________ exposure is the potential for an increase or decrease in the parent company's net worth and reported net income caused by a change in exchange rates since the last transaction.
A) Transaction
B) Operating
C) Currency
D) Translation

Question

Quizplus · Accepted Answer

Translation exposure, also known as accounting or bookkeeping exposure, refers to the impact of changes in exchange rates on the valuation of assets and liabilities denominated in foreign currencies, as well as on the translation of foreign subsidiaries' financial statements into the parent company's reporting currency. This exposure affects the reported net income and equity of the parent company but does not involve any actual cash flows.

________ Exposure Is the Potential for an Increase or Decrease