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

According to the context of investments in securities, how is a 'security' best defined?

A physical product manufactured by a company for sale to customers.

A financial instrument that represents ownership in a corporation (stock), a creditor relationship with a governmental body or corporation (bond), or rights to ownership as represented by an option.

A tangible asset such as inventory or equipment held for sale in the ordinary course of business.

A service provided by a financial institution to its clients.

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Verified step by step guidance

Step 1: Begin by understanding the term 'security' in the context of investments. A security is a financial instrument, not a physical product or tangible asset.

Step 2: Recognize that securities can represent ownership in a corporation, such as stocks, or a creditor relationship, such as bonds. They may also include rights to ownership, such as options.

Step 3: Eliminate incorrect definitions, such as 'a physical product manufactured by a company,' 'a tangible asset,' or 'a service provided by a financial institution,' as these do not align with the financial accounting definition of securities.

Step 4: Focus on the correct definition: A security is a financial instrument that represents ownership in a corporation (stock), a creditor relationship with a governmental body or corporation (bond), or rights to ownership as represented by an option.

Step 5: Apply this understanding to classify and analyze securities in financial accounting contexts, ensuring clarity in distinguishing them from other types of assets or services.