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:

Source Acceptance

The extent to which the information provided by a source is accepted as credible or convincing by a recipient.

Empathy

The capacity to understand or feel what another person is experiencing from within their frame of reference, essentially placing oneself in another's shoes.

Active Listening

The process of fully concentrating on what is being said rather than just passively ‘hearing’ the message, involving feedback and empathy towards the speaker.

Communication Process

The sequence of steps by which a message is transmitted from a sender to a receiver, including encoding, channel selection, decoding, and feedback.