Which of the Following Statements Regarding Available-For-Sale Equity Investments Is

question 19

Multiple Choice

Which of the following statements regarding available-for-sale equity investments is true?

• A)The realized gain on sale is determined by comparing the carrying value of the investment with its selling price.
• B)Income is affected by temporary changes in market value.
• C)All equity security investments are classified as noncurrent.
• D)Permanent declines in value are reported on the income statement.

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Definitions:

Accounting Equation

The foundational principle of double-entry bookkeeping that states assets equal liabilities plus equity.

Business Activity

Any action that is engaged in for the primary purpose of making a profit, including operations, marketing, and production.

Planning

The process of outlining business objectives, strategies, and actions to achieve those objectives.

Treasury Bonds

Long-term government securities issued with the promise of payment upon maturity with a fixed interest rate.