Concept explainers
Concept introduction:
Debt securities:
Debt securities are financing instrument which represents the loan taken from the creditor and usually these securities pay defined interest rate on the amount borrowed. The several types of debt instruments are bonds, certificate of deposits,
Equity securities:
Equity securities are financing instrument issued by a company representing the share in the capital financed by the investor. These securities gives right of ownership in the share capital of the company. Equity share holders are paid dividend and share the
Short-term investments:
Short-term investments are investments which are hold for a period of one year or less and which are easily convertible into cash.
Long-term investments:
Long-term investments are investments which are to be hold for a period of more than one year which are not easily convertible into cash in short term.
To discuss:
The allowance to adjust the short term investment to market.
Want to see the full answer?
Check out a sample textbook solutionChapter A2 Solutions
Cornerstones of Financial Accounting
- What distinguishes current liabilities from long-term liabilities?arrow_forwardWhat interest rates should be used in calculating the amount of interest that should be capitalized and how should they be calculated? What method should be used to calculate the amount of interest to be capitalized?arrow_forwardWhat types of investments generate interest income and how is interest income reported?arrow_forward
- What is the relationship between a discount rate (or IRR) and a capitalization rate? What causes differences between them?arrow_forwardWhat makes current liabilities different from long term liabilities? Provide an example of a current asset and how it might be used to finance current assets.arrow_forwardWhat determines the anticipated interest rate payout for an investment?arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning