Question 7* a:

Which type of securities owned by a company would be those that the company intends to sell within a short period of time in order to generate profits from selling them for more than the price at which they were purchased?

• a) held-to-maturity securities
• b) trading securities
• c) profit securities
• d) none of the above

b:

Which of the following is the correct way to estimate the uncollectible allowance based on the percentage-of-sales method?

• a) The percentage of total outstanding accounts receivable to total sales.
• b) The percentage of total sales to credit sales.
• c) The percentage of uncollectible accounts receivable to total sales.

c:

Both trading securities and available-for-sale securities are reported on the balance sheet at fair value; which of the following are the correct statements regarding the reporting of unrealized holding gains and/or losses related to these two types of securities?

• a) Unrealized holding gains/losses for trading securities are reported on the income statement as part of net income; those gains/losses related to available-for-sale securities are reported on the balance sheet as a component of shareholders' equity.
• b) Unrealized holding gains/losses for trading securities are reported on the balance sheet as a component of shareholders' equity; those gains/losses related to available-for-sale securities are reported on the income statement as part of net income.
• c) Unrealized holding gains/losses for both trading securities and available-for-sale securities are reported on the income statement as part of net income.