When a Firm Sells a Trading Security,it Recognizes

question 33

Multiple Choice

When a firm sells a trading security,it recognizes:

• A) the average of the selling price and the book value as a gain or loss in measuring net income.
• B) the difference between the selling price and the book value as a gain or loss in measuring net income.
• C) amortizes any difference between the acquisition cost and maturity value as interest revenue over the life of the debt.
• D) the difference between the selling price and the acquisition cost of the security as a realized gain or loss on the income statement.

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Definitions:

Demand Curve

A graphical representation in economics showing the relationship between the price of a good and the quantity demanded by consumers at various price levels.

Monopolistically Competitive Market

An economic setup in which numerous companies offer goods that are alike but not identical, granting them some level of control over the market.

Marginal Revenue

The additional revenue that a firm receives from selling one more unit of a good or service.

Average Total Cost

The total cost of production divided by the total output or quantity produced.