Question 1

Land used in the company's operations is reported as a long-term investment.

Accepted Answer

A) True 
 B)False  False

Question 2

When an investor company owns more than 25% of the voting stock of an investee company,it has a controlling influence.

Accepted Answer

A) True 
 B)False  False

Question 3

Match the following terms with the appropriate definitions.
-Financial statements that show the financial position,results of operations,and cash flows of all entities under the parent's control,including those of any subsidiaries.

Accepted Answer

A) Available-for-sale securities 
B) Equity method 
C) Parent company 
D) Consolidated financial statements 
E) Long-term investments
F)Unrealized gain (loss)
G)Trading securities
H)Return on total assets
I)Subsidiary
J)Held-to-maturity securities 
A) Available-for-sale securities 
B) Equity method 
C) Parent company 
D) Consolidated financial statements 
E) Long-term investments
F)Unrealized gain (loss)
G)Trading securities
H)Return on total assets
I)Subsidiary
J)Held-to-maturity securities D

Question 4

On November 12,Higgins,Inc.,a U.S.Company,sold merchandise on credit to Kagome 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 Higgins prepared its financial statements,the exchange rate was $0.00843.Kagome paid in full on January 12,when the exchange rate was $0.00861.On December 31,Higgins should prepare the following journal entry:

Accepted Answer

A)  Debit Sales $90; credit Foreign Exchange Gain $90. 
B)  Debit Foreign Exchange Loss $90; credit Sales $90. 
C)  Debit Accounts Receivable-Kagome $90; credit Foreign Exchange Gain $90. 
D)  Debit Foreign Exchange Loss $90; Accounts Receivable-Kagome $90. 
E)  No journal entry is required until the amount is collected. 
A)  Debit Sales $90; credit Foreign Exchange Gain $90. 
B)  Debit Foreign Exchange Loss $90; credit Sales $90. 
C)  Debit Accounts Receivable-Kagome $90; credit Foreign Exchange Gain $90. 
D)  Debit Foreign Exchange Loss $90; Accounts Receivable-Kagome $90. 
E)  No journal entry is required until the amount is collected.

Question 5

The cost method of accounting is used for long-term investments in equity securities with significant influence.

Accepted Answer

A) True 
 B)False

Question 6

Financial statements that show the financial position,results of operations,and cash flows of all entities under the parent company's control,including all subsidiaries are known as:

Accepted Answer

A)  Combined financial statements 
B)  Consolidated financial statements 
C)  Equity financial statements 
D)  Statement of owner's equity 
E)  Investor financial statements 
A)  Combined financial statements 
B)  Consolidated financial statements 
C)  Equity financial statements 
D)  Statement of owner's equity 
E)  Investor financial statements

Question 7

Short-term investments:

Accepted Answer

A)  Are securities that management intends to convert to cash within the longer of one year or the current operating cycle, and are readily convertible to cash. 
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 the longer of one year or the current operating cycle, and are readily convertible to cash. 
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 8

Silver Era Co.exports Southwestern artwork to Japan.Prepare journal entries for the following transactions.
 $$\begin{array} { | l | l | } 
\hline \text { Nov } 10 & \begin{array} { l } 
\text { Sold artwork to Ito Company for } ¥ 10,000,000 \text {, terms } n / 30 . \text { The exchange rate } \
\text { was } \$ 0.009 \text { per yen. }
\end{array} \
\hline \text { Dec } 5 & \begin{array} { l } 
\text { Received payment from Ito Company for the November } 10 \text { sale. The exchange } \
\text { rate was } \$ 0.0087 \text { per yen. }
\end{array} \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | r | r | } 
\

Question 9

On January 3,Kostansas Corporation purchased 5,000 shares of Morton,Inc.for $40 per share plus $700 in broker commissions.These shares represent a 40% ownership in Morton,Inc.Prepare the journal entry Kostansas Corporation should record for the investment transaction.

Accepted Answer

\[\begin{array} { c c } 
\text

Question 10

What are the accounting basics for debt securities,including recording their acquisition,interest earned,and their disposal?

Accepted Answer

At acquisition,debt securities are recor

Question 11

Investments can be classified as all but which of the following:

Accepted Answer

A)  Intangible investments. 
B)  Held-to-maturity debt securities. 
C)  Available-for-sale debt securities. 
D)  Available-for-sale equity securities. 
E)  Trading securities. 
A)  Intangible investments. 
B)  Held-to-maturity debt securities. 
C)  Available-for-sale debt securities. 
D)  Available-for-sale equity securities. 
E)  Trading securities.

Question 12

What is comprehensive income and how is it usually reported in the financial statements?

Accepted Answer

Comprehensive income refers to all chang

Question 13

Match the following terms with the appropriate definitions.
-A company that owns a more than 50% controlling interest in a subsidiary.

Accepted Answer

A) Available-for-sale securities 
B) Equity method 
C) Parent company 
D) Consolidated financial statements 
E) Long-term investments
F)Unrealized gain (loss)
G)Trading securities
H)Return on total assets
I)Subsidiary
J)Held-to-maturity securities 
A) Available-for-sale securities 
B) Equity method 
C) Parent company 
D) Consolidated financial statements 
E) Long-term investments
F)Unrealized gain (loss)
G)Trading securities
H)Return on total assets
I)Subsidiary
J)Held-to-maturity securities

Question 14

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

\[\begin{array} { | l | r | l | } 
\hlin

Question 15

Debt securities are recorded at cost when purchased.

Accepted Answer

A) True 
 B)False

Question 16

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 equals:

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 17

Held-to-maturity securities are:

Accepted Answer

A)  Always classified as Short-Term Investments. 
B)  Always classified as Long-Term Investments. 
C)  Debt securities that a company intends and is able to hold to maturity. 
D)  Equity securities that a company intends and is able to hold to maturity. 
E)  Equity securities where significant influence involved. 
A)  Always classified as Short-Term Investments. 
B)  Always classified as Long-Term Investments. 
C)  Debt securities that a company intends and is able to hold to maturity. 
D)  Equity securities that a company intends and is able to hold to maturity. 
E)  Equity securities where significant influence involved.

Question 18

Zhang Corp.owns 40% of Magnor Company's common stock.Magnor pays $97,000 in total cash dividends to its shareholders.Zhang's entry to record this transaction should include a:

Accepted Answer

A)  Debit to Dividends for $97,000. 
B)  Debit to Dividends for $38,800. 
C)  Debit to Long-Term investments for $97,000. 
D)  Credit to Long-Term Investments for $38,800. 
E)  Credit to Cash for $97,000. 
A)  Debit to Dividends for $97,000. 
B)  Debit to Dividends for $38,800. 
C)  Debit to Long-Term investments for $97,000. 
D)  Credit to Long-Term Investments for $38,800. 
E)  Credit to Cash for $97,000.

Question 19

Foreign exchange rates fluctuate due to changes in all but which of the following?

Accepted Answer

A)  Political conditions. 
B)  Economic conditions. 
C)  Supply and demand for currencies. 
D)  Expectations of future events. 
E)  Whether the companies prepare financial statements under U.S. GAAP or IFRS. 
A)  Political conditions. 
B)  Economic conditions. 
C)  Supply and demand for currencies. 
D)  Expectations of future events. 
E)  Whether the companies prepare financial statements under U.S. GAAP or IFRS.

Question 20

On January 4,Year 1,Barber Company purchased 5,000 shares of Convell Company for $59,500 plus a broker's fee of $1,000.Convell Company has a total of 25,000 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell.During each of the next two years,Convell declared and paid cash dividends of $0.85 per share,and its net income was $72,000 and $67,000 for Year 1 and Year 2,respectively.
-What is the book value of Barber's investment in Convell at the end of Year 2?

Accepted Answer

A)  $60,500. 
B)  $79,800. 
C)  $52,000. 
D)  $88,300. 
E)  $87,300. 
A)  $60,500. 
B)  $79,800. 
C)  $52,000. 
D)  $88,300. 
E)  $87,300.

Land used in the company's operations is reported as a long-term investment.

When an investor company owns more than 25% of the voting stock of an investee company,it has a controlling influence.

Match the following terms with the appropriate definitions. -Financial statements that show the financial position,results of operations,and cash flows of all entities under the parent's control,including those of any subsidiaries.

The cost method of accounting is used for long-term investments in equity securities with significant influence.

Financial statements that show the financial position,results of operations,and cash flows of all entities under the parent company's control,including all subsidiaries are known as:

Short-term investments:

On January 3,Kostansas Corporation purchased 5,000 shares of Morton,Inc.for $40 per share plus $700 in broker commissions.These shares represent a 40% ownership in Morton,Inc.Prepare the journal entry Kostansas Corporation should record for the investment transaction.

What are the accounting basics for debt securities,including recording their acquisition,interest earned,and their disposal?

Investments can be classified as all but which of the following:

What is comprehensive income and how is it usually reported in the financial statements?

Match the following terms with the appropriate definitions. -A company that owns a more than 50% controlling interest in a subsidiary.

Debt securities are recorded at cost when purchased.

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 equals:

Held-to-maturity securities are:

Zhang Corp.owns 40% of Magnor Company's common stock.Magnor pays $97,000 in total cash dividends to its shareholders.Zhang's entry to record this transaction should include a:

Foreign exchange rates fluctuate due to changes in all but which of the following?

Accounting in Business

Analyzing 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

Time Value of Money

Partnership Accounting

Filters

Exam 15: Investments

Land used in the company's operations is reported as a long-term investment.

When an investor company owns more than 25% of the voting stock of an investee company,it has a controlling influence.

Match the following terms with the appropriate definitions. -Financial statements that show the financial position,results of operations,and cash flows of all entities under the parent's control,including those of any subsidiaries.

The cost method of accounting is used for long-term investments in equity securities with significant influence.

Financial statements that show the financial position,results of operations,and cash flows of all entities under the parent company's control,including all subsidiaries are known as:

Short-term investments:

On January 3,Kostansas Corporation purchased 5,000 shares of Morton,Inc.for $40 per share plus $700 in broker commissions.These shares represent a 40% ownership in Morton,Inc.Prepare the journal entry Kostansas Corporation should record for the investment transaction.

What are the accounting basics for debt securities,including recording their acquisition,interest earned,and their disposal?

Investments can be classified as all but which of the following:

What is comprehensive income and how is it usually reported in the financial statements?

Match the following terms with the appropriate definitions. -A company that owns a more than 50% controlling interest in a subsidiary.

Debt securities are recorded at cost when purchased.

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 equals:

Held-to-maturity securities are:

Zhang Corp.owns 40% of Magnor Company's common stock.Magnor pays $97,000 in total cash dividends to its shareholders.Zhang's entry to record this transaction should include a:

Foreign exchange rates fluctuate due to changes in all but which of the following?

Accounting in Business

Analyzing 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

Time Value of Money

Partnership Accounting

Filters