Chapter 5 Notes

Chapter 5 Notes - Chapter 5 Notes Short-term Investments,...

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Chapter 5 Notes Short-term Investments, or marketable securities, are stock or debt investments that a company plans to hold for one year or less Called a gain (not revenue) if increase of asset worth, because it is not a core business activity You need to make a journal entry even when you do not sell your investment, if you keep your investment until after the end of the period, you need to make an adjusting entry on the last say of the period In the adjusting entry, you mark your short-term investments (up or down) to their market value on this day Unrealized increase/decrease in stock market price, still own Unrealized gain increases retained earnings. Loss is debited on expense that snows on the income statement Note: We keep a separate account for each security we carry, example: Marketable Securities- Google, and MS- Ford Gain/Loss form Sale of Investment are the two accounts to record the realized loss or gain through stock sales Unrealized gain/loss on investment are the two accounts to record unrealized
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This note was uploaded on 02/04/2011 for the course BADM 066 taught by Professor Bailey during the Fall '07 term at GWU.

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Chapter 5 Notes - Chapter 5 Notes Short-term Investments,...

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