Unit 16 — Investments

Image by Getty Images via Daylife 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 Luca Pacioli and DaVinci The secrets of 'no-doze' prose: Mary Duffy's Sentence Openers

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