All investments with remaining maturities (or repurchase dates under repurchase agreements) of one year or less at the time of acquisition are called:

Question

Options

• AInsured investments
• BLong-term investments
• CShort-term investments
• DCash investments

• A
  3% (1)
• B
  3% (1)
• C
  83% (24)
• D
  10% (3)

Explanation

Short-term investments are defined by their remaining maturity of one year or less at the time of acquisition - this is the standard accounting and finance definition used in governmental accounting (GASB) and general finance, which is exactly what option C describes.

Why the distractors are wrong:

• A (Insured investments) refers to investments backed by insurance or collateral (e.g., FDIC-insured deposits) - a safety characteristic, not a maturity-based classification.
• B (Long-term investments) is the opposite: maturities exceeding one year.
• D (Cash investments) is not a standard classification; cash equivalents are typically instruments with maturities of 90 days or less, which is an even narrower category.

Memory tip: Think of the "short" in short-term as referring to the short runway before the investment matures - one year or less is the finish line. If you see "maturity at acquisition" in an exam question, that's your cue this is a short-term investment definition.

No community discussion yet for this question.