Question 1

Profit margin reflects the percent of net income in each dollar of net sales.

Accepted Answer

A) True 
 B)False

Question 2

Explain the difference between short-term and long-term investments.Cite examples of each.

Accepted Answer

Short-term investments are securities ex

Question 3

Identify the classifications for debt investments in securities.What are the accounting basics for debt investments,including acquisition,interest earned,and disposition?

Accepted Answer

Debt investments can be classified as: (

Question 4

Madison Corporation purchased 40% of Jay Corporation for $125,000 on January 1.On June 20 of the same year,Jay Corporation declared total cash dividends of $30,000.At year-end,Jay Corporation reported net income of $150,000.The balance in Madison's Equity Method Investments-Jay Corporation account as of December 31 should be:

Accepted Answer

A) $77,000. 
B) $125,000. 
C) $173,000. 
D) $197,000. 
E) $370,000. 
A) $77,000. 
B) $125,000. 
C) $173,000. 
D) $197,000. 
E) $370,000.

Question 5

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) Non-current section of the balance sheet called long-term investments. 
D) Plant assets 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) Non-current section of the balance sheet called long-term investments. 
D) Plant assets section of the balance sheet. 
E) Equity section of the balance sheet.

Question 6

Silver Era Co.exports Southwestern artwork to Japan.Prepare journal entries for the following transactions.

Accepted Answer

The answer of Silver Era Co.exports Southwestern artwork to Japan.Prepare...

Question 7

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

Accepted Answer

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

Question 8

Consolidated financial statements:

Accepted Answer

A) Show the financial statements of all entities under the parent's control,including all subsidiaries. 
B) Show the results of operations,cash flows,and the financial position of the parent only. 
C) Show the results of operations,cash flows,and the financial position of the subsidiary only. 
D) Include line items for investments in the subsidiaries on the balance sheet. 
E) Do not include a balance sheet. 
A) Show the financial statements of all entities under the parent's control,including all subsidiaries. 
B) Show the results of operations,cash flows,and the financial position of the parent only. 
C) Show the results of operations,cash flows,and the financial position of the subsidiary only. 
D) Include line items for investments in the subsidiaries on the balance sheet. 
E) Do not include a balance sheet.

Question 9

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

Accepted Answer

cost metho

Question 10

A decrease in the fair value of a security that has not yet been realized through an actual sale of the security is called a(n):

Accepted Answer

A) Contingent loss. 
B) Realizable loss. 
C) Unrealized loss. 
D) Capitalized loss. 
E) Market loss. 
A) Contingent loss. 
B) Realizable loss. 
C) Unrealized loss. 
D) Capitalized loss. 
E) Market loss.

Question 11

________ securities reflect a creditor relationship while ________ securities reflect an owner relationship.

Accepted Answer

Debt; equi

Question 12

The currency in which a company presents its financial statements is known as the:

Accepted Answer

A) Multinational currency. 
B) Price-level-adjusted currency. 
C) Specific currency. 
D) Reporting currency. 
E) Historical cost currency. 
A) Multinational currency. 
B) Price-level-adjusted currency. 
C) Specific currency. 
D) Reporting currency. 
E) Historical cost currency.

Question 13

MotorCity,Inc.purchased 40,000 shares of Shaw 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 Debt Investments for $232,000. 
B) Debit to Equity Method Investments for $232,000. 
C) Credit to Equity Method Investments for $232,000. 
D) Debit to Long-Term Investments-HTM for $232,000. 
E) Debit to Short-Term Investment-AFS for $232,000. 
A) Debit to Debt Investments for $232,000. 
B) Debit to Equity Method Investments for $232,000. 
C) Credit to Equity Method Investments for $232,000. 
D) Debit to Long-Term Investments-HTM for $232,000. 
E) Debit to Short-Term Investment-AFS for $232,000.

Question 14

Return on total assets is computed by dividing ________ by ________.

Accepted Answer

net income; average

Question 15

Any cash dividends received from stock investments with insignificant influence are recorded as Dividend Expense.

Accepted Answer

A) True 
 B)False

Question 16

Match between columns
                        Premises: Debt securities that a company intends and is able to hold until maturity.
Debt securities not classified as trading or held-to-maturity.
Debt securities that a company intends to actively manage and trade for profit.
A corporation controlled by another company when the controlling company owns more than 50% of the investee's voting stock.
An accounting method for long-term investments in equity when the investor has significant influence over the investee.
A company that owns more than 50% controlling interest in a subsidiary.
Investments in equity and debt securities that are not readily convertible to cash or are not intended to be converted to cash in the short term.
Change in fair value that is not yet realized through an actual sale.
A measure of financial performance,computed as net income divided by average total assets.
Financial statements that show the financial statements of all entities under the parent's control,including all subsidiaries.

Accepted Answer

The Answer of Return on total assets and Long-term investments is...

Question 17

Cloverton Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is:

Accepted Answer

A) 3% 
B) 200% 
C) 6% 
D) 17% 
E) 1.5% 
A) 3% 
B) 200% 
C) 6% 
D) 17% 
E) 1.5%

Question 18

Long-term investments include investments in land or other assets not used in a company's operations.

Accepted Answer

A) True 
 B)False

Question 19

On May 1,Jorge Co.purchases notes of Radiotech for $25,000.This investment is considered to be an available-for-sale debt investment.This is the company's first and only investment in available-for-sale debt securities.On July 31 (Jorge's year-end),the notes had a fair value of $28,000.Jorge should record a credit to Unrealized Gain-Equity for $3,000.

Accepted Answer

A) True 
 B)False

Question 20

Trading (debt)securities are:

Accepted Answer

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

Exam 26: Investments

Profit margin reflects the percent of net income in each dollar of net sales.

Explain the difference between short-term and long-term investments.Cite examples of each.

Identify the classifications for debt investments in securities.What are the accounting basics for debt investments,including acquisition,interest earned,and disposition?

Long-term investments are reported in the:

Silver Era Co.exports Southwestern artwork to Japan.Prepare journal entries for the following transactions.

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

Consolidated financial statements:

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

A decrease in the fair value of a security that has not yet been realized through an actual sale of the security is called a(n):

________ securities reflect a creditor relationship while ________ securities reflect an owner relationship.

The currency in which a company presents its financial statements is known as the:

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

Return on total assets is computed by dividing ________ by ________.

Any cash dividends received from stock investments with insignificant influence are recorded as Dividend Expense.

Cloverton Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is:

Long-term investments include investments in land or other assets not used in a company's operations.

Trading (debt)securities are:

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Lean Principles and Accounting

Filters

securities reflect a creditor relationship while securities reflect an owner relationship.

Return on total assets is computed by dividing by .