The Account Unrealized Gain (Loss) on Trading Securities Should Be

question 11

Multiple Choice

The account Unrealized Gain (Loss) on Trading Securities should be included in the

• A) Income statement as Other Revenue (Expenses)
• B) Balance sheet as an adjustment to the asset account
• C) Balance sheet as an adjustment to Stockholders' Equity
• D) Statement of Retained Earnings

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Definitions:

Equity Method

An accounting technique used by a company to record its investment in another company, where the investment's value is adjusted in accordance with the investee's performance.

Partial Equity Method

An accounting method used for investments, where the investor recognizes its share of the investee's earnings, but adjustments are less comprehensive than under the full equity method.

Initial Value Method

A technique in accounting where an investment is recorded based on its initial purchase cost, maintaining this value without considering subsequent adjustments unless a permanent decline occurs.

Single-Line Consolidation

A method of accounting in which an investor records the value of its investment in a subsidiary at cost plus any changes due to the investor's share in the subsidiary's income or loss, displayed in a single line in financial statements.