A decrease in the fair value of a security that has not yet been realized through an actual sale of the security is called a(n):
A) Contingent loss.
B) Realizable loss.
C) Unrealized loss.
D) Capitalized loss.
E) Market loss.

Question

Quizplus · Accepted Answer

An unrealized loss is a decrease in the fair value of a security that has not yet been realized through an actual sale of the security. This is because the security has not been sold and therefore the loss is not yet realized. The other choices are incorrect. A contingent loss is a potential loss that is dependent on a specific event occurring in the future. A realizable loss is a loss that has been realized through the sale of an asset. A capitalized loss is a cost that has been incurred and is recorded as an asset instead of an expense. Finally, a market loss is a type of unrealized loss that occurs when the market value of a security declines.

A Decrease in the Fair Value of a Security That