Asked by Jordan Edmundson on Jun 09, 2024
Verified
Most companies invest excess cash in bonds as investments in order to profit long-term from the growth of the investment.
Bonds
A fixed income investment in which an investor loans money to an entity (corporate or sovereign) which borrows the funds for a definite period at a variable or fixed interest rate.
Excess Cash
Surplus funds that are not required for immediate operational needs or investment purposes.
- Distinguish between temporary and long-term investment strategies and their respective accounting treatments.
Verified Answer
VN
Vinny NicastroJun 15, 2024
Final Answer :
False
Explanation :
Most companies invest excess cash in bonds primarily for safety and liquidity, rather than long-term growth, as bonds typically offer more stable returns compared to stocks but with lower growth potential.
Learning Objectives
- Distinguish between temporary and long-term investment strategies and their respective accounting treatments.
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