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

All of the following are reasons to invest in securities, except:

To diversify risk

To increase current liabilities

To gain influence over another company

To earn a return on idle funds

Previous problemNext problem

Verified step by step guidance

Understand the concept of investing in securities: Companies invest in securities for various reasons, such as earning returns, gaining influence, or diversifying risk. These investments are typically made to achieve financial or strategic goals.

Analyze the options provided in the question: Each option represents a potential reason for investing in securities. Carefully evaluate whether each aligns with the purpose of investing.

Option 1: 'To diversify risk' - This is a valid reason for investing in securities, as diversification helps reduce exposure to specific risks by spreading investments across different assets.

Option 3: 'To gain influence over another company' - This is another valid reason, as purchasing significant shares in another company can provide influence or control over its operations.

Option 4: 'To earn a return on idle funds' - This is also a valid reason, as companies often invest idle funds in securities to generate returns rather than leaving them unutilized. However, 'To increase current liabilities' is not a valid reason for investing in securities, as liabilities represent obligations, not investments.