International Accounting Standards Differ from U

question 48

Multiple Choice

International accounting standards differ from U.S.Generally Accepted Accounting Principles in that International standards

• A)require that firm sale or purchase commitments are accounted for as fair value hedges.
• B)require that firm sale or purchase commitments are accounted for as cash flow hedges.
• C)state that firm sale or purchase commitments may not be treated as a hedged transaction.
• D)permit firm sale or purchase commitments to be accounted for as either fair value hedges or cash flow hedges.

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Definitions:

Moral Hazard

Moral hazard occurs when a party is more likely to take risks because the negative consequences of the risk will be borne by another party.

Present Value

The present-day worth of a forthcoming sum of money or cash inflows, assessed at an agreed-upon return rate.

Interest Rate

The percentage charged on a loan or paid on savings, indicating the cost of borrowing or the reward for saving.

Price To Earnings Ratios

A financial metric that measures a company's current share price relative to its per-share earnings, used to evaluate its relative value.