Increases in the market value of available-for-sale securities increase total stockholders' equity,but increases in the market value of trading securities do not increase total stockholders' equity.

Question

Quizplus · Accepted Answer

Increases in the market value of both available-for-sale and trading securities can increase total stockholders' equity, but they are reported differently in financial statements. Available-for-sale securities' unrealized gains are reported in other comprehensive income, while trading securities' unrealized gains are reported in net income.

Increases in the Market Value of Available-For-Sale Securities Increase Total