Which Statement Is Correct About Accounting for Financial Instruments

question 14

Multiple Choice

Which statement is correct about accounting for financial instruments?

• A)All financial instruments are accounted for at fair value through profit or loss.
• B)All are accounted for in accordance to their economic substance.
• C)All financial instruments are accounted for at amortized cost.
• D)All financial instruments are accounted for at fair value through OCI.

---

Definitions:

Law of Demand

The principle that there is an inverse relationship between the price of a good and the amount of it consumers are willing to buy, all else being equal.

Income Effect

How an individual's or an economic system's revenue shift affects the demand level for a particular good or service.

Substitution Effect

The economic principle that as the price of a good or service rises, consumers will replace it with cheaper alternatives, affecting the demand for goods.

Normal Good

A Normal Good is a type of good for which demand increases as the income of consumers increases and decreases when consumer income decreases, all else being equal.