Current GAAP Requires a Company to Disclose the Fair Value

question 58

Multiple Choice

Current GAAP requires a company to disclose the fair value of its financial instruments and to disclose all significant concentrations of credit risk due to its financial instruments.The FASB's rationale for this disclosure includes allowing readers to

• A)better identify major customers
• B)compute each company's risk
• C)better determine a company's financial flexibility
• D)compute liquidity ratios

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Definitions:

Credible Threat

A strategy or warning that is believable and likely to be carried out in a strategic situation.

Stackelberg Firm

A business that is considered a leader in a market, setting prices or quantities that followers in the market then respond to.

Incentive

A motivation or reward offered to encourage specific behaviors or actions, often used in business, economics, and psychology.

Accommodation

The provision of a place to stay or the process of adjusting something to match a certain need.