Trading (debt) securities are:Multiple ChoiceIntended to be held to maturity.Recorded at cost and then reported at cost over the life of the investment.Recorded at cost and then reported at fair value on the balance sheet.Always classified as Long-Term Investments.Reported at historical cost and then adjusted for the amortized amount of any difference between cost and maturity value.
Question
Trading (debt) securities are:Multiple ChoiceIntended to be held to maturity.Recorded at cost and then reported at cost over the life of the investment.Recorded at cost and then reported at fair value on the balance sheet.Always classified as Long-Term Investments.Reported at historical cost and then adjusted for the amortized amount of any difference between cost and maturity value.
Solution
The correct answer is: "Recorded at cost and then reported at fair value on the balance sheet."
Trading securities are a type of investment typically made for the purpose of short-term profit. They are bought and sold for the purpose of making a profit from the change in their prices. When these securities are initially acquired, they are recorded at cost. However, at the end of each reporting period, they are reported at their fair value on the balance sheet. Any unrealized holding gains or losses are included in earnings.
Similar Questions
Investments in debt securities that the company actively manages and trades for profit are referred to as short-term debt investments in:Multiple ChoiceHeld-to-maturity securities.Available-for-sale securities.Trading securities.Realizable securities.Liquid securities.
Debt securities that a company intends and is able to hold until maturity are known as:Multiple ChoiceConsolidation securities.Held-to-maturity securities.Available-for-sale securities.Equity method investments.Trading securities.
At acquisition, debt securities are:Multiple ChoiceRecorded at cost.Recorded at the amount of interest that will be received over the life of the security.Recorded at cost plus the amount of dividend income to be received.Not recorded, because no interest is due yet.Recorded at their cost, plus total interest that will be received over the life of the security.
Investments in trading securities:Multiple ChoiceInclude only equity securities.Are reported as current assets.Are long-term investments.Are reported at their cost, no matter what their fair value.Are intangible assets.
________ are marketable securities that are short-term debt obligations sold by the U.S. government to raise money.Multiple ChoiceCommercial certificates of depositsU.S. Treasury billsEurodollar depositsSecured loansTrade credits
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