All of the Following Statements About Financial Statement Gains and Losses

question 42

Multiple Choice

All of the following statements about financial statement gains and losses on investments are true except

• A)the account "Fair Value Adjustment - Available-For-Sale" is reported on the balance sheet.
• B)unrealized losses on trading securities are reported on the income statement.
• C)unrealized losses on available-for-sale securities are reported on the income statement.
• D)the account "Fair Value Adjustment - Trading" is reported on the balance sheet.

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Definitions:

Accounts Payable

Accounts payable represents the amount a company owes to its suppliers or creditors for goods or services received but not yet paid for.

Commercial Paper

Very short-term debt issued by major companies.

Revolving Credit Agreement

A formal, binding agreement with a bank as to the maximum amount a firm can borrow during a period of time. Interest is paid on the amount borrowed and a commitment fee is paid on the unused balance.

Promissory Note

A lending agreement in which the borrower promises to pay principal and interest in accordance with specific terms.