In General, Derivative Instruments Are

question 40

Multiple Choice

In general, derivative instruments are

• A) Not reported in a company's balance sheet because their impact on the company is not yet known.
• B) Reported in the balance sheet at fair value and changes in their fair value are reported in earnings.
• C) Reported in the balance sheet at historical cost and changes in their fair value are reported in earnings.
• D) Reported in the balance sheet at fair value and changes in their fair value are reported in other comprehensive income.

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Definitions:

Economic Order Quantity

A formula used to determine the most cost-effective quantity to order to minimize the costs of holding and ordering inventory.

Inventory Costs

Expenses associated with managing and holding inventory, including storage, insurance, taxes, and potential obsolescence.

Total Inventory

The total amount of goods and materials held in stock by a business at a given time, including raw materials, work-in-progress, and finished goods.

Cash Discounts

A reduction in invoice price offered by sellers to buyers as an incentive for early payment.