Which of the Following Is True About the Use of Derivatives

question 34

Multiple Choice

Which of the following is true about the use of derivatives?

• A)Derivatives usually appear explicitly in the financial statements.
• B)Academic surveys account for much of our knowledge of corporate derivatives use.
• C)Smaller firms are more likely to use derivatives than large firms.
• D)Frequently, firms use derivatives where financial distress costs are low.
• E)None of the above are true.

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Definitions:

Independent Internal Verification

The audit process within an organization where transactions and processes are reviewed by a person not involved in their execution, aimed at enhancing accuracy and reliability.

Reconciling Bank Statement

The process of ensuring the amounts on a bank statement match the corresponding amounts in a company's financial records.

Segregation Of Duties

An internal control measure where duties are divided among different individuals in an organization to reduce the risk of fraudulent activities.

Independent Internal Verification

The process of reviewing and verifying the accuracy and completeness of records and transactions by an internal party not involved in the initial preparation.