Asked by clara batista on Jul 02, 2024
Verified
Investments in debt securities that the company actively manages and trades for profit are referred to as short-term debt investments in:
A) Available-for-sale securities.
B) Held-to-maturity securities.
C) Trading securities.
D) Realizable securities.
E) Liquid securities.
Trading Securities
Financial instruments such as shares, bonds, or other securities that are purchased with the intention of selling them in the short term to profit from price fluctuations.
Debt Securities
Financial instruments representing money borrowed that must be repaid, such as bonds, bills, or notes.
Available-for-Sale Securities
Financial assets that a company intends to sell within a short period but can hold onto for an indefinite period, classified as neither held for trading nor held to maturity.
- Explain and distinguish among different investment categories (held-to-maturity, available-for-sale, trading securities).
Verified Answer
LM
Lovish Mittal7 days ago
Final Answer :
C
Explanation :
Short-term debt securities that the company actively manages and trades for profit are referred to as trading securities. Option A, available-for-sale securities, refers to debt securities that are not actively managed and may be sold if the company needs cash. Option B, held-to-maturity securities, refers to debt securities that the company intends to hold until maturity. Option D, realizable securities, is not a commonly used term in accounting for debt securities. Option E, liquid securities, does not specify whether the securities are actively managed and traded for profit.
Learning Objectives
- Explain and distinguish among different investment categories (held-to-maturity, available-for-sale, trading securities).