Question $(4)$

How does accounting risk affect credit risk assessment?

It is the risk that a company may suffer operating losses that result in default on a loan.

It is the risk that analysts may not be up to date with latest accounting standards thereby

misinterpreting results when making a lending decision.

It is the risk of making improper lending decisions as a result of poor financial data.

It is the risk that asset values may be understated in the accounts leading to overstatement of

future profits.