In Accounting for Noninfluential Securities

question 39

Multiple Choice

In accounting for noninfluential securities:

• A)The GAAP concept of "trading securities" is commonly referred to as "financial assets at fair value through profit and loss" under IFRS.
• B)The IFRS concept of "trading securities" is commonly referred to as "financial assets at fair value through profit and loss" under GAAP.
• C)The GAAP concept of "available-for-sale securities" is commonly referred to as "available-for-sale financial assets" under IFRS.
• D)The IRFS concept of "available-for-sale securities" translates as "available-for-sale financial assets" under GAAP.
• E)Both A and C above are true statements.

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Definitions:

Allowance Method

An accounting technique used to account for bad debts by estimating and setting aside a portion of accounts receivable deemed unlikely to be collected.

Uncollectible Accounts

Accounts receivable that a company does not expect to collect and writes off as bad debt expense.

Bankruptcy

A judicial process concerning an individual or entity that cannot fulfill their financial obligations.

Maturity Date

The final date by which a loan or other financial instrument must be paid back in full.