An Agreement That Grants Its Owner the Right, but Not

question 25

Multiple Choice

An agreement that grants its owner the right, but not the obligation, to buy or sell a specific asset at a specific price for a set period of time is called a(n) ________ contract.

• A) option
• B) forward
• C) futures
• D) swap
• E) spot

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Definitions:

Overhead

The ongoing operational costs not directly attributable to the creation of a product or service.

General Journal

A comprehensive journal used in bookkeeping to record all types of accounting transactions before their transfer to specific accounts in the ledger.

Predetermined Rate

A rate established before the start of a period for the purpose of applying overhead costs to products or services, based on estimated costs.

Direct Labor Hours

The total time workers spend producing goods or providing services that are directly associated with the production costs.