For purposes of valuation and reporting at a financial statement date, companies classify debt and stock investments into three categories:
- Trading securities are bought and held primarily for sale in the near term to generate income on short-term price differences.
- Available-for-sale securities are held with intent of selling them sometime in the future.
- Held-to-maturity securities are debt securities that the investor has the intent and ability to hold to maturity.
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A check is a written order signed by the depositor directing the bank to pay a specified sum of money to a designated recipient. There are three parties to a check:
- Cost method
Cost method is an accounting method in which the investment in common stock is recorded at cost, and revenues are recognized only when cash dividends are received.
A factor is a finance company or bank that buys receivables from businesses and then collects the payments directly from the customers.
- Internal rate of return (IRR)
Internal rate of return (IRR) is the interest rate that will cause the present value of the proposed capital expenditure to equal the present value of the expected net annual cash flows.
- Single-step income statement
Single-step income statement is an income statement that shows only one step in determining net income. The statement is so named because...
- Payment date
On the payment date the company mails dividend checks to the stockholders and records the payment to the dividend.
Transactions (business transactions) are a business’s economic events recorded by accountants. Transactions may be external or internal.