At the End of the First Year of Operations the Total

question 26

Multiple Choice

At the end of the first year of operations the total cost of the trading securities portfolio is $245000. Total fair value is $250000. The financial statements should show

• A) an addition to an asset of $5000 and a realized gain of $5000.
• B) an addition to an asset of $5000 and an unrealized gain of $5000 in the stockholders' equity section.
• C) an addition to an asset of $5000 in the current assets section and an unrealized gain of $5000 in "Other revenues and gains."
• D) an addition to an asset of $5000 in the current assets section and a realized gain of $5000 in "Other revenues and gains."

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Definitions:

Transferred Units

Refers to items or inventory that have been moved from one location, department, or stage of processing to another within a company.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of equivalent fully completed units.

Ending Work

The inventory or work-in-process at the end of an accounting period that has not yet been completed.

Equivalent Units

A concept used in cost accounting to standardize the quantities of produced goods, accounting for partially completed units.