FASB Statement 124, Accounting for Certain Investments of Not-For-Profit Organizations

question 128

Multiple Choice

FASB Statement 124, Accounting for Certain Investments of Not-for-Profit Organizations:

• A) Requires that investments in equity securities be carried at book value.
• B) Requires that investments accounted for under the equity method be adjusted to fair value at the end of the accounting period.
• C) Requires that investments in debt securities be carried at fair value.
• D) Requires that investments in consolidated subsidiaries be reported as permanently restricted.

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Definitions:

Principal

The original sum of money borrowed in a loan or invested, excluding any interest or dividends.

Business Activity

Business activity involves actions taken by companies or entrepreneurs to produce, sell, or trade goods and services to generate profit.

General Rule

A widely accepted standard or procedure that is typically followed in a particular field or situation.

Agent

An individual or entity authorized to act on behalf of another, often in business transactions, creating an agency relationship.