Asked by Dekia Mitchell on May 10, 2024

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All of the following statements regarding accounting for trading debt securities under U.S.GAAP are true except:

A) The entire portfolio of trading securities is reported at fair value.
B) An unrealized gain or loss from a change in fair value is reported in the income statement.
C) An unrealized gain or loss is recorded with an adjusting entry when the securities are sold.
D) An unrealized gain or loss is recorded with an adjusting entry at the end of each period.
E) Unrealized gains and losses are recorded in a temporary account that is closed to Income Summary at the end of each period.

Unrealized Gain

The paper profit attributed to an investment that has increased in value but has not yet been sold by the investor.

Trading Debt Securities

The act of buying and selling debt instruments, such as bonds or debentures, often for short-term profit.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing income and expenses.

  • Familiarize oneself with the accounting practices for dealing with realized and unrealized gains or losses pertaining to diverse securities.
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UG
UMANG GUPTAMay 16, 2024
Final Answer :
C
Explanation :
An unrealized gain or loss is not recorded with an adjusting entry when the securities are sold. Instead, a realized gain or loss is recognized at the time of sale.