FASB 133
Well little one, FASB 133 is a very big and important rulebook that tells companies how they should account for something called "derivatives."
Now, a derivative is like a special fancy way of trading that allows people and companies to make bets on the ups and downs of things like stocks, currencies, and commodities. It's kind of like playing a game where you try to predict what's going to happen in the future.
But because these bets can be risky and unpredictable, FASB 133 says that companies who use derivatives have to be very careful and accounting for them properly. It's like having to follow the rules when you're playing a game - you don't want to cheat or mess up and get in trouble.
The rulebook has lots of specific guidelines and requirements that companies have to follow when it comes to accounting for their derivatives. This helps make sure that everything is being done fairly and correctly, and also helps give investors and regulators a clearer picture of what's going on with a company's finances.
Basically, FASB 133 is like the referee in a game, making sure that everything is being played fairly and by the rules.
Now, a derivative is like a special fancy way of trading that allows people and companies to make bets on the ups and downs of things like stocks, currencies, and commodities. It's kind of like playing a game where you try to predict what's going to happen in the future.
But because these bets can be risky and unpredictable, FASB 133 says that companies who use derivatives have to be very careful and accounting for them properly. It's like having to follow the rules when you're playing a game - you don't want to cheat or mess up and get in trouble.
The rulebook has lots of specific guidelines and requirements that companies have to follow when it comes to accounting for their derivatives. This helps make sure that everything is being done fairly and correctly, and also helps give investors and regulators a clearer picture of what's going on with a company's finances.
Basically, FASB 133 is like the referee in a game, making sure that everything is being played fairly and by the rules.