DEDUCTIVE ACCOUNTING THEORY Definition

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DEDUCTIVE ACCOUNTING THEORY (mathematical method) assumes that optimal accounting standards and reporting rules can be derived by deduction much in the way that Pythagoras derived the rule for measuring the hypotenuse of a triangle based upon square root of the summed squares of the other two sides (assuming one angle is a perfect 90-degree angle).

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EXCHANGE RATE RISK, in foreign exchange, is the variability of a firm's value due to uncertain changes in the rate of exchange.

TERM LOAN is a bank loan, typically with a floating interest rate, for a specified amount that matures in between one and ten years and requires a specified repayment schedule.

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