Futures and Options,which Played a Part in the 2008 Financial

question 24

Multiple Choice

Futures and options,which played a part in the 2008 financial crisis,are financial instruments that:

• A)are tied to physical commodities but never to other financial instruments
• B)involve the current exchange of an item at a set price
• C)involve the exchange of some item at a set price at some point in the past
• D)allow some financial market participants to avoid risk
• E)always add to the financial risk faced by those who trade them

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Definitions:

Unadjusted Trial Balance

A listing of all the accounts and their balances from the ledger, before any adjustments, used to check the arithmetic accuracy of bookkeeping.

Aging of Receivable Method

An accounting technique used to estimate uncollectible debts by analyzing the age of accounts receivable.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's accounts receivable that may ultimately not be collectible.

Bad Debts Expense

Bad debts expense represents the amount of receivables a company estimates it will not be able to collect from customers over a period.