Which of the Following Is the Major Difference Between the Accounting

question 90

Multiple Choice

Which of the following is the major difference between the accounting for equity securities and debt securities?

• A)Debt securities are classified as liabilities, while equity securities are classified as assets.
• B)Most equity securities are classified as held-to-maturity and most debt securities are classified as trading investments.
• C)The revenue from debt securities is interest, while revenue from equity securities is dividends.
• D)All debt securities have a maturity date whereas only a few equity securities have a maturity date.

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Definitions:

Monthly Dollar Sales

The total sales revenue earned by a business within a month, measured in dollars.

Variable Expenses

Costs that change in proportion to the activity of a business, such as sales or production levels.

Fixed Expenses

Costs that do not change in total despite fluctuations in the volume of goods or services produced or sold.

Annual Sales

The total revenue generated from the sale of goods or services in one fiscal year.