Directions: Choose the Best Answer Based on the Information You

question 11

Multiple Choice

Directions: Choose the best answer based on the information you read in Chapter 4. ​ Every word has a _________________, and may also have a _____________________ and/or a _____________________.

• A)suffix, root, prefix
• B)prefix, suffix, root
• C)root, prefix, suffix
• D)none of the above

Distinguish between equity securities that do and do not qualify as investments in securities (e.g., common stocks, preferred stocks, convertible bonds, stock options).

Interpret how to account for investments in debt securities, exempting certain securities that don’t qualify.

Understand the distinctions and appropriate use of the equity method, cost method, and consolidation method for accounting for investments.

Comprehend the accounting and reporting requirements for unrealized gains and losses, including how they are reflected on the financial statements.

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Definitions:

Prepaid Expenses

Prepaid Expenses are future expenses that have been paid in advance and are recorded as assets on a balance sheet until they are realized as an expense.

Unearned Revenues

Money received by a business for services or goods not yet delivered or rendered to the customer.

Profit Margin

A financial metric that measures the amount by which revenue from sales exceeds costs in a business, expressed as a percentage of revenue.

Periodic Reporting

The process of preparing and presenting financial statements at regular intervals, typically quarterly or annually.