Question 1

Unrealized gains and losses are recognized on trading securities.

Accepted Answer

A) True 
 B)False

Question 2

The receipt of dividends on an investment affects the Stock Investment account when which of the following methods is used?

Accepted Answer

A)  Cost method. 
B)  Equity method. 
C)  Combination method. 
D)  Market method. 
A)  Cost method. 
B)  Equity method. 
C)  Combination method. 
D)  Market method.

Question 3

Ando Company earns 11% on an investment that pays back $660,000 at the end of each of the next 5 years. Ando finance department has the following values related to the time value of money to help in its planning process and compounded interest decisions. $\begin{array}{ll}
\text { Present value of } 1 \text { for } 5 \text { periods at } 11 \% & 0.59345 \
\text { Future value of } 1 \text { for } 5 \text { periods at } 11 \% & 1.68506 \
\text { Present value of an annuity of } 1 \text { for } 5 \text { periods at } 11 \% & 3.69590 \
\text { Future value of an annuity of } 1 \text { for } 5 \text { periods at } 11 \% & 6.22780
\end{array}$ To the closest dollar, what is the amount Ando invested to earn the 11% rate of return?

Accepted Answer

A)  $1,112,139 
B)  $391,677 
C)  $2,439,294 
D)  $178,577 
A)  $1,112,139 
B)  $391,677 
C)  $2,439,294 
D)  $178,577

Question 4

The Fair Value Adjustment account can only have a credit balance or a zero balance.

Accepted Answer

A) True 
 B)False

Question 5

Mazzeo Company acquires 80 Dodd's 10%, 5 year, $1,000 bonds on January 1, 2014 for $80,000. The journal entry to record this investment includes a debit to

Accepted Answer

A)  Debt Investments for $88,000. 
B)  Debt Investments for $80,000. 
C)  Cash for $80,000. 
D)  Stock Investments for $80,000. 
A)  Debt Investments for $88,000. 
B)  Debt Investments for $80,000. 
C)  Cash for $80,000. 
D)  Stock Investments for $80,000.

Question 6

Under the equity method, the receipt of dividends from the investee company results in an increase in the Stock Investments account.

Accepted Answer

A) True 
 B)False

Question 7

Under the equity method, the receipt of dividends from the investee company results in a credit to the Dividend Revenue account.

Accepted Answer

A) True 
 B)False

Question 8

On January 1, 2014, Tri-State Company purchased at face value, a $1,000 7%, bond that pays interest annually on January 1. Tri-State Company has a calendar year end. The entry for the receipt of interest on January 1, 2015 is

Accepted Answer

The answer of On January 1, 2014, Tri-State Company purchased...

Question 9

The present value is based on two variables-the dollar amount to be received and the length of time until the amount is received.

Accepted Answer

A) True 
 B)False

Question 10

Gwen and Steve Jones Jeter invested $10,000 in a savings account paying 4% annual interest when their daughter, Larrisa was born. They also deposited $5,000 on each of her birthdays until she was 18 (including her 18th birthday). How much was in the savings account on her 18th birthday (after the last deposit)?

Accepted Answer

The answer of Gwen and Steve Jones Jeter invested $10,000...

Question 11

Short-term investments should be valued on the balance sheet at

Accepted Answer

A)  the lower of cost or fair value. 
B)  the higher of cost or fair value. 
C)  cost. 
D)  fair value. 
A)  the lower of cost or fair value. 
B)  the higher of cost or fair value. 
C)  cost. 
D)  fair value.

Question 12

Distinguish between the cost and equity methods of accounting for investments in stocks.

Accepted Answer

Under the cost method an investment is o

Question 13

The amount you must deposit now in your savings account paying 5% interest, in order to accumulate $18,000 for your first tuition payment when you start law school in 3 years is

Accepted Answer

A)  $15,300.00. 
B)  $14,094.00. 
C)  $15,549.12. 
D)  $15,947.28. 
A)  $15,300.00. 
B)  $14,094.00. 
C)  $15,549.12. 
D)  $15,947.28.

Question 14

Jim and Aneta O'Connor invested $12,000 in a savings account paying 5% annual interest when their son, Austin, was born. They also deposited $500 on each of his birthdays until he was 20 (including his 20th birthday). Jim and Aneta have obtained the following values related to the time value of money to help them with their planning process for their compounded interest decisions. $\begin{array}{lr}
\text { Present value of } 1 \text { for } 20 \text { periods at } 5 \% & 0.37689 \
\text { Future value of } 1 \text { for } 20 \text { periods at } 5 \% & 2.65330 \
\text { Present value of an annuity of } 1 \text { for } 20 \text { periods at } 5 \% & 12.46221 \
\text { Future value of an annuity of } 1 \text { for } 20 \text { periods at } 5 \% & 33.06595
\end{array}$ To the closest dollar, how much was in the savings account on his 20th birthday (after the last deposit)?

Accepted Answer

A)  $33,166 
B)  $48,373 
C)  $22,000 
D)  $28,533 
A)  $33,166 
B)  $48,373 
C)  $22,000 
D)  $28,533

Question 15

Barcelona Company owns 40% interest in the stock of ABX Corporation. During the year, ABX pays $20,000 in dividends to Barcelona, and reports $150,000 in net income. Barcelona Company's investment in ABX will increase Barcelona net income by
A) $52,000.
B) $60,000.
C) $52,000.
D) $8,000.

Accepted Answer

The answer of Barcelona Company owns 40% interest in the...

Question 16

At December 31, 2014, the trading securities for Blue Bell, Inc. are as follow   Blue Bell should report the following amount related to the securities transactions in its 2014 income statement

Accepted Answer

A)  $2,000 gain. 
B)  $8,000 realized loss. 
C)  $8,000 unrealized loss. 
D)  $10,000 unrealized loss. 
A)  $2,000 gain. 
B)  $8,000 realized loss. 
C)  $8,000 unrealized loss. 
D)  $10,000 unrealized loss.

Question 17

All of the following factors would be signs of an investor's significant influence over an investee except

Accepted Answer

A)  the investor has representation on the investee's board of directors. 
B)  the investor participates in the investee's policy-making process. 
C)  there are immaterial transactions between the investor and the investee. 
D)  the common stock held by other stockholders is dispersed. 
A)  the investor has representation on the investee's board of directors. 
B)  the investor participates in the investee's policy-making process. 
C)  there are immaterial transactions between the investor and the investee. 
D)  the common stock held by other stockholders is dispersed.

Question 18

All of the following are necessary to compute the future value of a single amount except the

Accepted Answer

A)  interest rate. 
B)  number of periods. 
C)  principal. 
D)  maturity value. 
A)  interest rate. 
B)  number of periods. 
C)  principal. 
D)  maturity value.

Question 19

At the end of the first year of operations, the total cost of the trading securities portfolio is $179,000 and the total fair value is $174,000. What should the financial statements show?

Accepted Answer

A)  A reduction of an asset of $5,000 and a realized loss of $5,000. 
B)  A reduction of an asset of $5,000 and an unrealized loss of $5,000 in the stockholders' equity section. 
C)  A reduction of an asset of $5,000 in the current assets section and an unrealized loss of $5,000 under "Other expenses and losses." 
D)  A reduction of an asset of $5,000 in the current assets section and a realized loss of $75,000 under "Other expenses and losses." 
A)  A reduction of an asset of $5,000 and a realized loss of $5,000. 
B)  A reduction of an asset of $5,000 and an unrealized loss of $5,000 in the stockholders' equity section. 
C)  A reduction of an asset of $5,000 in the current assets section and an unrealized loss of $5,000 under "Other expenses and losses." 
D)  A reduction of an asset of $5,000 in the current assets section and a realized loss of $75,000 under "Other expenses and losses."

Question 20

Under the equity method, the investment in common stock is initially recorded at cost, and the Stock Investments account is adjusted annually.

Accepted Answer

A) True 
 B)False

Unrealized gains and losses are recognized on trading securities.

The receipt of dividends on an investment affects the Stock Investment account when which of the following methods is used?

The Fair Value Adjustment account can only have a credit balance or a zero balance.

Mazzeo Company acquires 80 Dodd's 10%, 5 year, $1,000 bonds on January 1, 2014 for $80,000. The journal entry to record this investment includes a debit to

Under the equity method, the receipt of dividends from the investee company results in an increase in the Stock Investments account.

Under the equity method, the receipt of dividends from the investee company results in a credit to the Dividend Revenue account.

On January 1, 2014, Tri-State Company purchased at face value, a $1,000 7%, bond that pays interest annually on January 1. Tri-State Company has a calendar year end. The entry for the receipt of interest on January 1, 2015 is

The present value is based on two variables-the dollar amount to be received and the length of time until the amount is received.

Short-term investments should be valued on the balance sheet at

Distinguish between the cost and equity methods of accounting for investments in stocks.

The amount you must deposit now in your savings account paying 5% interest, in order to accumulate $18,000 for your first tuition payment when you start law school in 3 years is

Barcelona Company owns 40% interest in the stock of ABX Corporation. During the year, ABX pays $20,000 in dividends to Barcelona, and reports $150,000 in net income. Barcelona Company's investment in ABX will increase Barcelona net income by A) $52,000. B) $60,000. C) $52,000. D) $8,000.

At December 31, 2014, the trading securities for Blue Bell, Inc. are as follow Blue Bell should report the following amount related to the securities transactions in its 2014 income statement

All of the following factors would be signs of an investor's significant influence over an investee except

All of the following are necessary to compute the future value of a single amount except the

At the end of the first year of operations, the total cost of the trading securities portfolio is $179,000 and the total fair value is $174,000. What should the financial statements show?

Under the equity method, the investment in common stock is initially recorded at cost, and the Stock Investments account is adjusted annually.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

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Exam 14: Understanding Investments and Acquisitions in Accounting

Unrealized gains and losses are recognized on trading securities.

The receipt of dividends on an investment affects the Stock Investment account when which of the following methods is used?

The Fair Value Adjustment account can only have a credit balance or a zero balance.

Mazzeo Company acquires 80 Dodd's 10%, 5 year, $1,000 bonds on January 1, 2014 for $80,000. The journal entry to record this investment includes a debit to

Under the equity method, the receipt of dividends from the investee company results in an increase in the Stock Investments account.

Under the equity method, the receipt of dividends from the investee company results in a credit to the Dividend Revenue account.

On January 1, 2014, Tri-State Company purchased at face value, a $1,000 7%, bond that pays interest annually on January 1. Tri-State Company has a calendar year end. The entry for the receipt of interest on January 1, 2015 is

The present value is based on two variables-the dollar amount to be received and the length of time until the amount is received.

Short-term investments should be valued on the balance sheet at

Distinguish between the cost and equity methods of accounting for investments in stocks.

The amount you must deposit now in your savings account paying 5% interest, in order to accumulate $18,000 for your first tuition payment when you start law school in 3 years is

Barcelona Company owns 40% interest in the stock of ABX Corporation. During the year, ABX pays $20,000 in dividends to Barcelona, and reports $150,000 in net income. Barcelona Company's investment in ABX will increase Barcelona net income by A) $52,000. B) $60,000. C) $52,000. D) $8,000.

At December 31, 2014, the trading securities for Blue Bell, Inc. are as follow Blue Bell should report the following amount related to the securities transactions in its 2014 income statement

All of the following factors would be signs of an investor's significant influence over an investee except

All of the following are necessary to compute the future value of a single amount except the

At the end of the first year of operations, the total cost of the trading securities portfolio is $179,000 and the total fair value is $174,000. What should the financial statements show?

Under the equity method, the investment in common stock is initially recorded at cost, and the Stock Investments account is adjusted annually.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

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