If Marketable Securities Increase, Then Cash Should Usually Decrease by a Similar

question 22

Multiple Choice

If marketable securities increase, then cash should usually decrease by a similar amount, since cash was probably used to purchase the securities. An exception to this occurs when:

• A) the company paid through a check.
• B) the marketable securities are purchased through a broker.
• C) the company incurred debt or traded an asset for the securities.
• D) the transaction was not recorded in the books of accounts.

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Definitions:

Economic Transactions

Activities involving the exchange of goods, services, or money between two or more parties.

Bretton Woods System

A monetary management system established in 1944, which set fixed foreign exchange rates for currencies in relation to the U.S. dollar and established the International Monetary Fund (IMF) and the World Bank.

World Economy

The global network of economic activities and interactions among countries' economies, including trade, investment, and currency exchange.

Gold Production

The process of extracting gold ore from the earth and refining it into pure gold.