Trading Securities Purchased in 2011 for $90,000 Were Valued at $92,000

question 173

Multiple Choice

Trading securities purchased in 2011 for $90,000 were valued at $92,000 on December 31, 2011. At December 31, 2013 the securities had a fair value of $95,000. The journal entry on December 31, 2013 would include a:

• A) debit to the Investment account for $5,000.
• B) debit to the Investment account for $3,000.
• C) credit to the Unrealized Gain account for $5,000.
• D) debit to the Unrealized Loss account for $3,000.

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Definitions:

Market Rate Of Interest

The prevailing rate at which interest is paid by borrowers for the use of money that they borrow from lenders.

Maturity Risk

The risk associated with the fixed income instrument reaching its maturity date, affecting the investment's interest rate and return.

Capital Leases

A capital lease is a lease classified as an asset purchase for accounting purposes, whereby lessee records the leased asset as if it was bought.

Financing Leases

Long-term lease agreements that are categorized as a means of financing the acquisition of assets.