ACCT 2134 Debt Investments

Temporary investments such as in trading securities are

• recorded at cost but reported at fair market value

• recorded at cost and reported at cost

• recorded at cost but reported at lower of cost or fair market value

• recorded at fair market value and reported at fair market value

Interest revenue on bonds is reported as

• an addition to the investment in bonds account

• part of comprehensive income but not as part of net income

• part of other income

• part of operating income

Held to Maturity securities are accounted for using

• the fair market value

• the net realizable value method

• either the fair market value or the cost method depending on management's intent

• the cost method

The Valuation Allowance Account

• Is a contra asset account

• is used for held to maturity investments

• is reported on the balance sheet as an addition or deduction from cost of the securities

• Is an adjunct account

Which of the following is not true about Available for Sale Securities?

• They are reported at Fair Market Value

• Unrealized gains or losses impact net income

• They are securities the company intends to sell in the future, but not in the near term

• The valuation allowance for available for sale investments is reported on the balance sheet