Which of the following properly describes a difference between the accounting for a trading security relative to the accounting for an available-for-sale security for a particular investment?

Question

Quizplus · Accepted Answer

The accounting for a trading security and an available-for-sale security differs in their treatment of unrealized gains and losses. For a trading security, unrealized gains and losses are recognized in net income for the period. For an available-for-sale security, unrealized gains and losses are recognized in other comprehensive income until the security is sold, at which point they are recognized in net income. Therefore, net income for a particular period may differ between the two alternatives. Choices A, B, and D are incorrect because they do not properly describe a difference between the two alternatives.

Which of the Following Properly Describes a Difference Between the Accounting