Which statement is correct about financial instruments?
A)A contract whose value changes according to a specified variable, requires little or no initial investment and is settled at a future date.
B)A contract that gives the holder the residual interest in an entity after deducting all of its liabilities.
C)Any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity.
D)Any contract that entitles the holder to joint interest in an entity after deducting all of its liabilities.

Question

Quizplus · Accepted Answer

Financial instruments are contracts that give rise to financial assets for one entity and financial liabilities or equity instruments for another entity. Option A describes a derivative, not a financial instrument. Option B describes equity instruments. Option D describes joint ownership, not a financial instrument.

Which Statement Is Correct About Financial Instruments