The Disclosure of Accounting Policies, Is Important to Financial Statement

question 4

Multiple Choice

The disclosure of accounting policies, is important to financial statement readers in determining

• A)net income for the year.
• B)whether accounting policies are consistently applied from year to year.
• C)the value of obsolete items included in ending inventory.
• D)whether the working capital position is adequate for future operations.

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Definitions:

Increases In Interest Rates

A scenario where central banks or financial institutions decide to raise the cost of borrowing money.

Cap

An upper limit set on the amount of money that can be charged or paid in a certain situation, such as interest rates on a loan or fees.

Cross-Hedging

Cross-hedging involves using a hedge to manage risk by investing in a financial instrument that is not directly correlated to the underlying asset but has similar price movements.

Hedge Price

A price locked in through hedge contracts to reduce exposure to price fluctuations of commodities, currencies, or securities.