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54 HASKINS & SELLS July What Constitutes Marketability? BA L A N C E sheets frequently show an item described as marketable securities. They are usually differentiated from investment securities on the theory that they are not only readily saleable but might be sold without any detriment, in its relations of stock control or operating affiliations, to the company which owns them. Such securities are usually considered to represent surplus funds which are either not required or may not be utilized to financial advantage in the business. They are temporary investments which usually yield more than bank deposits, and still may be converted immediately into current funds, in the event that such funds are needed. For this reason the item of marketable securities usually appears in the balance sheet immediately after the cash, and in some instances, as evidence of their availability, is even combined with call loans. In so far as these general theories are concerned all is smooth sailing. It is well that there should be a theory on which classification of items of this character is based. But when the accountant, whose duty it is to pass judgment on marketability, gets down to the point of specific securities, the task of deciding is not so simple. The question of marketability is quite apart from valuation, and has to do principally with the deciding whether or not the securities are properly included in the group of current assets. The best evidence of marketability is that the securities are listed on an exchange and traded in. Even inactive securities may be verified as to their marketability, as may unlisted securities traded in by brokers where bid and asked prices may be obtained. But the instances of supreme difficulty are those where securities are not listed, no bid or
Object Description
Title |
What constitutes marketability? |
Author |
Anonymous |
Subject |
Securities |
Citation |
Haskins & Sells Bulletin, Vol. 06, no. 07 (1923 July), p. 54-55 |
Date-Issued | 1923 |
Source | Originally published by: Haskins & Sells |
Type | Text |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi Libraries. Accounting Collection |
Date-Digitally Created | 2009 |
Identifier | HS Bulletin 6-p54a |