Question

on august 1, paid $72,000 cash to purchase houtte's 9%, six-month debt securities ($72,000 principal), dated august 1.

Answer 1

Here short term investment is debited as it increased the asset and credited the cash as decreased the asset.

here cash is debited as it increased the asset and credited the interest revenue as it also increased the revenue.

What Are Short-Term Investments?

• Marketable securities, commonly referred to as temporary investments or short-term investments, are financial investments that can be quickly converted to cash, usually within five years.
• After only three to twelve months, many short-term investments are sold or turned into cash. CDs, money market accounts, high-yield savings accounts, government bonds, and Treasury bills are a few typical examples of short-term investments.
• Short-term investments, also known as marketable securities or temporary investments, are financial investments that can be easily converted to cash, typically within 5 years.
• Typically, these investments are high-quality and highly liquid assets or investment vehicles.
• Short-term investments may also specifically refer to financial assets of a similar kind, but with a few additional requirements, that are owned by a company.

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