Asked by Banaz Fetah on May 03, 2024
Verified
Equity or debt securities designated by the investor intended to be held for a short period of time are usually classified as
A) available-for-sale securities.
B) trading securities.
C) fair value securities.
D) adjusted historical cost securities.
Equity Securities
Financial instruments representing ownership in a corporation, entity, or assets, such as stocks.
Short Period
A brief duration of time, particularly in accounting or financial contexts, often referring to less than one fiscal year.
Designated
Usually refers to something that has been officially assigned a particular status, role, or purpose.
- Acknowledge the situations prompting the selection of the fair value option in investment accounting.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
B
Explanation :
Short-term investments that are intended to be bought and sold for profit within a short period of time are classified as trading securities. Trading securities are reported at fair value on the balance sheet, and any unrealized gains or losses are recognized in net income. Available-for-sale securities are held for a longer period of time and not actively traded, while fair value and adjusted historical cost securities are not widely recognized classifications.
Learning Objectives
- Acknowledge the situations prompting the selection of the fair value option in investment accounting.