Accounting Essay Example | Topics and Well Written Essays - 1750 words - 4

Accounting - Essay Example Other companies can reside their head offices in other foreign countries. Therefore, the investment in other companies can be beneficial for the company in a manner that, the interest rate paid on the investment can be higher than the company home place. In questions below, we will record the accounting impact of investments in other companies with the help of double general journal entries (Cespa, 2002). Journal Entries: Anytime when a business does financial transactions, they record it with the help of a journal entry posted in the general journal under specific account heads of the transaction (Peavler, 2015). They are very important for keeping the records of the daily transactions done under the specific account head of the business. With the help of journal entries, the basic financial standing of the account head can be figured out. They also help the companies to monitor their cash-flow from the receivables and payables. They help business in accumulating a number of expenses done in a transaction. If the journal entries are not maintained, the finance department or the outside audit companies can be lost during the search of financial data to assert the income and its tax. Short term investments are the part of current assets on the balance sheet as short-term investments are the part of the debt or equity. These investments are the investments made in deposit certificates, interest based bonds and high-value bonds. They are recorded at cost and are cost adjusted with respect to change in their market prices (Needles, Powers, & Crosson, 2012). They can easily be liquidated. Therefore with high level of liquidity, the short term investments can save the Clarity Corporation from being dissolvent i.e. they will be an un-gained income for the company and while calculating the total income, they will have a strong cash position with respect to their rivals in the market. With the strong cash position, the corporation can invest in those