Which of the Following Is the Major Difference Between the Accounting

question 65

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) Debt securities are classified as trading debt investments, while equity securities are classified as held-to-maturity equity investments.
• C) Debt securities earn interest revenue, while equity securities may earn dividend revenue.
• D) Debt securities of all types have a maturity date, while only a few equity securities have a maturity date.

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Definitions:

Budget Constraint

An economic model that represents all the combinations of goods and services that a consumer can afford with a fixed amount of income.

Goods

Physical items that are produced and consumed by individuals or businesses to satisfy needs or wants.

Marginal Rate

The rate at which one variable changes relative to a change in another variable, often used in the context of marginal tax rates or marginal rates of substitution.

Convex Preferences

A preference structure where the consumer prefers mixed bundles of goods to extreme bundles, represented graphically by a bowed-inward indifference curve.