Unit 16 — Investments

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What are available-for-sale securities?
Securities available-for-sale are the type of securities that a company buys as an investment and with the intention of selling them sometime in the future.

What are consolidated financial statements?
Consolidated financial statements are inclusive statements that present all the assets and liabilities of subsidiaries that are controlled by the parent company. They also show all the revenues, cost, and expenses of subsidiaries.

What is controlling interest?
When a corporation owns more than 50% of the common stock of another corporation, then the owning corporation is said to own a controlling interest.

What is meant by Cost method?
Cost method is an accounting method in which the investment in common stock of another corporation is recorded at cost, and revenue is recognized only when the cash dividends are received.

What are debt investments?
Debt investments are investments in bonds issued by governments (to include their agencies) and corporations.

What is the equity method?
The equity method is an accounting method in which the investment in common stock is initially recorded at cost. At the end of the fiscal year the account is adjusted and marked to market.

What is meant by fair value?
Fair value is the market value of securities at particular a point in time.

What are held-to-maturity securities?
Held-to-maturity securities are bonds that the investor intends to hold until their maturity date.

What is an investment portfolio?
An investment portfolio is made up of a diversified group of stocks and bonds.

What are considered to be long term investments?
The stocks and bonds in a portfolio that the investor intends to hold for longer than a year are long term investments.

What is a parent company?
A parent company is a corporation that owns more than 50% of the common stock of another corporation.

What are considered to be short-term investments?
Short-term investments are stocks and bonds in a portfolio that will be sold within a year.

What is a subsidiary or affiliated company?
A subsidiary is a company whose stock is owned by another company.

What are trading securities?
Trading securities are stocks and bonds that are bought and sold to generate interest, dividends, and gains, by taking advantage of short-term price fluctuations.
Ch1 Accounting in Action

Ch2 Recording Process

Ch3 Adjusting the Accounts

Ch4 Completing the Accounting Cycle

Ch5 Merchandising Operations

Ch6 Inventories

Ch7 Accounting Information Systems

Ch8 Internal Control and Cash

Ch9 Accounting for Receivables

Ch10 PP&E, Natural Resources, and Intangible Assets

Ch11 Current Liabilities and Payroll


Ch12 Partnerships

Ch13 Corporations

Ch14 Corporations:Dividends, RE

Ch15 Long Term Liabilities

Ch16 Investment

Ch17 Statement of Cash Flows

Ch18 Financial Statement Analysis

Plato and Accounting

Price/Earnings Ratio

Plant Assets

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