What are Investments?
Investments are assets which are purchased with a view to generating an income and a capital gain when sold. Investments include items such as government bonds, stocks and shares, life insurance policies, and investment properties.
Investment income from the investments usually takes the form of interest, dividends, and rental income.
A business will normally purchase investments for the long term, and classify them as long term assets in the balance sheet. However, a business can purchase short term investments which are readily realizable, and which it intends not to hold for more than a year, and these investments would be classified as current assets in the balance sheet.
Additional information on investments can also be found at Wikipedia Investments Definition.
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About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.