Question 1

Short-term investments:

Accepted Answer

A) Are securities that management intends to convert to cash within one year or an operating cycle,whichever is longer. 
B) Include funds earmarked for a special purpose such as bond sinking funds. 
C) Include stocks not intended to be converted into cash. 
D) Include bonds not intended to be converted into cash. 
E) Include sinking funds not intended to be converted into cash. 
A) Are securities that management intends to convert to cash within one year or an operating cycle,whichever is longer. 
B) Include funds earmarked for a special purpose such as bond sinking funds. 
C) Include stocks not intended to be converted into cash. 
D) Include bonds not intended to be converted into cash. 
E) Include sinking funds not intended to be converted into cash.

Question 2

On January 2,Froxel Company purchased 10,000 shares of Sandia Corp.common stock at $19 per share plus a $3,000 commission.This represents 30% of Sandia Corp.'s outstanding stock.On August 6,Sandia Corp.declared and paid cash dividends of $1.75 per share and on December 31 it reported net income of $150,000.Prepare the necessary entries Froxel Company must make to account for these transactions and events.

Accepted Answer

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Question 3

A company has net income of $250,000,net sales of $2,000,000,and average total assets of $1,500,000.Its return on total assets is equal to:

Accepted Answer

A) 12.5% 
B) 13.3% 
C) 16.7% 
D) 75.0% 
E) 600.0% 
A) 12.5% 
B) 13.3% 
C) 16.7% 
D) 75.0% 
E) 600.0%

Question 4

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 5

Vans purchased 40,000 shares of Skechers common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

Accepted Answer

A) Debit to Long-Term Investments for $92,800. 
B) Debit to Long-Term Investments for $232,000. 
C) Credit to Long-Term Investments for $92,800. 
D) Credit to Long-Term Investments for $232,000. 
E) Debit to Long-Term Investment for $40,000. 
A) Debit to Long-Term Investments for $92,800. 
B) Debit to Long-Term Investments for $232,000. 
C) Credit to Long-Term Investments for $92,800. 
D) Credit to Long-Term Investments for $232,000. 
E) Debit to Long-Term Investment for $40,000.

Question 6

Consolidated financial statements show the financial position,results of operations,and cash flows of all entities under the parent's control.

Accepted Answer

A) True 
 B)False

Question 7

When using the equity method of accounting for investments in equity securities,the receipt of cash dividends is recorded as revenue.

Accepted Answer

A) True 
 B)False

Question 8

Comprehensive income refers to all changes in equity during a period except those due to investments and distributions to income.

Accepted Answer

A) True 
 B)False

Question 9

Golden Age Co.exports Native American artwork to Japan.Prepare journal entries for the following transactions.

Accepted Answer

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Question 10

Explain how investors report investments in equity securities when the investor has a controlling influence over an investee.

Accepted Answer

If an investing company controls another

Question 11

A company reported net income of $100,000 and average total assets of $425,000.Calculate its return on total assets.

Accepted Answer

$100,000/$

Question 12

Long-term investments in debt securities not classified as held-to-maturity securities are classified as available-for-sale securities.

Accepted Answer

A) True 
 B)False

Question 13

A U.S.company's credit sale to an international customer to be paid in a foreign currency is recorded using the exchange rate on the date of sale.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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Question 15

Hector Corp.purchased 1,000 shares of Landmark Corp.'s common stock for $36,850 cash.This purchase is considered a long-term available-for-sale investment by Hector.Prepare Hector's journal entry to record the purchase.

Accepted Answer

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Question 16

A company has net income of $130,500.Its net sales were $1,740,000 and its average total assets were $2,750,000.Its total asset turnover is equal to 4.7%.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

The answer of Long-term investments in available-for-sale securities are reported...

Question 18

On November 12,Kendra,Inc.,a U.S.Company,sold merchandise on credit to Nakakura Company of Japan at a price of 1,500,000 yen.The exchange rate was $0.00837 per yen on the date of sale.On December 31,when Kendra prepared its financial statements,the exchange rate was $0.00843.Nakakura Company paid in full on January 12,when the exchange rate was $0.00861.On December 31,Kendra should prepare the following journal entry for this transaction:

Accepted Answer

A)    
B)    
C)    
D)    
E) No journal entry is required until the amount is collected 
A)    
B)    
C)    
D)    
E) No journal entry is required until the amount is collected

Question 19

In accounting for noninfluential securities:

Accepted Answer

A) The GAAP concept of "trading securities" is commonly referred to as "financial assets at fair value through profit and loss" under IFRS. 
B) The IFRS concept of "trading securities" is commonly referred to as "financial assets at fair value through profit and loss" under GAAP. 
C) The GAAP concept of "available-for-sale securities" is commonly referred to as "available-for-sale financial assets" under IFRS. 
D) The IRFS concept of "available-for-sale securities" translates as "available-for-sale financial assets" under GAAP. 
E) Both A and C above are true statements. 
A) The GAAP concept of "trading securities" is commonly referred to as "financial assets at fair value through profit and loss" under IFRS. 
B) The IFRS concept of "trading securities" is commonly referred to as "financial assets at fair value through profit and loss" under GAAP. 
C) The GAAP concept of "available-for-sale securities" is commonly referred to as "available-for-sale financial assets" under IFRS. 
D) The IRFS concept of "available-for-sale securities" translates as "available-for-sale financial assets" under GAAP. 
E) Both A and C above are true statements.

Question 20

Micron owns 30% of JVT stock.Micron received $6,500 in cash dividends from its investment in JVT.The entry to record receipt of these dividends would include a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.

Accepted Answer

A) True 
 B)False

Short-term investments:

A company has net income of $250,000,net sales of $2,000,000,and average total assets of $1,500,000.Its return on total assets is equal to:

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:

Vans purchased 40,000 shares of Skechers common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

Consolidated financial statements show the financial position,results of operations,and cash flows of all entities under the parent's control.

When using the equity method of accounting for investments in equity securities,the receipt of cash dividends is recorded as revenue.

Comprehensive income refers to all changes in equity during a period except those due to investments and distributions to income.

Golden Age Co.exports Native American artwork to Japan.Prepare journal entries for the following transactions.

Explain how investors report investments in equity securities when the investor has a controlling influence over an investee.

A company reported net income of $100,000 and average total assets of $425,000.Calculate its return on total assets.

Long-term investments in debt securities not classified as held-to-maturity securities are classified as available-for-sale securities.

A U.S.company's credit sale to an international customer to be paid in a foreign currency is recorded using the exchange rate on the date of sale.

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

Hector Corp.purchased 1,000 shares of Landmark Corp.'s common stock for $36,850 cash.This purchase is considered a long-term available-for-sale investment by Hector.Prepare Hector's journal entry to record the purchase.

A company has net income of $130,500.Its net sales were $1,740,000 and its average total assets were $2,750,000.Its total asset turnover is equal to 4.7%.

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

In accounting for noninfluential securities:

Micron owns 30% of JVT stock.Micron received $6,500 in cash dividends from its investment in JVT.The entry to record receipt of these dividends would include a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.

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

Short-term investments:

A company has net income of $250,000,net sales of $2,000,000,and average total assets of $1,500,000.Its return on total assets is equal to:

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:

Vans purchased 40,000 shares of Skechers common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

Consolidated financial statements show the financial position,results of operations,and cash flows of all entities under the parent's control.

When using the equity method of accounting for investments in equity securities,the receipt of cash dividends is recorded as revenue.

Comprehensive income refers to all changes in equity during a period except those due to investments and distributions to income.

Golden Age Co.exports Native American artwork to Japan.Prepare journal entries for the following transactions.

Explain how investors report investments in equity securities when the investor has a controlling influence over an investee.

A company reported net income of $100,000 and average total assets of $425,000.Calculate its return on total assets.

Long-term investments in debt securities not classified as held-to-maturity securities are classified as available-for-sale securities.

A U.S.company's credit sale to an international customer to be paid in a foreign currency is recorded using the exchange rate on the date of sale.

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

Hector Corp.purchased 1,000 shares of Landmark Corp.'s common stock for $36,850 cash.This purchase is considered a long-term available-for-sale investment by Hector.Prepare Hector's journal entry to record the purchase.

A company has net income of $130,500.Its net sales were $1,740,000 and its average total assets were $2,750,000.Its total asset turnover is equal to 4.7%.

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

In accounting for noninfluential securities:

Micron owns 30% of JVT stock.Micron received $6,500 in cash dividends from its investment in JVT.The entry to record receipt of these dividends would include a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.

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