Not-for-profit organizations should report investments in debt securities at which of the following amounts? a. potential proceeds from liquidation sale. b. present value of expected future cash flows. c. historical cost. d. market price.

Not-for-profit organizations should report investments in debt securities at which of the following amounts? a. potential proceeds from liquidation sale. b. present value of expected future cash flows. c. historical cost. d. market price.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 13MC: Which of the following would be included in the financing section? A. loss on sale of investments B....

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Concept explainers

Characteristics of Bonds

Question

Not-for-profit organizations should report investments in debt securities at which of the following amounts?
a. potential proceeds from liquidation sale.
b. present value of expected future cash flows.
c. historical cost.
d. market price.

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

Expert Solution

Step 1

A debt security is an investment in bonds which is issued by the government or relevant organisation or a not for profit organization.

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