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

The cost of ______ is the minimum required return on a new investment.

inventory

capital

goods sold

depreciation

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Verified step by step guidance

Understand the concept of 'cost of capital': In financial accounting, the cost of capital refers to the minimum return that a company must earn on its investments to satisfy its investors or creditors. It represents the opportunity cost of using capital for a specific purpose.

Identify the incorrect options: Inventory, goods sold, and depreciation are terms related to operational or accounting processes, but they do not represent the minimum required return on a new investment.

Clarify why 'capital' is the correct answer: Capital is the financial resource used to fund investments, and its cost is the expected return required by investors or lenders. This is the benchmark for evaluating whether a new investment is worthwhile.

Relate the concept to decision-making: Companies use the cost of capital to assess the profitability of potential investments. If the expected return on an investment exceeds the cost of capital, the investment is considered viable.

Summarize the importance: Understanding the cost of capital is crucial for making informed financial decisions and ensuring that investments align with the company's financial goals and obligations.