In Which of the Following Situations Would the Largest Amount

question 7

Multiple Choice

In which of the following situations would the largest amount be recorded as an expense of the current year? (Assume accrual basis accounting. )

• A)$4,000 is paid in January for equipment with a useful life of four years.
• B)$1,800 is paid in January for a two-year fire insurance policy.
• C)$1,200 cash dividends are declared and paid.
• D)$900 is paid to an attorney for legal services rendered during the current year.

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Definitions:

Variance

A statistical measure of the dispersion of returns for a given security or market index.

Elasticity

A measure of how much the demand or supply of a product changes in relation to a change in one of its determinants like price.

Hedge Ratio

A ratio used to reduce financial risk, representing the proportion of a position hedged to the total position size.

Hedge Ratio

The ratio used to manage risk in financial portfolios, determining the size of a position required to offset potential losses.