Which of the Following Is Correct About Financial Instruments

question 8

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 may be used in support of innovations designed to circumvent accounting standards.
• D)All financial instruments are accounted for at fair value.

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Definitions:

Net Profit

The amount of money that remains after all operating expenses, interest, taxes, and preferred stock dividends have been subtracted from a company's total revenue.

Step-Down Method

An accounting technique used to allocate indirect costs to products or services based on a hierarchy of activities.

Janitorial Department

A division within an organization responsible for maintaining cleanliness, hygiene, and order in facilities and buildings.

Cost Allocated

The portion of expenses assigned to a specific product, service, or department within a company, as part of cost accounting practices.