Which of the Following Statements Regarding Trading Debt Securities Is

question 17

Multiple Choice

Which of the following statements regarding trading debt securities is false?

• A) If a trading debt security is purchased at a premium, the premium must be amortized on a periodic basis.
• B) Fair value adjustments are treated as adjustments to net income.
• C) If the fair value of trading debt securities is less than the amortized cost, the fair value adjustment account will have a credit balance.
• D) Fair value adjustments are treated as adjustments to other comprehensive income.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good consumers are willing to purchase at various prices.

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity supplied at those prices in a market.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price.

Substitute

Replacement items or alternatives that consumers may choose, which impacts market demand and competition among sellers.