In USGAAP, Which of the Following Accurately Describe(s) the Effects of of Transactions

question 39

Multiple Choice

In U.S.GAAP, which of the following accurately describe(s) the effects of transactions involving investments on the statement of cash flows?

• A)When using the fair value method for trading securities and fair value hedges, both realized and unrealized gains and losses appear in net income.
• B)Dividends received from investee included in investor's cash flow from operations.
• C)When using the indirect method, add back realized holding losses, and subtract realized holding gains included in income for the period to derive cash flow from operations.
• D)All proceeds of sale of trading securities appear as [dis-]investing source of cash.
• E)all of the above

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Definitions:

Self-Dealing Managers

Managers or directors of a company who engage in transactions that benefit themselves at the expense or detriment of the company or its shareholders.

Business Judgment Rule

A legal doctrine that protects corporate executives' decisions when made in good faith and believed to be in the best interest of the company.

Corporate Opportunity

A legal doctrine that restricts leaders of a corporation from taking personal advantage of an opportunity that should belong to the corporation.

Safe Harbor

A provision in a law or regulation that provides protection from liability or penalty under specific situations or conditions.