The Cervantes Company Uses the Same Method of Depreciation for Its

question 15

Multiple Choice

The Cervantes Company uses the same method of depreciation for its equipment in each fiscal period.This practice is an example of

• A) conservatism.
• B) consistency.
• C) materiality.
• D) matching.

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Definitions:

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Underlying Asset

The financial instrument (e.g., stock, bond, commodity, or currency) on which a derivative instrument, such as an option or futures contract, is based.

Corporate Bond Portfolio

A collection of corporate bonds held by an investor or managed by a financial institution.

T-bond Futures

Financial contracts obligating the buyer to purchase U.S. Treasury bonds at a specified price at a future date, used for hedging and investment purposes.