Question 1

A long-term investment is recorded at cost when purchased.

Accepted Answer

A) True 
 B)False  True

Question 2

Long-term investments are reported in the:

Accepted Answer

A) Current asset section of the balance sheet. 
B) Intangible asset section of the balance sheet. 
C) Noncurrent asset section of the balance sheet. 
D) Liability section of the balance sheet. 
E) Equity section of the balance sheet. 
A) Current asset section of the balance sheet. 
B) Intangible asset section of the balance sheet. 
C) Noncurrent asset section of the balance sheet. 
D) Liability section of the balance sheet. 
E) Equity section of the balance sheet. C

Question 3

When a credit sale is denominated in a foreign currency,the foreign exchange rate used to record the sale is the current exchange rate:

Accepted Answer

A) Thirty days from the date of sale. 
B) At the end of the seller's fiscal year. 
C) At the end of the buyer's fiscal year. 
D) On the date final payment is made. 
E) On the date of the sale. 
A) Thirty days from the date of sale. 
B) At the end of the seller's fiscal year. 
C) At the end of the buyer's fiscal year. 
D) On the date final payment is made. 
E) On the date of the sale. E

Question 4

On April 1 of the current year,a company paid $150,000 to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually on October 1 and April 1.The company intends to hold the bonds until they mature.Prepare the journal entry to record the receipt of the semiannual interest payment on April 1 of the following year.

Accepted Answer

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Question 5

Investments in trading securities are always short-term investments.

Accepted Answer

A) True 
 B)False

Question 6

When an equity security is sold,the sale proceeds are compared with the cost and if the cost is greater than the proceeds,a gain on the sale of the security is recorded.

Accepted Answer

A) True 
 B)False

Question 7

The price of one currency stated in terms of another currency is referred to as the:

Accepted Answer

A) Historical exchange rate 
B) Foreign exchange rate 
C) Consolidated exchange rate 
D) General exchange rate 
E) Multinational exchange rate 
A) Historical exchange rate 
B) Foreign exchange rate 
C) Consolidated exchange rate 
D) General exchange rate 
E) Multinational exchange rate

Question 8

An investor purchased $50,000 of bonds that were held to maturity.The investor's journal entry at maturity of the bonds should include a debit to Cash for $50,000 and a credit to Long-Term Investments for $50,000.

Accepted Answer

A) True 
 B)False

Question 9

Short-term investments in held-to-maturity debt securities are accounted for using the:

Accepted Answer

A) Market value method with market adjustment to income. 
B) Market value method with market adjustment to equity. 
C) Cost method with amortization. 
D) Cost method without amortization. 
E) Equity method. 
A) Market value method with market adjustment to income. 
B) Market value method with market adjustment to equity. 
C) Cost method with amortization. 
D) Cost method without amortization. 
E) Equity method.

Question 10

On January 4,2011,Larsen Company purchased 5,000 shares of Warner Company for $59,500 plus a broker's fee of $1,000.Warner Company has a total of 25,000 shares of common stock outstanding and it is presumed the Larsen Company will have a significant influence over Warner.During each of the next two years,Warner declared and paid cash dividends of $0.85 per share.Its net income was $72,000 and $67,000 for 2011 and 2012,respectively.The January 12,2013,entry to record the sale of 3,000 shares of Warner Company stock for $39,000 cash should be:

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 11

Explain how to record the sale of trading securities.

Accepted Answer

When trading securities are sold,the dif

Question 12

Identify the three types of classifications for noninfluential investments in securities.

Accepted Answer

Noninfluential investments in

Question 13

On January 2,2014,McLachlan Corp.paid $50,000 cash to acquire 400,000 shares of stock in Gradley Corp.These shares represent 40% of Gradley Corp.'s total outstanding stock.McLachlan accounted for this acquisition using the equity method.For the year ended December 31,2014,Gradley Corp.earned $800,000 in net income.How would McLachlan record the related adjusting entry?

Accepted Answer

A) Debit Cash for $800,000 and credit Dividend Revenue for $800,000. 
B) Debit Cash for $320,000 and credit Dividend Revenue for $320,000. 
C) Debit Long-Term Investments-Gradley for $800,000 and credit Dividend Revenue for $800,000. 
D) Debit Long-Term Investments-Gradley for $320,000 and credit Earnings from Long-Term Investment for $320,000. 
E) Debit Long-Term Investments-Gradley for $800,000 and credit Earnings from Long-Term Investment for $800,000. 
A) Debit Cash for $800,000 and credit Dividend Revenue for $800,000. 
B) Debit Cash for $320,000 and credit Dividend Revenue for $320,000. 
C) Debit Long-Term Investments-Gradley for $800,000 and credit Dividend Revenue for $800,000. 
D) Debit Long-Term Investments-Gradley for $320,000 and credit Earnings from Long-Term Investment for $320,000. 
E) Debit Long-Term Investments-Gradley for $800,000 and credit Earnings from Long-Term Investment for $800,000.

Question 14

The price of one currency stated in terms of another currency is called a foreign exchange rate.

Accepted Answer

A) True 
 B)False

Question 15

_________________________ are investments that are both readily converted to known amounts of cash and mature within three months.

Accepted Answer

The answer of _________________________ are investments that are both readily...

Question 16

Explain how held-to-maturity debt securities are accounted for at and after acquisition and how they are reported in the financial statements.

Accepted Answer

Held-to-maturity (HTM) debt securities a

Question 17

Explain how transactions (both sales and purchases) in a foreign currency are recorded and reported.

Accepted Answer

When a selling company makes a credit sa

Question 18

A company had investments in long-term available-for-sale securities.At the end of the current year,the company's portfolio had a $731,000 cost and $730,000 market value. What is the current year's adjustment to market value given the following account balances at the end of the prior year?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 19

A company's return on total assets equals 28%.If total assets and net sales are $4,500,000 and $10,000,000 respectively,how much is net income?

Accepted Answer

A) $2,800,000 
B) $4,060,000 
C) $1,260,000 
D) $14,500,000 
E) $2,030,000 
A) $2,800,000 
B) $4,060,000 
C) $1,260,000 
D) $14,500,000 
E) $2,030,000

Question 20

A company should report its portfolio of trading securities at its market value.

Accepted Answer

A) True 
 B)False

A long-term investment is recorded at cost when purchased.

Long-term investments are reported in the:

When a credit sale is denominated in a foreign currency,the foreign exchange rate used to record the sale is the current exchange rate:

Investments in trading securities are always short-term investments.

When an equity security is sold,the sale proceeds are compared with the cost and if the cost is greater than the proceeds,a gain on the sale of the security is recorded.

The price of one currency stated in terms of another currency is referred to as the:

An investor purchased $50,000 of bonds that were held to maturity.The investor's journal entry at maturity of the bonds should include a debit to Cash for $50,000 and a credit to Long-Term Investments for $50,000.

Short-term investments in held-to-maturity debt securities are accounted for using the:

Explain how to record the sale of trading securities.

Identify the three types of classifications for noninfluential investments in securities.

The price of one currency stated in terms of another currency is called a foreign exchange rate.

_________________________ are investments that are both readily converted to known amounts of cash and mature within three months.

Explain how held-to-maturity debt securities are accounted for at and after acquisition and how they are reported in the financial statements.

Explain how transactions (both sales and purchases) in a foreign currency are recorded and reported.

A company had investments in long-term available-for-sale securities.At the end of the current year,the company's portfolio had a $731,000 cost and $730,000 market value. What is the current year's adjustment to market value given the following account balances at the end of the prior year?

A company's return on total assets equals 28%.If total assets and net sales are $4,500,000 and $10,000,000 respectively,how much is net income?

A company should report its portfolio of trading securities at its market value.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Accounting for Partnerships

Accounting With Special Journals

Filters

Exam 15: Investments and International Operations

A long-term investment is recorded at cost when purchased.

Long-term investments are reported in the:

When a credit sale is denominated in a foreign currency,the foreign exchange rate used to record the sale is the current exchange rate:

Investments in trading securities are always short-term investments.

When an equity security is sold,the sale proceeds are compared with the cost and if the cost is greater than the proceeds,a gain on the sale of the security is recorded.

The price of one currency stated in terms of another currency is referred to as the:

An investor purchased $50,000 of bonds that were held to maturity.The investor's journal entry at maturity of the bonds should include a debit to Cash for $50,000 and a credit to Long-Term Investments for $50,000.

Short-term investments in held-to-maturity debt securities are accounted for using the:

Explain how to record the sale of trading securities.

Identify the three types of classifications for noninfluential investments in securities.

The price of one currency stated in terms of another currency is called a foreign exchange rate.

_________________________ are investments that are both readily converted to known amounts of cash and mature within three months.

Explain how held-to-maturity debt securities are accounted for at and after acquisition and how they are reported in the financial statements.

Explain how transactions (both sales and purchases) in a foreign currency are recorded and reported.

A company had investments in long-term available-for-sale securities.At the end of the current year,the company's portfolio had a $731,000 cost and $730,000 market value. What is the current year's adjustment to market value given the following account balances at the end of the prior year?

A company's return on total assets equals 28%.If total assets and net sales are $4,500,000 and $10,000,000 respectively,how much is net income?

A company should report its portfolio of trading securities at its market value.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Accounting for Partnerships

Accounting With Special Journals

Filters