If the Cost of an Available-For-Sale Security Exceeds Its Fair

question 136

Multiple Choice

If the cost of an available-for-sale security exceeds its fair value by $29,000, the entry to recognize the loss

• A) is not required since the share prices will likely rebound in the long run.
• B) will show a debit to an expense account.
• C) will show a credit to a valuation allowance account that appears in the stockholders' equity section of the balance sheet.
• D) will show a debit to an unrealized loss account that is deducted in the stockholders' equity section of the balance sheet.

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Definitions:

SQ3R Reading System

A reading comprehension method named for its five steps: Survey, Question, Read, Recite, and Review.

Five-Part Reading System

A comprehensive approach to reading that might associate with strategies to enhance comprehension, but specific details suggest it's rephrased from "SQ3R Reading System" and refers to a structured method to improve reading skills.

Dyslexia

A learning disorder characterized by difficulties with accurate and/or fluent word recognition and by poor spelling and decoding abilities.

Decoding

The process of breaking words into individual sounds.