Unrealized holding gains and losses on securities available for sale would have the following effects on retained earnings:
A) Option a
B) Option b
C) Option c
D) Option d

Question

Unrealized holding gains and losses on securities available for sale would have the following effects on retained earnings: 
A) Option a 
B) Option b 
C) Option c 
D) Option d

Quizplus · Accepted Answer

Unrealized holding gains and losses on securities available for sale impact the accumulated other comprehensive income (AOCI) account, which is a separate component of shareholders' equity. Therefore, these gains or losses do not affect retained earnings directly. The option (C) shows the correct treatment of unrealized holding gains and losses on securities available for sale in the statement of shareholders' equity.

Unrealized Holding Gains and Losses on Securities Available for Sale