If the Cost of an Non-Trading Security Exceeds Its Fair

question 55

Multiple Choice

If the cost of an non-trading security exceeds its fair value by $40,000, 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 contra-asset account that appears in the equity section of the statement of financial position.
• D) will show a debit to an unrealized loss account that is deducted in the equity section of the statement of financial position.

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Definitions:

Prospect

A potential customer or client who has shown interest in a company's products or services but has not yet made a purchase.

Stalling Objection

A type of resistance shown by potential customers indicating hesitation or delay in making a purchasing decision.

Quaker Oats

A brand of oats and related products known for its breakfast cereals, owned by the PepsiCo conglomerate.

Retail Buyers

These are professionals responsible for selecting and purchasing merchandise for retail sale, considering factors like trends, customer demand, and price.