____________ exposure results from the possibility of incurring a gain or loss related to a sale or purchase already entered into and denominated in another currency.
A)translation
B)transaction
C)operating
D)accounting

Question

Quizplus · Accepted Answer

Transaction exposure is the possibility of incurring gains or losses related to a sale or purchase already entered into and denominated in another currency. This could be due to fluctuations in exchange rates between the time of the transaction and the time of settlement. Translation exposure, on the other hand, refers to the impact of currency fluctuations on the financial statements of a company with foreign subsidiaries or operations. Operating exposure refers to the impact of currency fluctuations on a company's future cash flows and competitive position, and accounting exposure is another term for translation exposure.

____________ Exposure Results from the Possibility of Incurring a Gain