Which of the Following Statements About the Gross Method of Recording

question 49

Multiple Choice

Which of the following statements about the gross method of recording a hedge is true?

• A)It can only be used for internal record-keeping.
• B)The receivable and payable under the forward contract are recorded separately at fair value.
• C)The receivable and payable under the forward contract are netted together and only the net amount is recorded.
• D)The gross method provides a slightly different result than the net method.

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Definitions:

Marginal Benefit

The extra utility or satisfaction that is derived from the consumption or manufacture of one more unit of a good or service.

Marginal Cost

The growth in complete cost caused by the manufacture of one more unit of a good or service.

Artificially Scarce Good

A product or service whose availability is limited due to artificial constraints, such as legal restrictions or monopolistic practices, rather than natural scarcities.

Competitive Market

A market structure where many firms offer products or services that are similar, allowing consumers to find substitutes easily.