Question

Bonds that are purchased with the intent of selling them in the near future to take advantage of short-term price changes are classified as: a. Securities available-for-sale. by. Consolidating securities. c. Held-to-maturity securities. d. Trading securities.

Answer 1

Answer:

The correct answer is letter "D": Trading securities.

Explanation:

Trading securities are assets purchased to be traded within a period shorter than one year. According to the Generally Accepted Accounting Principles (GAAP), firms must classify their investments when they are purchased, in such a case, investments can be held for trading, held to maturity or available for sale.

Trading securities are typically sold not too long after they were acquired. They are recorded at fair value and the unrealized gains or losses are registered in the earnings account.