Current Accounting for an Available-For-Sale AFS)security Is Consistent with

question 31

Multiple Choice

Current accounting for an available-for-sale AFS) security is consistent with

• A)The financial capital maintenance concept of income because AFS security unrealized gains and losses are reported in earnings.
• B)The financial capital maintenance concept of income because AFS security unrealized gains and losses are reports in other comprehensive income.
• C)The physical capital maintenance concept of income because AFS security unrealized gains and losses are reported in earnings.
• D)The physical capital maintenance concept of income because AFS security unrealized gains and losses are reported in other comprehensive income.

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Definitions:

Marketable Securities

Financial instruments that can easily be converted to cash without a significant loss in value.

Near Cash

Assets that are not cash but can be quickly converted into cash with minimal loss of value.

Transit Float

The time difference between when a check is deposited and when the funds are credited to the depositor's account, during which the funds are in transit.

Check Clearing

The process through which banks settle transactions made by checks, transferring funds from the issuer's account to the recipient's account.