Which of the Following Statements Does Not Properly Describe GAAP

question 9

Multiple Choice

Which of the following statements does not properly describe GAAP accounting for derivatives?

• A)Derivatives are reported in the balance sheet at fair value.
• B)Speculative investments in derivative contracts can increase earnings volatility.
• C)Changes in the fair value of a derivative must be included in net income when they occur.
• D)A derivative's unrealized holding gain or loss for a particular year is not a component of that year's income from operations.

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Definitions:

Quantity Theorists

Economists who believe that the amount of money in circulation is the primary influencing factor on overall levels of prices and inflation in an economy.

Increase in M

An increase in the money supply, referring to the total amount of money within a specific economy available for purchasing goods or services.

PQ Increase

A rise in the product of price level and quantity of goods and services produced, indicating growth in the value of economic output.

Classical Economist

An economist adhering to a school of thought originating in the late 18th and early 19th centuries, focusing on free markets, the role of self-interest, and the importance of limiting government intervention in the economy.