How Are Marketable Securities Valued on the Balance Sheet

question 27

Multiple Choice

How are marketable securities valued on the balance sheet?

• A) Historical cost.
• B) At cost or fair value depending on how the securities are classified.
• C) Market value.
• D) At fair value with the difference between cost and fair value reported as revenue.

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Definitions:

True Values

Refers to the actual, inherent value or worth of an item, property, or financial instrument, as opposed to its market price or cost.

Just over

Slightly more than a specified amount, number, or degree.

Consumer Surplus

The discrepancy between what consumers are ready and able to spend on a good or service and the amount they end up paying.

Producer Surplus

The difference between the amount that producers are willing to accept for a good or service and the actual amount they receive.