Investment: It is a financial term which refers to spend or deposit money to get the financial benefits. The different ways in which a firm can invest are mentioned below: Long-term investments Short-term investments Short-term investments: It includes such investments which are highly liquid in nature as these can be convert in form of cash easily during the period of 1 year. Journal Entry : It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health. Rules of Journal Entry: The rules for journal entry are defined by 5 accounting components, Assets: Increase in asset should be debit and decrease should be credit. Liabilities: Increase in liabilities should be credit and decrease should be debit. Equity: Increase in Equity should be credit and decrease should be debit. Expense: Increase in expense should be debit and decrease should be credit. Revenue: Increase in revenue should be credit and decrease should be debit. Financial Statements: It refers to the statements that are being made to show the financial results and financial position of a business or a company. To prepare: Adjusting entry for trading securities.

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Chapter C, Problem 7E

To determine

Investment:

It is a financial term which refers to spend or deposit money to get the financial benefits.

The different ways in which a firm can invest are mentioned below:

Long-term investments

Short-term investments

Short-term investments:

It includes such investments which are highly liquid in nature as these can be convert in form of cash easily during the period of 1 year.

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

The rules for journal entry are defined by 5 accounting components,

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

Financial Statements:

It refers to the statements that are being made to show the financial results and financial position of a business or a company.

To prepare: Adjusting entry for trading securities.

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