Which of the Following Is Not a Condition of Accounting

question 102

Multiple Choice

Which of the following is not a condition of accounting for hedge derivatives?

• A) The derivative is minimally effective in offsetting changes in the cash flows or fair value related to the hedged item.
• B) The derivative is properly documented as a hedge.
• C) The derivative is used to hedge a cash flow exposure to foreign exchange risk.
• D) The derivative is highly effective in offsetting changes in the cash flows or fair value related to the hedged item.
• E) The derivative is used to hedge a fair value exposure to foreign exchange risk.

---

Definitions:

Dysfunctional

Referring to systems, relationships, or behaviors that are impaired or operate in an unhealthy or abnormal manner.

Bonus

An additional compensation given to employees as a reward for achieving targets or exceptional performance.

Incoming Partner

An individual who is joining an existing partnership, bringing capital, skills, or other resources into the business in exchange for a share of the profits and losses.

Partnership Books

Financial records and accounts specifically maintained to track the transactions and financial state of a partnership.