The Primary Difference in Accounting for Available-For-Sale Securities and Accounting

question 3

Multiple Choice

The primary difference in accounting for available-for-sale securities and accounting for trading securities is:

• A) Measuring the fair value of the long-term and short-term stock portfolios.
• B) Computing the cost at acquisition.
• C) Determining where the unrealized holding gain or loss on investments is reported in the financial statements; in current net income or in comprehensive income.
• D) Accounting for dividends received.

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Definitions:

Total Surplus

The combined total of consumer and producer surplus, indicating the overall net gain to society from producing and consuming goods and services.

Producer Surplus

The difference between what producers are willing to sell a product for and the price they actually receive.

Equilibrium Price

The selling price where the quantity of goods on offer is equal to the quantity consumers want to buy.

Consumer Surplus

The variance between the sum consumers are willing to shell out for a good or service and the sum they actually shell out.