Which of the Following Best Characterizes the Profit of a Buyer

question 66

Multiple Choice

Which of the following best characterizes the profit of a buyer of a futures contract?

• A) spot price at settlement minus futures price at purchase
• B) futures price at settlement minus spot price at purchase
• C) futures price at purchase minus spot price at settlement
• D) spot price at purchase minus futures price at settlement

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Definitions:

Merchandise

Goods that are bought and sold in business; the commodities or items that a business trades in.

Journal Entry

A record in the books of accounts that represents a single financial transaction, documented in chronological order and showing the debits and credits for each transaction.

Terms N/30

Payment terms indicating that an invoice must be paid within 30 days of the invoice date.

Allowance Method

An accounting technique used to account for bad debts, estimating and setting aside a portion of accounts receivable that may not be collectible.