Which of the Following Is a CORRECT Statement About the Petty

question 102

Multiple Choice

Which of the following is a CORRECT statement about the petty cash fund?

• A)To set up the petty cash fund,a check is issued to the chief financial officer.
• B)The custodian of the fund has sole responsibility for accounting for the fund.
• C)The cash in the fund must always equal the opening balance of the fund.
• D)The petty cash fund must be maintained at a bank.

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Definitions:

International Fisher Effect

An economic theory predicting that the difference in nominal interest rates between two countries is equal to the expected change in their exchange rates over a specific period.

Relative Economic Conditions

Economic circumstances in one region or country as compared to another.

Long-Run Exposure

A type of currency risk faced by firms that operate internationally over an extended period.

Exchange Rate Risk

The potential for financial loss due to fluctuations in the exchange rate between two currencies.