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 of the following correctly defines a role of investments in securities for a business?

To record all company expenses in the income statement.

To reduce the company's equity by issuing more shares.

To allocate excess cash into financial instruments to earn a return.

To increase the company's liabilities through borrowing.

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Verified step by step guidance

Understand the concept of investments in securities: Investments in securities refer to the allocation of excess cash by a business into financial instruments such as stocks, bonds, or mutual funds to earn a return on the investment.

Analyze the options provided in the question: Each option represents a different financial activity or concept. Evaluate which one aligns with the purpose of investments in securities.

Option 1: 'To record all company expenses in the income statement' - This is incorrect because recording expenses is part of financial reporting, not related to investments in securities.

Option 2: 'To reduce the company's equity by issuing more shares' - This is incorrect because issuing shares affects equity and capital structure, not investments in securities.

Option 3: 'To allocate excess cash into financial instruments to earn a return' - This is correct because it directly defines the role of investments in securities for a business. Investments are made to utilize surplus cash effectively and generate additional income.