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

Presented below is information related to equipment owned by Suarez Company. Which of the following would be classified as an investment in securities rather than property, plant, and equipment on the balance sheet?

Office equipment used by Suarez Company employees

Machinery used in the company's manufacturing operations

A delivery truck used for company deliveries

Shares of stock in another corporation held for potential appreciation

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Verified step by step guidance

Step 1: Understand the classification of assets on the balance sheet. Assets are typically categorized into current assets, non-current assets, and investments. Property, plant, and equipment (PP&E) are tangible assets used in the operations of the business, while investments in securities are financial assets held for potential appreciation or income generation.

Step 2: Analyze the items provided in the problem. Office equipment, machinery, and delivery trucks are tangible assets used in the operations of Suarez Company. These are classified as property, plant, and equipment (PP&E) because they are directly involved in the company's operations.

Step 3: Consider the nature of shares of stock in another corporation. Shares of stock are financial instruments and are not used in the operations of Suarez Company. Instead, they are held for potential appreciation or income generation, which makes them an investment in securities.

Step 4: Differentiate between tangible and intangible assets. Tangible assets like office equipment, machinery, and delivery trucks have physical substance and are used in operations, while intangible or financial assets like shares of stock are held for investment purposes.

Step 5: Conclude that shares of stock in another corporation are classified as an investment in securities on the balance sheet, rather than property, plant, and equipment, because they are not used in the company's operations but are held for potential financial gain.