Which of the Following Is True of Accounting Risk?​

question 123

Multiple Choice

Which of the following is true of accounting risk?​

• A) ​Accounting risk refers to the possibility that a firm's present value of future cash flows will be affected by exchange rate fluctuations.
• B) ​Accounting risk is the degree to which a firm's financial statements are exposed to exchange rate fluctuation.
• C) ​Accounting risk is synonymous with transaction risk.
• D) ​Accounting risk refers to the possibility that future cash transactions will be affected by changing exchange rates.

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Definitions:

Net Sales

The revenue generated from sales after deducting returns, allowances for damaged goods, and discounts.

Markup

The amount added to the cost price of goods to cover overhead and profit.

Inventory Turnover

A ratio indicating how fast a company sells and replaces its stock of goods during a particular period.

Net Sales

The total revenue from sales after deducting returns, allowances for damaged or missing goods, and discounts.