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:

Activity Driver

A factor that influences or contributes to the expense of certain business operations, often used in activity-based costing.

High-volume Product Lines

Product categories within a company that produce or sell in large quantities, typically generating significant portions of revenue.

Cost Distortion

An inaccurate allocation of costs to products, often resulting from traditional costing methods that can overstate or understate the true costs of goods.

Activity-based Costing Systems

A method in accounting that assigns costs to products or services based on the activities that go into producing them, aiming to provide more accurate costing.