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

question 28

Multiple Choice

If the cost of an available-for-sale security exceeds its fair value by $29,000, 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 valuation allowance account that appears in the stockholders' equity section of the balance sheet.
• D)will show a debit to an unrealized gain or loss account that is deducted in the stockholders' equity section of the balance sheet.

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Definitions:

Policy Makers

Individuals or groups responsible for making decisions that affect the economy, society, or governance.

Normative Economics

A branch of economics that expresses value judgments about economic fairness or what the economy ought to be like.

Positive Economics

An approach to economics that seeks to understand and explain the economy as it is, based on factual observations without making normative judgments.

Normative Statements

Opinions or judgments that reflect beliefs about what ought to be rather than statements that can be tested or verified.