Discuss the Three Categories of Investments Described in the FASB's

question 14

Essay

Discuss the three categories of investments described in the FASB's current standard for investments in marketable securities.

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Definitions:

Retained Earnings

The portion of a company's profits that is held back and not distributed to shareholders, reinvested in the business.

Net Income

The net income a company earns once all costs and taxes are subtracted from its total revenues.

Dividend

A portion of a company's earnings distributed to its shareholders, typically paid out in cash or additional shares of stock.

Treasury Stock

Shares that were once part of the outstanding shares and have been bought back by the company, reducing the amount of stock on the open market.