If the Combined Market Value of Available-For-Sale Securities at the End

question 11

Multiple Choice

If the combined market value of available-for-sale securities at the end of the year is less than the market value of the same portfolio of available-for-sale securities at the beginning of the year,the difference should be accounted for by

• A) reporting an unrealized loss in security investments in the stockholders' equity section of the balance sheet.
• B) reporting an unrealized loss in security investments in the income statement.
• C) a footnote to the financial statements.
• D) a credit to Investment in Available-for-Sale Securities.

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Definitions:

Futures Contracts

Agreements to buy or sell a particular commodity or financial instrument at a predetermined price at a specific time in the future.

Profit (Loss)

The financial result of a company's operations and activities, determined by subtracting total expenses from total revenues over a given period.

Ounce

An ounce is a unit of weight commonly used in the United States and Britain, equivalent to 1/16 of a pound or about 28.35 grams.

Pounds

A unit of weight commonly used in the United States, equivalent to 0.453592 kilograms, or a British currency (GBP).