Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which term refers to the monetary gain or loss of an investment over time?

Diversification

Principal

Liquidity

Return

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Verified step by step guidance

Understand the concept of 'Return': In financial accounting, 'Return' refers to the monetary gain or loss generated by an investment over a specific period of time. It is a key measure used to evaluate the performance of an investment.

Differentiate 'Return' from other terms: Diversification refers to spreading investments across various assets to reduce risk. Principal is the original amount invested or loaned. Liquidity refers to how quickly an asset can be converted into cash without affecting its market price.

Recognize that 'Return' is the correct term for monetary gain or loss: It directly measures the financial outcome of an investment, including both income (e.g., dividends, interest) and capital gains or losses.

Understand how 'Return' is calculated: The formula for return is typically expressed as:

\frac{(Ending Value - Beginning Value) + Income}{Beginning Value}

. This formula accounts for changes in value and any income generated during the investment period.

Apply the concept of 'Return' in decision-making: Investors use return to assess the profitability of investments and compare different opportunities. A higher return generally indicates better performance, but it should also be evaluated in the context of risk.