What Is "Hedge Accounting

question 33

Multiple Choice

What is "hedge accounting?"

• A) Any record keeping related to purchase, sale, or valuation of derivatives.
• B) Recording options and other derivatives on the Balance Sheet.
• C) Matching gains or losses from hedging with losses or gains from the risk being hedged.
• D) Using multiple accounting methods to offset the effect of foreign currency exchange.

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Definitions:

Machine-Hours

The quantity of operational time, captured in hours, that industrial equipment is actively utilized for manufacturing purposes.

Departmental Overhead Rates

The method of allocating overhead costs to specific departments within a company based on predetermined rates.

Manufacturing Cost

The total cost related to producing goods, including materials, labor, and overhead expenses.

Machine-Hours

A measure of production volume or activity based on the number of hours machines are operated within a specified period.