Which of the Following Statements Is Correct

question 3

Multiple Choice

Which of the following statements is correct?

• A) Any unrealized holding gain or loss on investments in trading securities is reported on the income statement.
• B) Any unrealized holding gain or loss on investments in trading securities or in available-for-sale securities is reported on the income statement.
• C) All unrealized gains and losses are reported on the income statement regardless of the method used to account for the investment.
• D) Any unrealized holding gain or loss on investments in available-for-sale securities is reported on the income statement.

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Definitions:

Sinking Fund Deposits

Money regularly set aside by a company to repay a debt or replace an asset in the future.

Compounded Annually

An investment or loan interest calculation method where interest is added to the principal sum at the end of each year, with future interest then earned on the new total.

Present Value

Today's value of future cash flows or a lump sum, calculated using an established return rate.

Discounted

The process of determining the present value of a payment or a series of payments made in the future, using a specific discount rate.