Forward Contracts Are Similar to Normal Transactions Between Buyers and Sellers

question 28

Multiple Choice

Forward contracts are similar to normal transactions between buyers and sellers with one exception.Which of the following statements best describes it?

• A)The timing of payment is different.
• B)The timing of ownership transfer is different.
• C)The timing of price derivation is different.
• D)Both A and B

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Definitions:

Merchandise Inventory

The total value of a company's products that are currently unsold, crucial for retail and wholesale businesses.

Operating Cycle

The average period of time required for a business to convert its investments in inventory back into cash through the sale of goods or services.

Merchandise

Products or goods that are bought, sold, or traded within a retail environment.

Long-Term Assets

Assets that a company intends to hold for more than one year, including property, plant, and equipment.