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Trading Securities definitions

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  • Trading Securities
    Short-term investments classified as current assets, intended for active buying and selling to profit from price changes.
  • Fair Value
    Current market price at which an asset could be bought or sold, used for subsequent measurement of investments.
  • Unrealized Gain
    Increase in investment value not yet sold, reported on the income statement and affecting equity.
  • Unrealized Loss
    Decrease in investment value not yet sold, shown on the income statement and reducing equity.
  • Realized Gain
    Profit recognized when an investment is sold for more than its book value at last revaluation.
  • Realized Loss
    Loss recognized when an investment is sold for less than its book value at last revaluation.
  • Dividend Revenue
    Income received from holding shares, classified as non-operating and reported separately on the income statement.
  • Current Asset
    Resource expected to be converted to cash or used within one year, including trading securities.
  • Income Statement
    Financial report where unrealized and realized gains or losses from trading securities are presented.
  • Journal Entry
    Accounting record documenting transactions such as purchases, sales, and value adjustments of investments.
  • Book Value
    Carrying amount of an investment on the balance sheet after adjustments for fair value changes.
  • Non-Operating Income
    Earnings from activities outside a company's main business, such as dividend revenue and investment gains.
  • Revaluation
    Process of updating the recorded value of an investment to reflect current fair value at reporting dates.
  • Equity
    Owner's residual interest in assets, increased by gains and decreased by losses from trading securities.
  • T Account
    Visual tool used to track increases and decreases in accounts like investments and unrealized gains or losses.