Peregrine Global Services Accounting Practice Exam

Long-term investments are characterized by the duration of time they are held, specifically investments that are intended to be held for more than one year. This definition encompasses a wide array of investments, including stocks, bonds, real estate, and other financial instruments, as long as the intention is to hold them for a longer period. The focus on a one-year horizon is significant because it determines how these investments are classified on financial statements, affecting liquidity and financial reporting.

By defining long-term investments based solely on their holding period, this choice captures the essence of various investment strategies where the goal is often capital appreciation or income generation over a longer span, rather than seeking quick returns. Other options may narrow the scope too much, incorrectly limiting the definition of long-term investments to specific types or durations that do not universally apply.