At the End of the First Year of Operations, the Total

question 203

Multiple Choice

At the end of the first year of operations, the total cost of the trading securities portfolio is $179,000 and the total fair value is $174,000. What should the financial statements show?

• A) A reduction of an asset of $5,000 and a realized loss of $5,000.
• B) A reduction of an asset of $5,000 and an unrealized loss of $5,000 in the stockholders' equity section.
• C) A reduction of an asset of $5,000 in the current assets section and an unrealized loss of $5,000 under "Other expenses and losses."
• D) A reduction of an asset of $5,000 in the current assets section and a realized loss of $75,000 under "Other expenses and losses."

---

Definitions:

Strict Liability

A legal principle where a party is held responsible for damages or loss, regardless of fault or intention.

Employer Negligence

A situation where an employer fails to provide a safe working environment, leading to injury or damage to employees.

ERISA

The Employee Retirement Income Security Act, a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry.

Pension Benefits

Payments made from a retirement plan, often based on years of service and salary history, made to eligible employees after retirement.