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Why Is the Accrual Method of Accounting for Unrealized Foreign

Question 14

Multiple Choice

Why is the accrual method of accounting for unrealized foreign exchange gains sometimes criticized?


A) Foreign exchange gains almost never occur, so there is no reason to have an accounting standard for it.
B) It violates the principle of conservatism.
C) It is not objective.
D) There is no reliable method for measuring unrealized foreign exchange gains.

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