Definition of Trading assets:
Trading assets are a collection of securities held by a firm for the purpose of reselling for a profit. They are recorded as a separate account from the investment portfolio and may include U.S. Treasury securities, mortgage-backed securities, foreign exchange rate contracts, and interest rate contracts. Trading assets include those positions acquired by the firm with the purpose of reselling in the near term in order to profit from short-term price movements.
Accounts receivable, accounts payable, and inventory the three main financial items that impact heavily on a cash flow.
Companies acquire trading assets with the purpose of trading them for a profit. When a company buys and sells a trading asset, it is marked at the fair value of the asset. When trading assets are held by banks for other banks, they are valued at mark-to-market. Certain banks are required to file reports with the government and the Federal Deposit Insurance Corporation (FDIC) when engaging in this activity.
How to use Trading assets in a sentence?
- The value of trading assets need to be updated on the balance sheet and recorded as a profit or loss on the income statement.
- Treasuries, mortgage-backed securities, foreign exchange contracts, and other securities can be considered trading assets.
- The investment portfolio of a firm is kept separate from trading assets.
- Trading assets are considered current assets as they are intended to be sold quickly.
- Trading assets are securities held by a firm for the purpose of reselling to make a profit.
Meaning of Trading assets & Trading assets Definition