Which of the Following Statements Is True About Hedge Accounting

question 16

Multiple Choice

Which of the following statements is true about hedge accounting under U.S.GAAP?

• A)Companies may choose whether to account for derivatives as cash flow hedges or fair value hedges.
• B)If a derivative qualifies as a cash flow hedge,a company may choose to account for it as a fair value hedge.
• C)If a derivative is considered a cash flow hedge,it must be accounted for as such.
• D)Hedge accounting is only advantageous when a foreign currency depreciates between the transaction date and the payment date.

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Definitions:

Cirrhosis

A chronic liver disease marked by the replacement of healthy liver tissue with scar tissue, often due to alcohol abuse or hepatitis infections.

Diverticulitis

Inflammation or infection of one or more diverticula, small bulges or pockets that can form in the lining of the gastrointestinal tract.

-ase

A suffix used in chemistry to denote enzymes, which are proteins that catalyze biochemical reactions.

Amylase

An enzyme found in saliva and pancreatic fluid that helps in the digestion of carbohydrates by breaking them down into sugars.