When It Comes to Measuring Investments, Which of the Following

question 103

Multiple Choice

When it comes to measuring investments, which of the following statements is true?

• A) Companies are required to measure at cost/amortized cost.
• B) Companies are required to measure at fair value.
• C) Both cost/amortized cost and fair value are permitted in appropriate circumstances.
• D) The company may report using whichever method best aligns with their financial reporting objectives.

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Definitions:

Transaction

A financial event that changes the value or composition of a company's assets, liabilities, or equity.

Journal

A chronological record of all financial transactions, used to transfer information to a company's general ledger.

Accounts

Financial records that track the income, expenses, assets, liabilities, and equity of an individual or organization, forming the basis for financial reporting.

Transaction Effects

The impact of business transactions on the financial statements, including assets, liabilities, and equity.