How to Show Investments on a Balance Sheet

Video Transcript

"Hi, I'm Ryan Levine with Utah Working Capital, and now I'd like to talk about accounting for investments. A company will typically make three types of investments that need to be accounted for. The first one is cash and cash equivalents. This will typically include all of the basic checking and savings accounts that a company might have to handle all of its operations. It might also include liquid assets such as money market accounts, or short term investments that become liquid within one week to one month's time period. All of these investments should be accounted for within the cash and cash equivalents classification. The second type of investment is short term investments. These investments are those that become liquid within one year, but are not readily available to a company. Some examples might be some six month or possibly nine month bonds or investments that a company makes. They will be readily available in the near future, but still possibly a few months out. The third type of investment is long term investments. And this is going to include investments that will not mature for a year out. These can include investments in other companies that have time restrictions on it, as well as certain bonds or stocks that don't mature for twelve months or greater, so that analysts can understand that even though you have this investment, it's not available and will not become liquid for at least one year. For further additional questions, contact us at utworkingcapital@gmail.com."