1. Trading securities are securities bought and held primarily for sale in the near term to generate income on short-term price differences.

2.Unrealized holding gains and losses are recognized in net income for available-for-sale debt securities.

3.Companies do not report changes in the fair value of available-for-sale debt securities as income until the security is sold.

4.Companies report trading securities at fair value, with unrealized holding gains and losses reported in net income.

5.Equity security holdings between 20 and 50 percent indicates that the investor has a controlling interest over the investee.

6.The Unrealized Holding Gain/LossEquity account is reported as a part of other compre-hensive income.

7. The accounting profession has concluded that an investment of more than 50 percent of the voting stock of an investee should lead to a presumption of significant influence over an investee.

8.Changes in the fair value of a company's available-for-sale debt instruments are included as part of earnings in any given period.

9.A reclassification adjustment is necessary when a company reports realized gains/losses as part of net income but also shows unrealized gains/losses as part of other comprehensive income.

10.If a company transfers held-to-maturity securities to available-for-sale securities, the unrealized gain or loss is recognized in income.

11.Revenue is recognized in the accounting period when the performance obligation is satisfied.

12.The first step in the revenue recognition process is to identify the separate performance obligations in the contract.

13.When a contract modification is treated as a separate performance obligation or prospectively, the same amount of revenue is recognized before and after the modification.

14.A performance obligation is a written guarantee in a contract to provide a product or service to a customer.

15.Companies rarely have to allocate the transaction price to more than one performance obligation in a contract.

16.When a company sells a product but gives the buyer the right to return it, revenue should not be recognized until the sale is collected.

17.The most popular input measure used to determine the progress toward completion in long-term contracts is the cost-to-cost basis.

18.If the difference between the Construction in Process and the Billings on Construction in Process account balances is a debit, the difference is reported as a current asset.

19.The Construction in Process account includes only construction costs under the percentage-of-completion method.

20.Under the completed-contract method, companies recognize costs only when the contract is completed.

21.The principal advantage of the completed-contract method is that reported revenue reflects final results rather than estimates.

22.Companies must recognize the entire expected loss on an unprofitable contract in the current period under the percentage-of-completion method but not the completed-contract method.