How Are Derivative Contracts Generally Accounted For

question 86

Multiple Choice

How are derivative contracts generally accounted for?

• A)Fair value.
• B)Fair value with changes recorded through income.
• C)Amortized cost.
• D)Historical cost.

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Definitions:

Express Warranty

An explicit promise or assurance made by a seller about the condition, functionality, or quality of a product.

Sales Transaction

The process of exchanging a good or service for payment between a buyer and a seller.

Implied Warranty

A legal assumption that a product will meet basic standards of quality and functionality, even if not expressly stated.

Merchantable

A quality of goods being fit for the purpose for which such goods are ordinarily used, a requirement for sales under many commercial laws.