Question 1

Long-term investments in available-for-sale securities are reported at their _______ on the balance sheet.

Accepted Answer

fair value

Question 2

Available-for-sale debt securities are:

Accepted Answer

A) Recorded at cost and remain at cost over the life of the investment. 
B) Reported at historical cost,adjusted for the amortized amount of any difference between cost and maturity value. 
C) Reported at fair value on the balance sheet. 
D) Intended to be held to maturity. 
E) Always classified as Long-Term Investments. 
A) Recorded at cost and remain at cost over the life of the investment. 
B) Reported at historical cost,adjusted for the amortized amount of any difference between cost and maturity value. 
C) Reported at fair value on the balance sheet. 
D) Intended to be held to maturity. 
E) Always classified as Long-Term Investments. C

Question 3

On May 1 of the current year,a company paid $200,000 cash to purchase 6%,10-year bonds with a par value of $200,000;interest is paid semiannually each May 1 and November 1.The company intends to hold these bonds until they mature.Prepare the journal entry to record the receipt of the first semiannual interest payment on November 1.

Accepted Answer

The answer of On May 1 of the current year,a...

Question 4

Investments in held-to-maturity debt securities are always current assets.

Accepted Answer

A) True 
 B)False

Question 5

Investments in debt and equity securities that the company actively manages and trades for profit are referred to as short-term investments in:

Accepted Answer

A) Available-for-sale securities. 
B) Held-to-maturity securities. 
C) Trading securities. 
D) Realizable securities. 
E) Liquid securities. 
A) Available-for-sale securities. 
B) Held-to-maturity securities. 
C) Trading securities. 
D) Realizable securities. 
E) Liquid securities.

Question 6

Investments in equity securities where the investor has a controlling influence are accounted for using the ________________________________.

Accepted Answer

equity met

Question 7

A company had net income of $40,000,net sales of $300,000,and average total assets of $200,000.Its profit margin and total asset turnover were respectively:

Accepted Answer

A) 13.3%;0.2. 
B) 13.3%;1.5. 
C) 2.0%;1.5. 
D) 1.5%;0.2. 
E) 1.5%;13.3. 
A) 13.3%;0.2. 
B) 13.3%;1.5. 
C) 2.0%;1.5. 
D) 1.5%;0.2. 
E) 1.5%;13.3.

Question 8

Weston Company had the following long-term available-for-sale securities in its portfolio at December 31,Year 1.Weston had several long-term investment transactions during the next year.After analyzing the effects of each transaction, (1)determine the amount Weston should report on its December 31,Year 1 balance sheet for its long-term investments in available-for-sale securities, (2)determine the amount Weston should report on its December 31,Year 2 balance sheet for its long-term investments in available-for-sale securities, (3)prepare the necessary adjusting entry to record the fair value adjustment at December 31,Year 2.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& @#IMG-DLM& Year 1: $1,307,300 - $1,284,000 = $23

Question 9

On February 15,Jewel Company buys 7,000 shares of Marcelo Corp.common stock at $28.53 per share plus a brokerage fee of $400.The stock is classified as available-for-sale securities.On March 15,Marcelo Corp.declares a dividend of $1.15 per share payable to stockholders of record on April 15.Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp.stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250.The fair value of the remaining shares is $29.50 per share.The amount that Jewel Company should report on its year-end December 31 income statement related to the investment in Marcelo Corp.is:

Accepted Answer

A) $10,295. 
B) $8,050. 
C) $2,245. 
D) $3,195. 
E) $5,440. 
A) $10,295. 
B) $8,050. 
C) $2,245. 
D) $3,195. 
E) $5,440.

Question 10

All companies desire a low return on total assets.

Accepted Answer

A) True 
 B)False

Question 11

Hamasaki Company owns 30% of CDW Corp.stock.Hamasaki received $6,500 in cash dividends from its investment in CDW.The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.

Accepted Answer

A) True 
 B)False

Question 12

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment,which method would the investor normally use to account for this investment?

Accepted Answer

A) Equity method. 
B) Fair value method. 
C) Historical cost method. 
D) Cost with amortization method. 
E) Effective method. 
A) Equity method. 
B) Fair value method. 
C) Historical cost method. 
D) Cost with amortization method. 
E) Effective method.

Question 13

Select the correct statement from the following:

Accepted Answer

A) Profit margin reflects a company's ability to produce net sales from total assets. 
B) Total asset turnover reflects the percent of net income in each dollar of net sales. 
C) Return on total assets can be separated into gross margin ratio and price-earnings ratio. 
D) High returns on total assets are desirable. 
E) Return on total assets analysis is beneficial in evaluating a company but is not useful for competitor analysis. 
A) Profit margin reflects a company's ability to produce net sales from total assets. 
B) Total asset turnover reflects the percent of net income in each dollar of net sales. 
C) Return on total assets can be separated into gross margin ratio and price-earnings ratio. 
D) High returns on total assets are desirable. 
E) Return on total assets analysis is beneficial in evaluating a company but is not useful for competitor analysis.

Question 14

____________________________ are debt and equity securities that a company intends to actively manage and trade for a profit.

Accepted Answer

The answer of ____________________________ are debt and equity securities that...

Question 15

Long-term investments in held-to-maturity debt securities are accounted for using the ___________________________.

Accepted Answer

cost metho

Question 16

Trading securities are securities that are purchased by trading securities with other companies rather than by paying cash.

Accepted Answer

A) True 
 B)False

Question 17

All of the following statements regarding accounting for trading securities under U.S.GAAP are true except:

Accepted Answer

A) The entire portfolio of trading securities is reported at is fair value. 
B) An unrealized gain or loss from a change in fair value is reported on the income statement. 
C) An unrealized gain or loss is recorded with an adjusting entry when the securities are sold. 
D) An unrealized gain or loss is recorded with an adjusting entry at the end of each period. 
E) Unrealized gains and losses are recorded in a temporary account that is closed to Income Summary at the end of the period. 
A) The entire portfolio of trading securities is reported at is fair value. 
B) An unrealized gain or loss from a change in fair value is reported on the income statement. 
C) An unrealized gain or loss is recorded with an adjusting entry when the securities are sold. 
D) An unrealized gain or loss is recorded with an adjusting entry at the end of each period. 
E) Unrealized gains and losses are recorded in a temporary account that is closed to Income Summary at the end of the period.

Question 18

On May 1 of the current year,a company paid $200,000 to purchase 7%,10-year bonds with a par value of $200,000;interest is paid semiannually on May 1 and November 1.The company intends to hold the bonds until they mature.Prepare the journal entries to record (1)the bond purchase, (2)the receipt of the first semiannual interest payment on September 1 of the current year, (3)the accrual of interest for year-end December 31,and (4)the receipt of the second semiannual payment on May 1.

Accepted Answer

The answer of On May 1 of the current year,a...

Question 19

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it is earned.

Accepted Answer

A) True 
 B)False

Question 20

If a U.S.Company's credit sale to an international customer allows payment to be made in a foreign currency,the same exchange rate must be used for the date of sale and the cash payment date.

Accepted Answer

A) True 
 B)False

Exam 15: Investments and International Operations

Long-term investments in available-for-sale securities are reported at their _______ on the balance sheet.

Available-for-sale debt securities are:

Investments in held-to-maturity debt securities are always current assets.

Investments in debt and equity securities that the company actively manages and trades for profit are referred to as short-term investments in:

Investments in equity securities where the investor has a controlling influence are accounted for using the ________________________________.

A company had net income of $40,000,net sales of $300,000,and average total assets of $200,000.Its profit margin and total asset turnover were respectively:

All companies desire a low return on total assets.

Hamasaki Company owns 30% of CDW Corp.stock.Hamasaki received $6,500 in cash dividends from its investment in CDW.The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment,which method would the investor normally use to account for this investment?

Select the correct statement from the following:

____________________________ are debt and equity securities that a company intends to actively manage and trade for a profit.

Long-term investments in held-to-maturity debt securities are accounted for using the ___________________________.

Trading securities are securities that are purchased by trading securities with other companies rather than by paying cash.

All of the following statements regarding accounting for trading securities under U.S.GAAP are true except:

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it is earned.

If a U.S.Company's credit sale to an international customer allows payment to be made in a foreign currency,the same exchange rate must be used for the date of sale and the cash payment date.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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