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

A 30-year home mortgage is a classic example of:

a current asset

a long-term liability

an equity security

a short-term investment

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Understand the concept of a mortgage: A mortgage is a loan secured by real estate, typically used to purchase a home. It involves a borrower making regular payments over a specified period, such as 30 years.

Classify the nature of the mortgage: Since the mortgage spans 30 years, it is not expected to be paid off within the current accounting period (usually one year). This makes it a long-term financial obligation.

Define long-term liability: In financial accounting, a long-term liability refers to obligations that are due beyond one year or the operating cycle of the business. Examples include mortgages, bonds payable, and long-term loans.

Eliminate incorrect options: A current asset refers to resources expected to be converted into cash or used within one year, which does not apply to a mortgage. Equity security represents ownership in a company, and a short-term investment is typically held for less than a year. None of these fit the description of a 30-year mortgage.

Conclude that the correct classification for a 30-year home mortgage is a long-term liability, as it represents a financial obligation extending beyond one year.