Changes in the value of available-for-sale securities
A) are reported as part of stockholders' equity
B) are recognized on the income statement
C) are not recognized
D) are recognized on the income statement and as part of stockholders' equity

Question

Quizplus · Accepted Answer

Changes in the value of available-for-sale securities are reported as part of other comprehensive income, which is a component of stockholders' equity, rather than being recognized on the income statement. This allows for the unrealized gains or losses on these securities to be accounted for without affecting net income until they are actually realized.

Changes in the Value of Available-For-Sale Securities