A major difference in accounting for AFS investments versus HFT investments is:

Question

Quizplus · Accepted Answer

For AFS investments, gains and losses are recorded in other comprehensive income (OCI) until the investment is sold. At that point, the cumulative gain or loss in OCI is reclassified to net earnings. In contrast, gains and losses for HFT investments are recorded directly in net earnings as they occur. Therefore, C is the correct choice because it accurately describes a major difference in accounting for AFS and HFT investments. A, B, and D are incorrect because they either do not accurately describe a difference or are false statements.

A Major Difference in Accounting for AFS Investments Versus HFT