Question

gy.com/assigny 2332078316/assessment Question 10 Short-term investments 0 а 0 b are investments in debt securities or equity securities in which the investor holds less than 50 percent of the voting stock and that the investor plans to sell in the very near future are debt and equity Securities that the investor expects to hold for more than a year are investments in debt and equity securities that are highly liquid and that the investor intends to convert to cash within one year are investments in debt securities that the investor intends to hold until maturity e d Question 11 Which of the following securities pay dividends? a Ob е с d corporate bonds debt securities common stocks Treasury bills Question 12 Unrealized holding gains or losses on trading investments are reported in the Ob OC current assets section of the balance sheet Intangible assets section of the balance sheet other revenues and expenses section of the income statement accumulated other comprehensive income section of stockholders equity O d

Answer 1

10. (c) are investments in debt and equity securities that are highly liquid and that the investor tends to convert to cash within one year.

Explanation: The main characteristic of classifying an Investment as short term or long term is the liquidity and intended period of holding of the investments. The investments that are liquid (can be converted into cash within a week or less) and intended to be held for a period of less than one year are classified as short-term investments.

11. (c) common stocks

Explanation: Dividends are paid to the common and preferred stockholders of a corporate entity. Bonds and debt securities holders are paid interest at predetermined rates and the benefit of treasury bills is recognized from the difference in purchase and sale price.

12. (c) Other revenue and expenses section of the income statement.

Explanation: The unrealized gains or losses of trading investments is recognized in Income statement under heading of Other revenue and expense section and accordingly increase or decrease the EPS. However, such unrealized gains or losses does not affect the cash flow statements.