An investor has made one short-term investment in shares.If the shares were bought on July 23 for $10,000,and they are worth $13,500 as of year-end,the increase in value will result in:

Question

Quizplus · Accepted Answer

The increase in value of the shares is an unrealized gain, which means that it has not been realized through a sale or dividend payment. Therefore, option D is the best choice as it reflects an unrealized gain reported on the income statement. Option A is incorrect because the net investment would be adjusted to reflect the current market value ($13,500) on the year-end balance sheet. Option B is incorrect because there is no mention of dividend income in the scenario. Option C is incorrect because the increase in value would not directly impact retained earnings.

An Investor Has Made One Short-Term Investment in Shares