In Recognizing a Decline in the Fair Value of Short-Term

question 199

Multiple Choice

In recognizing a decline in the fair value of short-term stock investments, an Unrealized Loss account is debited because

• A) management intends to realize this loss in the near future.
• B) the securities have not been sold.
• C) the stock market is volatile.
• D) management cannot determine the exact amount of the loss in value.

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Definitions:

Supply Shock

An unexpected event that suddenly changes the supply of a product or commodity, leading to a rapid change in its price.

Corporate Earnings

The profit a company makes after deducting the costs of doing business, such as expenses, taxes, and more, usually reported quarterly.

Stock Prices

The current price at which a share of a company is bought or sold in the market.

Stock Price Performance

An assessment of how the price of a specific stock or the overall stock market has performed over a given period.