Which statement is correct about a financial instrument?
A)An arrangement where one party has the power to participate in the financial and operating policy decisions of another entity.
B)An arrangement where one entity governs the financial and operating policies about another entity.
C)A contractual arrangement whereby two or more parties share control over an economic activity and all strategic decisions requires unanimous consent by all parties.
D)An arrangement that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity.

Question

Quizplus · Accepted Answer

A financial instrument is an arrangement that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity. Option A describes a joint venture, Option B describes control, and Option C describes a unanimous shareholder agreement, which are not necessarily financial instruments.

Which Statement Is Correct About a Financial Instrument