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

Why might a financial advisor suggest donating securities to a charity?

To allow the donor to avoid paying capital gains tax on appreciated securities

To reduce the charity's tax liability

To increase the market value of the donated securities

To guarantee a fixed return on the donor's investment

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Verified step by step guidance

Understand the concept of capital gains tax: Capital gains tax is a tax on the profit realized from the sale of an asset, such as securities, that has increased in value over time. Donating appreciated securities can help avoid this tax.

Recognize the tax benefit for the donor: When a donor gives appreciated securities directly to a charity, they can avoid paying capital gains tax on the appreciation, which would otherwise be due if the securities were sold.

Understand the charity's benefit: Charities, as tax-exempt organizations, do not pay taxes on the appreciated value of the securities they receive. This means the full value of the securities can be used for charitable purposes.

Clarify the incorrect options: Donating securities does not reduce the charity's tax liability (since they are already tax-exempt), does not increase the market value of the securities, and does not guarantee a fixed return on the donor's investment.

Conclude the reasoning: The primary reason a financial advisor might suggest donating securities to a charity is to allow the donor to avoid paying capital gains tax on appreciated securities, while also benefiting the charity.