Short-term Investments would be an example of what kind of account?

Short-term Investments would be an example of what kind of account?

• A. An asset account.
• B. A liability account.
• C. An equity account.
• D. A revenue account.

Answer: (A)

Short-term investments are resources the company expects to turn into cash within one year, so they sit as assets on the balance sheet. They represent things the business owns that have future economic benefit, rather than obligations you owe (liabilities), owners’ claims (equity), or income from operations (revenue). On the financial statements, they appear among current assets (often as marketable securities), reflecting their near-cash nature. When recording such an item, you’d increase the asset account with a debit; it isn’t a revenue, liability, or equity account.

Short-term investments are resources the company expects to turn into cash within one year, so they sit as assets on the balance sheet. They represent things the business owns that have future economic benefit, rather than obligations you owe (liabilities), owners’ claims (equity), or income from operations (revenue). On the financial statements, they appear among current assets (often as marketable securities), reflecting their near-cash nature. When recording such an item, you’d increase the asset account with a debit; it isn’t a revenue, liability, or equity account.