Short-term investment:
Short-term investment refers to all kinds of securities that can be realized at any time and held for less than one year, as well as other investments that do not exceed one year.
Securities include all kinds of stocks and bonds, such as buying all kinds of stocks issued by other joint-stock companies and all kinds of bonds issued by the government or other enterprises (national debt, national key construction bonds, local government bonds and corporate financing bonds, etc.). ); Other investments such as monetary funds, materials, fixed assets and intangible assets invested by enterprises to other units.
Refers to the purchase of marketable securities that can be realized at any time and held for no more than one year (including one year) and other investments that do not exceed one year (including one year), including various stocks, bonds, funds, etc.
When the cash of an enterprise is temporarily surplus, it is the best way to invest in stocks, bonds and treasury bills with strong liquidity. When the enterprise is short of cash, it can sell its investment to get cash. Short-term investment is a strategy for enterprises to use living funds. When an enterprise has too much money and it is uneconomical to put it in the bank, it can use part of the money for short-term investment and buy securities such as stocks and treasury bills to obtain higher returns.
All these are priced according to the cost at the time of acquisition, including the purchase price of securities, commission and tax. If the price paid for short-term investment includes interest or dividend, it should be deducted from it and not regarded as the cost of short-term investment. The deducted part can be debited to both the income account and the asset account (other receivables or interest receivable and dividends receivable).
Because debiting the income account can automatically adjust the future income, most American companies debit the interest and dividends contained in short-term investments into the income account. According to China Accounting Standards, the interest or dividend included in the payment price is recorded as an asset account. On the date of preparation of accounting statements, there are three valuation methods for short-term investment: cost method, market method and whichever is lower.