CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Which of the following is (are) true about trading securities?

I. They are current assets.
II. They are reported at fair market value.
III. Changes in their reported value are allocated directly to retained earnings.
A. I, II and III
B. I and II
C. II and III
Explanation: Marketable securities classified as trading securities are financial securities purchased with the intent to sell in the near future. They are therefore categorized as current assets and reported at the fair market value on the date of the balance sheet. When the classification of a trading security is changed, the assignation of the security to the new account is carried out at the fair market value on the transfer date, with any gain or loss reflected separately on the income statement.

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