Balance Sheet

Question 1

Trading securities

Answer 1

Securities that you plan on trading and profiting from in the near future

• Listed on the balance sheet at fair value
• Unrealized gains and losses are recognized on income statement
• dividend and interest income are recognized in the income statement.

Question 2

Available for sale securities

Answer 2

Securities that you don’t plan on trading in the near future but you won’t hold them until maturity

• Reported on the balance sheet at fair value
• Unrealized gains and losses are recognized in “Other Comprehensive Income” which is located in Stockholders’ Equity
• dividend and interest income are recognized in the income statement.

Question 3

Held to maturity securities

Answer 3

Securities that will be held to maturity

• Reported on the balance sheet at amortized cost.
• Can be classified as a current/noncurrent asset, depending on the maturity