Where Is the Ineffective Portion of a Cash-Flow Hedge Recognized

question 43

Multiple Choice

Where is the ineffective portion of a cash-flow hedge recognized on the financial statements?

• A)As part of net income
• B)As part of other comprehensive income
• C)As a separate component of equity
• D)It does not appear on the financial statements.

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Definitions:

Operating Cash Flow

The cash generated from the normal operations of a business, reflecting how much cash is produced by the business's core operations.

Depreciation Expense

The distribution of a physical asset's cost over its expected lifespan for tax and accounting reasons.

Net Working Capital

The gap between a firm's existing assets and its short-term obligations, showcasing its liquidity and ability to run efficiently in the near term.

Accounts Payable

The amount of money owed by a business to its suppliers or creditors for goods and services bought on credit.