The Financial Accounting Standards Board Issued Statement of Financial Accounting

question 39

Essay

The Financial Accounting Standards Board issued Statement of Financial Accounting Standard No.133,"Accounting for Derivatives and Hedging Activities," as part of its project on financial instruments and its effort to deal with off-balance-sheet financing.
Explain what is meant by the term "off-balance-sheet financing" and give two reasons why "off-balance-sheet financing" is attractive to the management of an enterprise.

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Definitions:

Iodine

A chemical element essential for the production of thyroid hormones, which regulate metabolism and are crucial for growth and development.

Thyroxine

A major hormone produced by the thyroid gland, important for regulation of metabolism, energy generation, and growth and development.

Iron

A chemical element with symbol Fe, essential for blood production in the human body.

Hemoglobin

An iron-containing protein in red blood cells that is responsible for transporting oxygen from the lungs to the body's tissues.