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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

When it comes to stock splits, experts advise young investors to:

Expect guaranteed higher returns solely because of the stock split.

Sell their shares immediately after a stock split to lock in profits.

Avoid investing in companies that announce stock splits.

Understand that stock splits do not increase the intrinsic value of their investment.

Previous problemNext problem

Verified step by step guidance

Understand the concept of a stock split: A stock split is a corporate action where a company divides its existing shares into multiple shares to boost liquidity. For example, in a 2-for-1 split, each shareholder receives an additional share for every share they own, but the total value of their investment remains the same.

Recognize the impact on intrinsic value: A stock split does not change the intrinsic value of the company or the total value of the investor's holdings. The price per share is adjusted proportionally to reflect the split, but the overall market capitalization of the company remains unchanged.

Avoid misconceptions: Young investors should not expect guaranteed higher returns solely because of a stock split. The split itself does not affect the company's fundamentals or future performance.

Understand the rationale for stock splits: Companies often announce stock splits to make their shares more affordable to a broader range of investors, which can increase trading activity and liquidity. However, this does not inherently make the company a better investment.

Focus on fundamentals: Instead of making investment decisions based solely on stock splits, young investors should evaluate the company's financial health, growth prospects, and market conditions to make informed decisions.