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

Which of the following situations would normally involve long-term financing?

Paying monthly utility bills

Buying office supplies for daily use

Covering short-term payroll expenses

Purchasing new manufacturing equipment expected to last 10 years

Previous problemNext problem

Verified step by step guidance

Understand the concept of long-term financing: Long-term financing refers to funding obtained for assets or projects that have a useful life extending beyond one year. It is typically used for investments in fixed assets or large-scale projects.

Analyze the options provided: Paying monthly utility bills, buying office supplies for daily use, and covering short-term payroll expenses are all examples of short-term expenses. These are recurring or operational costs that do not require long-term financing.

Focus on the correct answer: Purchasing new manufacturing equipment expected to last 10 years is a capital expenditure. Since the equipment has a long useful life, it is appropriate to use long-term financing to match the duration of the asset's benefit.

Explain the matching principle: In financial accounting, the matching principle suggests that the financing method should align with the duration of the asset's use. Long-term financing is suitable for assets like manufacturing equipment because the repayment period can be spread over the asset's useful life.

Conclude the reasoning: Long-term financing is typically used for investments in fixed assets, such as manufacturing equipment, because these assets provide benefits over an extended period and require significant upfront costs that are impractical to cover with short-term funds.