All of the Following Statements Regarding Accounting for Trading Securities

question 146

Multiple Choice

All of the following statements regarding accounting for trading securities under U.S. GAAP are true except:

• A) Unrealized gains and losses are recorded in a temporary account that is closed to Income Summary at the end of the period.
• B) The entire portfolio of trading securities is reported at is fair value.
• C) An unrealized gain or loss is recorded with an adjusting entry when the securities are sold.
• D) An unrealized gain or loss from a change in fair value is reported on the income statement.
• E) An unrealized gain or loss is recorded with an adjusting entry at the end of each period.

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Definitions:

Motor Division

A sector or unit within a company that specializes in the development, production, and marketing of motor vehicles or engine components.

Automotive Division

A specialized business unit within a larger company that focuses on the development, manufacturing, and sales of automotive vehicles and related services.

Transfer Price

The price at which goods and services are sold between departments within the same company or between subsidiaries.

Commercial Security Division

A branch of a company focused on providing security products and services to businesses and commercial properties.