In accounting, an investment refers to any asset purchased or capital committed with the goal of generating income or appreciation over time. This includes stocks, bonds, real estate, equipment, and even stakes in other companies.
Investments are classified on the balance sheet based on their nature and holding period. Short-term investments (held under a year) are current assets, while long-term investments are non-current assets.
For example, if a company buys $1 million worth of government bonds as a safe place to park excess cash, that is recorded as an investment asset. The returns (interest income) flow into the income statement.