A Forward Contract May Be Used for Which of the Following

question 34

Multiple Choice

A forward contract may be used for which of the following?
1) A fair value hedge of an asset.
2) A cash flow hedge of an asset.
3) A fair value hedge of a liability.
4) A cash flow hedge of a liability.

• A) 1 and 3
• B) 2 and 4
• C) 1 and 2
• D) 1, 3, and 4
• E) 1, 2, 3, and 4

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Definitions:

Indirect Materials

Indirect materials are supplies used in the production process that do not become an integral part of the finished product and are not directly traceable to specific goods or services produced.

Raw Materials

The basic materials and inputs used in the production process to manufacture finished goods.

Work in Process

Inventory that includes items being manufactured but not yet completed, representing a stage between raw materials and finished goods.

Raw Materials

are basic substances or components used in the manufacturing process to create finished goods.