Which of the Following Is a Condition to Record an Investment

question 70

Multiple Choice

Which of the following is a condition to record an investment as an available-for-sale security?

• A)There should not be any annual cash flows from the investment.
• B)It should have a maturity of less than two years.
• C)It should be a debt security.
• D)The ownership in the voting stock of the investee should be less than 20%.

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Definitions:

Liabilities

Obligations of a company or organization due to past transactions or events, resulting in the future sacrifice of economic benefits.

Stockholders' Equity

The ownership interest of shareholders in the assets of a corporation, after all liabilities have been subtracted.

Accounts Payable

The amounts owed by a business to its suppliers or creditors for goods and services received, representing short-term liabilities.

Accounts Receivable

Funds that are due to a company from its clients for the delivery of goods and services which payment is pending.