definitions Flashcards
long term investments
are
investments that are not readily convertible to cash or are not
intended to be converted into cash in the short term.
investments in securities include both ______ and _____ securities.
debt and equity
define debt securities
reflect a creditor relation such as investments in notes, bonds, and
certificates of deposit; they are issued by governments, companies,
and individuals.
define equity securities
reflect an owner relation such as
investments in shares of stock issued by companies.
accounting for investment in securities depend on what 3 factors
- security type
- The company intent to hold the securities either short-term or long-term.
- the investor’s % of ownership in the other company’s equity securities
trading securities
debt investments that the company actively buys and sells for profit.
are trading securities current or non current asset?
current asset
are long term investments current or non current assets
non current
profilio
group of securities
Is managerial accounting used by internal or external users?
Internal users
short term investment
investment intended to be converted to cash in one year. Mature within 3-12 months.
Are short investments current or non current assets?
Current assets.
what journal entries are recorded when purchasing a bond?
Dr. Debt Investment
Cr. Cash
Assume that Long Co. paid 30,000 on July 1 2021 to buy Dell 7% Two-year bonds payable with a $30,0000 par value. The bond’s interest is paid semiannually on dec. 31 and June 30. What is the journal entry for the acquisition?
Dr. debt investment 30,000
Cr. cash 30,000
Assume that Long Co. paid 30,000 on July 1 2021 to buy Dell 7% Two-year bonds payable with a $30,0000 par value. The bond’s interest is paid semiannually on Dec. 31 and June 30. What is the journal entry for the Cash receipt of interest for 12/31/24
Dr.Cash. 1050
Cr. Interest Revenue 1050
30,000 X 7%/ 2= 1050
