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

Interest earned on a savings account is _____.

recorded as a liability

treated as an operating expense

classified as a capital gain

considered investment income

Previous problemNext problem

Verified step by step guidance

Understand the concept of investment income: Investment income refers to earnings generated from financial assets, such as interest earned on savings accounts, dividends from stocks, or rental income from properties.

Recognize that interest earned on a savings account is not a liability. A liability represents an obligation to pay, whereas interest earned is income received by the account holder.

Clarify that interest earned is not treated as an operating expense. Operating expenses are costs incurred during the normal operations of a business, such as rent, utilities, or salaries, and do not include income earned.

Distinguish between capital gains and investment income: Capital gains arise from the sale of an asset at a higher price than its purchase price, while investment income includes earnings like interest, which do not involve asset sales.

Conclude that interest earned on a savings account is considered investment income because it represents earnings from a financial asset without involving operational activities or asset sales.