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

Investing your money earns you more money because of which of the following concepts?

Inventory turnover

Depreciation

Compound interest

Amortization

Previous problemNext problem

Verified step by step guidance

Understand the concept of compound interest: Compound interest is the process where the interest earned on an investment is reinvested, allowing the investment to grow exponentially over time. It is calculated on the initial principal and also on the accumulated interest from previous periods.

Differentiate compound interest from other terms in the problem: Inventory turnover refers to the efficiency of inventory management, depreciation is the allocation of the cost of an asset over its useful life, and amortization is the gradual repayment of a loan or the spreading out of an intangible asset's cost over time. None of these relate to earning more money through investment growth.

Recognize why compound interest is the correct answer: Compound interest directly relates to the growth of money through reinvestment of earnings, which is the key concept behind earning more money from investments.

Learn the formula for compound interest: The formula is \( A = P(1 + r)^n \), where \( A \) is the future value of the investment, \( P \) is the principal amount, \( r \) is the annual interest rate, and \( n \) is the number of compounding periods.

Apply the concept of compound interest in real-world scenarios: Understand how reinvesting earnings in savings accounts, bonds, or other investment vehicles can lead to exponential growth over time, emphasizing the importance of starting early and allowing time for compounding to work.