Which of the following statements is true concerning hedge accounting?
A) Hedges of foreign currency firm commitments are used for future sales only.
B) Hedges of foreign currency firm commitments are used for future purchases only.
C) Hedges of foreign currency firm commitments are used for current sales or purchases.
D) Hedges of foreign currency firm commitments are used for future sales or purchases.
E) Hedges of foreign currency firm commitments are entered into for speculative purposes.

Question

Quizplus · Accepted Answer

Hedges of foreign currency firm commitments are used to manage the risk associated with future sales or purchases, not just one or the other. They are not for speculative purposes but for risk management.

Which of the Following Statements Is True Concerning Hedge Accounting