Question

Brown Company's short-term investment account balance decreased by $14,000. No other information is available. This means that Brown

1) incurred a loss
2) made a profit
3) had no change in profit or loss
4) cannot be determined

Answer 1

4) cannot be determined

The impact of Brown Company's investment account balance decreasing by $14,000 on profit or loss cannot be determined without further information regarding the transactions involved.

Step-by-step explanation:

When Brown Company's short-term investment account balance decreased by $14,000 and no other information is available, it cannot be determined whether the company incurred a loss, made a profit, or had no change in profit or loss.

This decrease could be the result of a variety of transactions, such as the sale of investments for either more or less than their original purchase price,

or redemption of investments at maturity for the exact amount initially invested. Without specific details about the transactions that caused the decrease, it is not possible to accurately assess the impact on the company's profits or losses.

Based on the information provided, if Brown Company's short-term investment account balance decreased by $14,000, it means that they incurred a loss.

When the account balance decreases, it indicates a negative change in the value of their investments, resulting in a loss.