Which of the Following Is Correct About Financial Instruments

question 31

Multiple Choice

Which of the following is correct about financial instruments?

• A)Accounting for financial instruments has been consistent.
• B)There is no economic substance to financial instruments.
• C)They are often designed to circumvent accounting standards.
• D)All financial instruments are accounted for at fair value.

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Definitions:

Month-end Postings

The journal entries made at the end of the month to record all transactions and adjustments for that month.

Financial Year

A period of twelve months used for accounting purposes and the preparation of financial statements, not necessarily aligning with the calendar year.

Cash Receipts Journal

A specialized accounting journal used to record all money that is received by a business.

Cash Sale

A transaction where payment for a good or service is made at the time of the sale, usually in the form of cash or equivalent.