Asked by Cassie Collins on Jun 25, 2024
Verified
Debt securities are recorded at cost when purchased,and interest revenue for investments in debt securities is recorded when earned.
Debt Securities
Financial instruments representing money borrowed that must be repaid, which include bonds, bills, and notes issued by governments or corporations.
Interest Revenue
The income earned from lending money or from investing in interest-bearing financial instruments.
- Understand the accounting treatment for purchases and interest revenue of debt securities.
Verified Answer
SG
Shamini GovindasamyJun 27, 2024
Final Answer :
True
Explanation :
Debt securities are typically recorded at cost when purchased, and interest revenue is recognized over time as it is earned on the investment. This follows the general accounting principle of recording assets at their historical cost and recognizing revenue when it is earned, rather than when cash is received.
Learning Objectives
- Understand the accounting treatment for purchases and interest revenue of debt securities.