When should securities generally be recorded in financial statements?

Securities should generally be recorded in financial statements on the trade date because this is when the transaction is executed, which is the point at which the buyer and seller have legally agreed to exchange the securities. This recognition aligns with the principles of accrual accounting, which emphasize recognizing transactions when they occur rather than when cash is exchanged.

Recording securities on the trade date provides a more accurate representation of a company's financial position and performance, as it reflects the company's rights and obligations as soon as the transaction occurs. This approach is widely accepted in financial reporting standards, including Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), which require entities to recognize securities at the time of the trade.

Recognizing securities on the settlement date would mean waiting until the actual transfer of securities and payment occurs, which can misrepresent the entity's financial status by delaying the recognition of the transaction. Recording securities only at year-end or only upon sale would fail to capture the ongoing changes in the value of the securities and would not provide a complete picture of the financial assets held by the entity at any point in time.