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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Why might a business invest cash in temporary investments?

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

To explain: The reasons a business invests in temporary investments

Explanation

A business invests in temporary investments for the following reasons:

  • To earn interest revenue from bond investments
  • To earn dividend revenue from stock investments
  • To recognize gain from investments, when the market price of the investment rises

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