Which One of the Following Statements Concerning Forward Contracts Is

question 124

Multiple Choice

Which one of the following statements concerning forward contracts is true?

• A) Forward contracts are marked-to-the market daily.
• B) Forward contracts can NOT be resold once purchased.
• C) Both the buyer and the seller of a forward contract can profit if both parties hold the original contract for the duration of the contract.
• D) The buyer of a forward contract has the right, but not the obligation, to take delivery of the goods.
• E) The seller of a forward contract on corn profits when the price of corn falls.

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Definitions:

Income Summary

An account in the ledger that is used to transfer the balances of revenue and expense accounts at the end of an accounting period to determine the net income or loss.

Net Income

The total earnings of a company after subtracting all costs and expenses from revenues; also known as net profit.

Revenue Accounts

Accounts that track the income a company generates from its normal business activities, typically from the sale of goods and services to customers.

Expense Accounts

Accounts used to record the consumption of economic benefits during the operational period, contributing to revenue generation.