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:

Imports

Goods and services bought from foreign countries for domestic consumption or use.

Rate of Inflation

The measurement of how rapidly the general price level of goods and services escalates, which in turn, reduces the purchasing strength.

Unemployment Rate

The ratio of individuals in the labor force who are without a job and actively seeking employment.

Labor Force

The total number of people employed or actively seeking employment in a country or specific area.