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:

EDI

Electronic Data Interchange, a system that allows the exchange of business documents and data across different companies electronically.

B2C

Business-to-Consumer, a commercial transaction model where businesses sell products or services directly to the end-users or consumers.

C2B

Consumer-to-Business, a business model where consumers create value or products that businesses purchase.

B2B

Business-to-Business, a model that involves transactions between two firms rather than between a firm and individual consumers.