The Kerry Company Began Operations During 2014 and Purchased Shares

question 8

Multiple Choice

The Kerry Company began operations during 2014 and purchased shares of Molson Corporation stock during the year.The market value of the Molson stock had increased as of the end of 2014.Kerry should have classified this investment as a trading security but mistakenly classified it as an available-for-sale security.Which of the following properly describes the impact of this error?

• A)The 2014 net income was not misstated.
• B)Total assets as of December 31,2014 were understated.
• C)Total stockholders' equity as of December 31,2014 was understated.
• D)Total stockholders' equity as of December 31,2014 was not misstateD.

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Definitions:

Guarantor

A person or entity that agrees to be responsible for another's debt or obligations if the original party fails to meet their responsibilities.

Guaranty

A legal commitment by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults.

Suretyship

A contractual agreement where a party (surety) agrees to be responsible for the debt or obligations of another party (principal) if that party fails to fulfill them.

Cosigner

an individual who agrees to be responsible for the repayment of a loan or debt if the primary borrower fails to pay.