Short-Term Investments

Definition: Marketable securities to be sold within 12 months

Scope:ModerateDifficulty:Easy

Marketable securities to be sold within 12 months

Common Journal Entries
AccountDebitCredit
1. Purchase securities
Buy $15,000 of marketable securities.
Short-Term InvestmentsAsset+$15,000
CashAsset−$15,000
Current asset acquired.
2. Sell at a gain
Sell for $16,200; cost $15,000.
CashAsset+$16,200
Short-Term InvestmentsAsset−$15,000
Gain on Sale of InvestmentsRevenue+$1,200
Gain = proceeds − cost.

T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.

Short-Term InvestmentsShort-Term InvestmentsAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$15,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$15,000.00
$0.00
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$16,200.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$15,000.00
$1,200.00
Gain on Sale of InvestmentsGain on Sale of InvestmentsRevenueIncome earned from business operations. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$1,200.00
Normal bal. ▶
$1,200.00
DurationShort-Term

Related Subjects

Used in Formula

See Also

  • CashBoth part of Quick Ratio (Acid-Test)

External Links