Futures Contract
Accounting glossary · Understand, connect, apply
A futures contract is a standardised contract traded on an exchange to buy, sell or settle an exposure on agreed terms at a future date.
Example
A grain producer sells wheat futures to offset part of its exposure to falling wheat prices.
Remember the difference
Futures typically involve clearing and daily margin settlement. A negotiated forward can be tailored to a different amount, date or settlement method.
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Prepared with AI assistance. Examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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