Which of the following statements is true about investments categorized as trading securities?
A)They are valued on the balance sheet at cost.
B)They can consist of debt,but not equity,securities.
C)They are purchased to be held to maturity.
D)Changes in market value are reflected in net income.

Question

Quizplus · Accepted Answer

Trading securities are bought and held with the intention of selling them in the near future to generate profits from short-term price movements. Changes in the market value of trading securities are reflected in net income through the income statement. A is incorrect because trading securities are valued on the balance sheet at fair value, not cost. B is incorrect because trading securities can consist of both debt and equity securities. C is incorrect because trading securities are not purchased to be held to maturity.

Which of the Following Statements Is True About Investments Categorized