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:

ROI Computation

The calculation of Return on Investment, which measures the gain or loss generated on an investment relative to the amount of money invested.

Net Book Value

The value of an asset after accounting for depreciation or amortization found on a company's balance sheet.

Operating Expense

Expenses incurred from a company's operational activities, excluding cost of goods sold, such as selling, general, and administrative expenses.

Minimum Required Rate of Return

The lowest acceptable return on investment for a project or investment, often determined by the cost of capital or desired profit.