The Recognition of Unrealized Gains on Passive Equity Investments

question 12

Multiple Choice

The recognition of unrealized gains on passive equity investments

• A)increases the current ratio.
• B)decreases the current ratio.
• C)does not affect the current ratio.
• D)increases the current ratio if the investment is classified as current, otherwise it has no effect.

---

Definitions:

Date of Record

The date set by a company on which the shareholders must be registered to be eligible for dividends or other benefits.

Penny Stocks

Refers to shares of small companies traded at very low prices, often considered highly speculative.

Underpricing

The practice of setting the initial stock price below its intrinsic value during an initial public offering (IPO).

Dilution Effects

In finance, the decrease in existing shareholders' ownership percentage of a company as a result of the company issuing more shares.