________ 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) Translation
C) Structural
D) Conversion

Question

Quizplus · Accepted Answer

Translation exposure refers to the impact of exchange rate shifts on a company's financial statements when it consolidates the financial results of foreign subsidiaries or affiliates. It deals with potential gains or losses from the translation of foreign currency-denominated financial statements into the reporting currency. Translation exposure arises regardless of a company's overseas transactions but rather from its investment in foreign affiliates.

________ Exposure Is the Potential for an Increase or Decrease