Jane Company has excess cash of $100,000 and invests the same amount in corporate bonds on March 30, 2015 that mature twenty years from the date of purchase. The company plans to keep the bonds until maturity. Based on the information provided, which of the following is true of the balance sheet line items on March 30, 2015?

Question

Quizplus · Accepted Answer

The excess cash of $100,000 is used to buy corporate bonds, which are long-term assets. Since the company plans to hold the bonds until maturity, there is no change in the asset value until the bonds mature. There is no change in liabilities or equity due to this transaction. Therefore, total assets will remain unchanged.

Jane Company Has Excess Cash of $100,000 and Invests the Same