Which of the Following Statements Is Not Correct with Respect

question 78

Multiple Choice

Which of the following statements is not correct with respect establishing reporting requirements for governments entering into derivative instruments according to GASB?

• A) Derivatives include swaps, options, forward contracts and future contracts.
• B) If a derivative is effective in reducing a government's exposure to identifiable risks, the changes in the value of the derivative are reflected as investment gains or losses in the period that the value changes.
• C) If a hedge derivative is deemed ineffective it is classified as investment purpose.
• D) GASB statements apply only to reporting at the government-wide level for derivatives held by governmental funds, not the fund-basis statements.

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Definitions:

Capital Expenditures Budget

A plan for a company's spending on fixed assets, such as buildings or equipment, over a period.

Fixed Assets

Long-term tangible assets purchased for business use and not expected to be converted into cash in the short term, such as buildings, machinery, and equipment.

Dollar Amounts

A value or quantity expressed in terms of dollars, used to denote the price, cost, or value of something.

Flexible Budgeting

A budgeting process that adjusts to different levels of operation activities or volumes.