Short-term investments should be valued on the balance sheet at
A) the lower of cost or fair value.
B) the higher of cost or fair value.
C) cost.
D) fair value.

Question

Quizplus · Accepted Answer

Short-term investments should be valued on the balance sheet at fair value. This is in accordance with the principle of conservatism, which requires assets to be stated at the lower of cost or fair value. As short-term investments are expected to be sold or converted into cash within a year, it is appropriate to value them at fair value, which represents the current market value of the investment.

Short-Term Investments Should Be Valued on the Balance Sheet at