ACC 573 Week 11 Final Exam
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Which of the following is not one of the GAAP classifications for derivatives?
A. Speculative investment
B. Fair value hedge
C. Asset-Liability hedge
D. Cash flow hedge
2. Derivatives are financial instruments that derive their value from changes in any of the following underlyings except:
A. Stock prices
B. Percentage discount on accounts receivable
C. Interest rates
D. Commodity prices
3. Which of the following best describes the accounting treatment for derivative instruments not held for purposes of hedging?
A. Record as an asset or liability and recognize changes in fair value in other comprehensive income.
B. Do not record as an asset or liability, record income from the transaction at maturity and recognize in earnings.
C. Record as an asset or liability, recognize changes in fair value currently in earnings.
D. Record as an asset or liability if off-balance sheet risk is material.
4. Which of the following is not a distinguishing characteristic of a derivative instrument?
A. Derivative instruments have terms that require or permit net settlement.
B. Derivative instruments have a low initial net investment.
C. Derivative instruments are highly effective throughout their term.
D. Derivative instruments have one or more underlyings and notional amounts.
5. The accumulated benefit obligation measures
A. the pension obligation on the basis of the plan formula applied to years of service to date and based on existing salary levels.
B. an estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement.
C. the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels.
D. the shortest possible period for funding to...