All of the Following Statements Regarding Accounting for Trading Securities

question 59

Multiple Choice

All of the following statements regarding accounting for trading securities under U.S.GAAP are true except:

• A)The entire portfolio of trading securities is reported at fair value.
• B)An unrealized gain or loss from a change in fair value is reported on the income statement.
• C)A realized gain or loss is recorded when the securities are sold and reported on the income statement.
• D)When the period-end fair value adjustment for the portfolio of trading securities is computed,it includes the cost and fair value of any securities sold.
• E)Any prior period fair value adjustment to the portfolio is not used to compute the gain or loss from sale of individual transactions.

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Definitions:

Dividend

A portion of a company's earnings distributed to its shareholders, usually in the form of cash or stock.

Directors

Individuals elected by shareholders to oversee the management and govern the affairs of an organization, making strategic decisions and ensuring legal compliance.

Decision

The act or process of making choices or judgements based on available data, reasoning, and preferences.

Retained Earnings

The amount of net income left over for the business after it has paid out dividends to its shareholders.