FAR SU6

Question 1

What is risk of accounting loss?

Answer 1

Accounting loss is an amount the would be lost because of credit risk. Where we lend credit and it is uncollected. But there is also an allowance for uncollectible accounts. Loss in excess of allowance for uncollectible accounts would be a unmitigated risk and therefore susceptible to an accounting loss.

Question 2

What is Off-Balance- Sheet Risk?

Answer 2

The chance that something is left off the balance sheet. Tends to be much more likely for liabilities due to fraud. Risk is practically 0% when reporting assets.

Question 3

How are A/R reported?

Answer 3

At net realizable value