Unrealized Holding Gains and Losses on Trading Securities Are Included

question 150

Multiple Choice

Unrealized holding gains and losses on trading securities are included in earnings because:

• A) They measure the success or failure of taking advantage of short-term price changes.
• B) The IRS mandates the inclusion.
• C) The SEC mandates the inclusion.
• D) They measure the book value of the securities in the balance sheet date.

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Definitions:

Financing

The act of providing funds for business activities, purchases, or investments, typically involving loans, equity investments, or other financial instruments.

Financial Institution

An establishment that focuses on dealing with financial transactions, such as investments, loans, and deposits.

Security Interest

A legal claim or right granted over assets as collateral for the performance of an obligation or repayment of a debt.

Caveat Emptor

A Latin phrase meaning "let the buyer beware," indicating that the buyer assumes the risk for the quality and condition of goods purchased unless they are protected by warranty.