In a Hedge of a Forecasted Transaction, Gains or Losses

question 8

Multiple Choice

In a hedge of a forecasted transaction, gains or losses on derivative instruments prior to the occurrence of the actual transaction should be reported as

• A)​a component of stockholders' equity.
• B)​a component of other comprehensive income.
• C)​an extraordinary item.
• D)​income from continuing operations.

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Definitions:

Supply of Money

The total value of money available in an economy at a specific time, including cash, coins, and balances in bank accounts.

Tight Monetary Policy

A monetary policy strategy used by central banks to decrease the money supply and increase interest rates to control inflation and stabilize the currency.

Net Exports

The value of a country's total exports minus the value of its total imports. It is a component of a country’s GDP.

Federal Reserve System

The main banking authority in the United States, tasked with setting monetary policy, overseeing banks, ensuring the financial system's stability, and offering financial services.