The Buyer of a Forward Contract

question 23

Multiple Choice

The buyer of a forward contract:

• A) will be taking delivery of the good(s) today at today's price.
• B) will be making delivery of the good(s) at a later date at that date's price.
• C) will be making delivery of the good(s) today at today's price.
• D) will be taking delivery of the good(s) at a later date at pre-specified price.

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Definitions:

Encumbrances

Claims, liens, or charges on property or funds that affect or limit their use until the encumbrance is lifted.

Accounts Payable

Liabilities to creditors that are short-term financial obligations arising from purchasing goods or services on credit.

Accrual Basis

An accounting method that records income and expenses when they are earned or incurred, regardless of when the cash is actually received or paid.

Internal Service Funds

Funds used by a government or organization to account for the financing of goods or services provided by one department to other parts of the organization, on a cost-reimbursement basis.