Chapter 12, Problem 12Q

To determine

Investments: Companies invest in stocks and bonds of other companies or governmental entity to deploy their excess fund, and/or for a specific business strategy.

Trading securities:

It refers to the buying and selling of short-term debt or equity securities to generate profits in the current period.

Available-for-sale securities:

Available-for-sale are short-term or long-term debt equity securities that are not classified as trading or held to maturity securities. These securities are readily sold in the short-term to receive return on investment.

To explain: The Classification guidelines for investments at a balance sheet date.