Question

The generally accepted accounting principles for trading securities include all of the following except:________a. Initially recording the investment at costb. Subsequently valuing the investment at fair valuec. Including unrealized holding gains and losses as a component of stockholders' equityd. Including interest and dividend revenue as part of income

Answer 1

Answer:

c. Including unrealized holding gains and losses as a component of stockholders' equity

Explanation:

Any unrealized holding gains or losses of Held for Trading securities must be included in the income statement under unrealized gains or losses. They affect net income, because a gain resulting from an increase in market value will increase net income, and a decrease in market will decrease net income.