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

1. What is one advantage of starting to invest as early as possible?

It eliminates all investment risks.

It guarantees higher returns regardless of market conditions.

It allows more time for compound interest to grow your investments.

It requires less knowledge about financial markets.

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 to earn additional interest over time. This creates a snowball effect, where the investment grows at an increasing rate.

Recognize the importance of time in compounding: The earlier you start investing, the more time your investment has to grow through compounding. This is because the interest earned in each period is added to the principal, and future interest is calculated on this larger amount.

Compare scenarios: If two individuals invest the same amount, but one starts earlier, the one who starts earlier will have a significantly larger investment at the end due to the longer compounding period.

Acknowledge that starting early does not eliminate risks: While starting early maximizes the benefits of compounding, it does not remove investment risks such as market volatility or economic downturns.

Conclude that the key advantage of starting early is the ability to leverage time to grow investments through compound interest, which is why this is the correct answer.