Asked by Matthew Mihatov on May 04, 2024
Verified
The entry to record the purchase of the Taylor shares on Feb 1 would include a
A) debit to Long-Term Trading Investments.
B) debit to Trading Investments.
C) debit to Strategic Investments.
D) debit to Investment in Associates.
Trading Investments
Securities that are purchased by a firm for the purpose of realizing a short-term profit.
Long-Term Trading Investments
Investments in stocks, bonds, or other securities that a company intends to hold for a period longer than a year to achieve long-term financial goals.
Strategic Investments
Investments made to gain a competitive advantage or achieve long-term goals rather than for short-term profit.
- Explore the reporting prerequisites for trading investments, including the management of dividends and gains/losses.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
B
Explanation :
The correct entry for purchasing shares intended for trading purposes is a debit to Trading Investments. This account reflects investments in securities that the company plans to buy and sell in the short term to generate profit from short-term price fluctuations.
Learning Objectives
- Explore the reporting prerequisites for trading investments, including the management of dividends and gains/losses.