A Credit Balance in the Account Allowance to Adjust Long-Term

question 10

Multiple Choice

A credit balance in the account Allowance to Adjust Long-Term Investments to Market is disclosed in the financial statements as a

• A)regular account in the stockholders' equity section of the balance sheet.
• B)contra account to Long-Term Investments.
• C)note to the financial statements.
• D)current asset.

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Definitions:

FIFO

An accounting method where the first items placed in inventory are the first sold or used.

Inventories

Quantities of goods in stock that are held by a business for the purpose of sale or production.

Retrospective Adjustment

An accounting practice where prior period financial statements are adjusted to reflect changes in accounting policies or correction of errors as if the new policy had always been applied.

Financial Statements

Reports that provide an overview of a company's financial condition, performance, and cash flows.