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

question 27

Multiple Choice

If the cost of an available-for-sale security exceeds its fair value by $40000 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 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:

Correlation Designs

Research designs used to measure and analyze the relationships between two or more variables without implying causation.

Confirmatory Factor Analysis

A statistical technique used to validate the factor structure of a set of observed variables and to confirm prior hypotheses about their relationships.

Latent Variables

Variables that are not directly observed but are inferred from other variables that are measured directly in research.

Psychometric Properties

Characteristics that describe the quality of psychological tests or measurements, including reliability, validity, and factor structure.