BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter A2, Problem 1DQ
Textbook Problem

How do long-term investments differ from short-term investments?

Expert Solution
To determine

The difference between Long term and Short term investments.

Explanation of Solution

Long term investments are the investments that a company usually intends to hold for more than 1 year whereas Short term investments are defined as investments that an investor is expected to hold for 1years or less, then they can sell or covert those investments into cash.

Examples of Short term investments are Money market funds, short term bonds, certificates of deposits etc.

Long term investments are shown on the asset side of the company’s balance sheet that represents the investments of the company they include: Bonds, stocks, cash, real estate etc.

Long term investments are easier and safe to plan.

Basis Long term investments Short term investments
Definition the investments that a company usually intends to hold for more than 1 year investments that an investor is expected to hold for 1years or less, then they can sell or covert those investments into cash
Example Bonds, stocks, cash, real estate Money market funds, short term bonds, certificates of deposits etc.
Expectations They expect a good amount of return Do not expect much return
Goals Long term goals like building resources to help pay for a comfortable retirement. Short term goals like purchase of a car or funds for a vacation.
Risks Risk associated is volatility, fluctuations in the financial market. Risk associated is Purchasing power risk- risk that the investment’s return will not keep up with the inflation.

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Chapter A2 Solutions

Cornerstones of Financial Accounting
Ch. A2 - How does the consolidated balance sheet differ...Ch. A2 - What is the allowance to adjust short-term...Ch. A2 - Why is it necessary to eliminate transactions...Ch. A2 - What is the difference between an asset...Ch. A2 - What is goodwill, and how is it calculated?Ch. A2 - Investments in equity securities are deemed to be...Ch. A2 - Debt investments that management intends to sell...Ch. A2 - Which of the following is a reason businesses...Ch. A2 - Which of the following terms is not used for debt...Ch. A2 - How are held-to-maturity securities values? a....Ch. A2 - The Boss Inc. reported an unrealized gain on its...Ch. A2 - EMK Corp. is holding two bonds to maturity, both...Ch. A2 - Refer to the information for Shackley above. Which...Ch. A2 - Refer to the information for Shackley above....Ch. A2 - A2-10 JFK Inc. buys 30% of the shares outstanding...Ch. A2 - Whopper Corporation owns a 40% interest in BigMac...Ch. A2 - When the market value of a companys...Ch. A2 - What account title will not appear on consolidated...Ch. A2 - Consolidated financial statements are required: a....Ch. A2 - Assume a parent has total assets of $6,000,000 and...Ch. A2 - Goodwill is calculated as the excess of the cost...Ch. A2 - Matching Accounting Methods and Investments...Ch. A2 - Trading Securities Pear Investments began...Ch. A2 - Available-for-Sale Securities Tolland Financial...Ch. A2 - Allowance for Available-for-Sale Securities...Ch. A2 - Adjusting the Allowance to Adjust Trading...Ch. A2 - Investment in Equity Securities 200 shares of...Ch. A2 - Fair Value and Equity Methods Nadal Corporation...Ch. A2 - Fair Value Method On January 1, 2019, Miller Inc....Ch. A2 - On January 1, 2019, Hill Corporation acquired 40%...Ch. A2 - Accounting for Investments in Equity Securities On...Ch. A2 - Investments in Trading Securities Maxwell Company...Ch. A2 - Consolidated Balance Sheet Augusta Inc. acquired...Ch. A2 - Consolidated Income Statement Johnson Inc. is the...Ch. A2 - Goodwill Pindar Corporation acquired all the...

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