Which of the Following Is Not a Criterion That Must

question 16

Multiple Choice

Which of the following is not a criterion that must exist for hedge accounting to function:

• A) Item to be hedge exposes the enterprise to price, currency, or interest rate risk.
• B) The hedge position reduces the exposure.
• C) The hedge position is designated as a hedge.
• D) The enterprise would suffer a loss in the absence of the hedge.

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Definitions:

Selling Price

Selling Price is the amount of money a buyer pays to purchase a product or service, which could include considerations for costs, profit margins, and market demand.

Desired Profit

The target profit a company or an individual aims to achieve within a specific period.

Profitable

A financial state in which income exceeds costs and expenses, resulting in a net gain.

Constraint

A limitation or restriction on a process, system, or activity.