Financial Assets--Effects of Transactions

question 107

Essay

Financial assets--effects of transactions
Five events involving financial assets are described below:
(a.)Received dividends earned on investment in marketable securities.
(b.)Invested excess cash in marketable securities.
(c.)Determined that a specific account receivable is worthless and wrote it off against the allowance for doubtful accounts.
(d.)Made sale of merchandise for cash.
(e.)Sold available for sale marketable securities at a loss.Cash proceeds from the sale were equal to the current market value reflected in the last balance sheet.
Indicate the effects of each independent transaction or adjusting entry upon the financial measurements shown in the column headings below.Use the code letters,I for increase,D for decrease,and NE for no effect.

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Definitions:

Ask Price

The ask price is the lowest price a seller is willing to accept for a security, commodity, or currency in financial markets.

Face Value

The nominal value printed on a bond, note, or financial document, representing its worth at maturity or when redeemed.

Term Structure

Refers to the relationship between interest rates or bond yields and different terms or maturities.

Interest Rates

The proportion of a total amount of money levied for borrowing it, usually represented as an annual rate.