The Purpose of a Hedge on an Identifiable Commitment Where

question 2

Multiple Choice

The purpose of a hedge on an identifiable commitment where the U.S.company is selling goods is to:

• A)​fix the basis of sales revenue to the date of the commitment
• B)​eliminate all exchange gains/losses from the date of commitment to the date of settlement
• C)​fix the basis of cost of goods sold to the date of commitment
• D)​eliminate any exchange gains/losses from the transaction date to the settlement date

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Definitions:

Current Liabilities

Financial obligations that a company is expected to pay within one year.

Accounts Payable

Money owed by a business to its suppliers shown as a liability on the company’s balance sheet.

Salaries and Wages Payable

Salaries and Wages Payable are liabilities on the balance sheet representing amounts owed to employees for work performed but not yet paid.

Mortgage Payable

A long-term liability account that records the amount owed on a property mortgage.