Question 1

________ are debt and equity securities that a company intends to actively manage and trade for a profit.

Accepted Answer

The answer of ________ are debt and equity securities that...

Question 2

A company had net income of $43,000,net sales of $380,500,and average total assets of $220,000.Its profit margin and total asset turnover were,respectively:

Accepted Answer

A)  11.3%; 1.73. 
B)  11.3%; 19.5. 
C)  1.7%; 19.5. 
D)  1.7%; 11.3. 
E)  19.5%; 11.3. 
A)  11.3%; 1.73. 
B)  11.3%; 19.5. 
C)  1.7%; 19.5. 
D)  1.7%; 11.3. 
E)  19.5%; 11.3.

Question 3

Held-to-maturity securities are equity securities a company intends and is able to hold until maturity.

Accepted Answer

A) True 
 B)False

Question 4

A U.S.company makes a sale to a foreign customer receivable in 30 days in the customer's currency.The sale would be recorded by the U.S.company on the date:

Accepted Answer

A)  Of sale using a projected estimate of the U.S. dollar value at payment date. 
B)  Of sale using a 30-day average U.S. dollar value. 
C)  Of sale using the current dollar value. 
D)  Of sale using the foreign currency value. 
E)  When payment is received. 
A)  Of sale using a projected estimate of the U.S. dollar value at payment date. 
B)  Of sale using a 30-day average U.S. dollar value. 
C)  Of sale using the current dollar value. 
D)  Of sale using the foreign currency value. 
E)  When payment is received.

Question 5

On February 15,Jewel Company buys 7,000 shares of Marcelo Corp.common at $28.53 per share plus a brokerage fee of $400.The stock is classified as available-for-sale securities.This is the company's first and only investment in available-for-sale securities.On March 15,Marcelo Corp.declares a dividend of $1.15 per share payable to stockholders of record on April 15.Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp.stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250.The fair value of the remaining shares is $29.50 per share.The amount that Jewel Company should report in the equity section of its year-end December 31 balance sheet for its investment in Marcelo Corp.is:

Accepted Answer

A)  Unrealized Gain -Equity; $10,295. 
B)  Realized Gain -Equity; $8,050. 
C)  Unrealized Loss -Equity; $2,245. 
D)  Unrealized Gain -Equity; $3,195. 
E)  Unrealized Gain - Equity; $6,390. 
A)  Unrealized Gain -Equity; $10,295. 
B)  Realized Gain -Equity; $8,050. 
C)  Unrealized Loss -Equity; $2,245. 
D)  Unrealized Gain -Equity; $3,195. 
E)  Unrealized Gain - Equity; $6,390.

Question 6

When an investment in 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

Six months ago,a company purchased an investment in stock for $70,000.The investment is classified as available-for-sale securities.This is the company's first and only investment in available-for-sale securities.The current fair value of the stock is $68,500.The company should record a:

Accepted Answer

A)  Debit to Unrealized Loss-Equity for $1,500. 
B)  Credit to Unrealized Gain-Equity for $1,500. 
C)  Debit to Investment Revenue for $1,500. 
D)  No entry is required. 
E)  Credit to Investment Revenue for $1,500. 
A)  Debit to Unrealized Loss-Equity for $1,500. 
B)  Credit to Unrealized Gain-Equity for $1,500. 
C)  Debit to Investment Revenue for $1,500. 
D)  No entry is required. 
E)  Credit to Investment Revenue for $1,500.

Question 8

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 when Morton reports net income of $52,000 for the year on December 31.

Accepted Answer

Dec. 31 @#LAT-DLM&Long-Term Investments@#LAT-DLM&2

Question 9

When the cost of a short-term held-to-maturity debt security is different from the maturity value,the difference is amortized over the remaining life of the security.

Accepted Answer

A) True 
 B)False

Question 10

On February 15,Jewel Company buys 7,000 shares of Marcelo Corp.common stock at $28.53 per share plus a brokerage fee of $400.The stock is classified as long-term available-for-sale securities.This is the company's first and only investment in available-for-sale securities.On March 15,Marcelo declares a dividend of $1.15 per share payable to stockholders of record on April 15.Jewel received the dividend on April 15 and ultimately sells half of the Marcelo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250.The journal entry to record the purchase on February 15 is:

Accepted Answer

A)  Debit Long-Term Investments-HTM $199,710; credit Cash $199,710. 
B)  Debit Long-Term Investments-AFS $199,710; credit Cash $199,710. 
C)  Debit Long-Term Investments-Trading $199,710; credit Cash $199,710. 
D)  Debit Long-Term Investments-Trading $200,110; credit Cash $200,110. 
E)  Debit Long-Term Investments-AFS $200,110; credit Cash $200,110. 
A)  Debit Long-Term Investments-HTM $199,710; credit Cash $199,710. 
B)  Debit Long-Term Investments-AFS $199,710; credit Cash $199,710. 
C)  Debit Long-Term Investments-Trading $199,710; credit Cash $199,710. 
D)  Debit Long-Term Investments-Trading $200,110; credit Cash $200,110. 
E)  Debit Long-Term Investments-AFS $200,110; credit Cash $200,110.

Question 11

If a U.S.Company's credit sale to an international customer allows payment to be made in a foreign currency,the same exchange rate must be used for the date of sale and the cash payment date.

Accepted Answer

A) True 
 B)False

Question 12

Long-term investments are usually held as an investment of cash for use in current operations.

Accepted Answer

A) True 
 B)False

Question 13

Kendall Corp.purchased at par value $75,000 of Shrem Company's 8% bonds that mature in three-years.The bonds pay interest semiannually on June 1 and December 1.Kendall plans to hold the bonds until they mature.When the bonds mature,Kendall should prepare the following journal entry:

Accepted Answer

A)  debit Long-Term Investments-HTM, $75,000; credit Cash, $75,000. 
B)  debit Cash, $6,000; credit, Unrealized Gain-Equity, $6,000. 
C)  debit Cash, $75,000; credit Long-Term Investments-HTM, $75,000. 
D)  debit Unrealized Gain-Equity, $6,000; credit Cash, $6,000. 
E)  debit Cash, $75,000; credit Long-Term Investments-Trading, $75,000. 
A)  debit Long-Term Investments-HTM, $75,000; credit Cash, $75,000. 
B)  debit Cash, $6,000; credit, Unrealized Gain-Equity, $6,000. 
C)  debit Cash, $75,000; credit Long-Term Investments-HTM, $75,000. 
D)  debit Unrealized Gain-Equity, $6,000; credit Cash, $6,000. 
E)  debit Cash, $75,000; credit Long-Term Investments-Trading, $75,000.

Question 14

Match the following terms with the appropriate definitions.
-An accounting method for long-term investments in equity when the investor has significant influence over the investee.

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 15

All of the following statements regarding accounting for influential securities under U.S.GAAP and IFRS are true except:

Accepted Answer

A)  Under the equity method, the share of investee's net income is reported in the investor's income in the same period the investee earns that income. 
B)  Under the consolidation method, investee and investor revenues and expenses are combined. 
C)  Under the equity method, the investment account equals the acquisition cost plus the share of investee income plus the share of investee dividends. 
D)  Under the consolidation method, nonintercompany assets and liabilities are combined (eliminating the need for an investment account). 
E)  U.S. GAAP companies commonly refer to noncontrolling interests in consolidated subsidiaries as minority interests whereas IFRS companies use noncontrolling interests. 
A)  Under the equity method, the share of investee's net income is reported in the investor's income in the same period the investee earns that income. 
B)  Under the consolidation method, investee and investor revenues and expenses are combined. 
C)  Under the equity method, the investment account equals the acquisition cost plus the share of investee income plus the share of investee dividends. 
D)  Under the consolidation method, nonintercompany assets and liabilities are combined (eliminating the need for an investment account). 
E)  U.S. GAAP companies commonly refer to noncontrolling interests in consolidated subsidiaries as minority interests whereas IFRS companies use noncontrolling interests.

Question 16

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it is earned.

Accepted Answer

A) True 
 B)False

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

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

Accepted Answer

answers m

Question 19

Scotsland Company had the following transactions relating to investments in trading securities during the year.Prepare the required general journal entries for these transactions.
 $$\begin{array} { | l | l | } 
\hline \text { May } 4 & \begin{array} { l } 
\text { Scotsland purchased } 600 \text { shares of Lobe Company stock at } \$ 120 \text { per share plus a } \
\$ 750 \text { brokerage fee. }
\end{array} \
\hline \text { July 1 } & \text { Scotsland received a } \$ 2.50 \text { per share cash dividend on the Lobe Company stock. } \
\hline \text { Sept. } 15 & \begin{array} { l } 
\text { Sold } 300 \text { shares of Lobe Company stock for } \$ 125 \text { per share, less a } \$ 450 \
\text { brokerage fee. }
\end{array} \
\hline \text { Dec. } 31 & \begin{array} { l } 
\text { The fair value of the Lobe Company stock (the only investment that Scotsland } \
\text { owns) is } \$ 124 \text { per share. The balance of the Fair value Adjustment-Trading } \
\text { account had a zero balance prior to adjustment. }
\end{array} \
\hline
\end{array}$$

Accepted Answer

The answer of Scotsland Company had the following transactions relating...

Question 20

A company had net income of $86,000 in Year 1 and $118,000 in Year 2.Its net sales were $640,000 in Year 1 and $611,000 in Year 2.Its average total assets in Year 1 were $1,670,000 and $1,712,000 in Year 2.Calculate the profit margin,total asset turnover and return on total assets for both years.Comment on the results.

Accepted Answer

\[\begin{array} { |l | l | } 
\hline \te

________ are debt and equity securities that a company intends to actively manage and trade for a profit.

A company had net income of $43,000,net sales of $380,500,and average total assets of $220,000.Its profit margin and total asset turnover were,respectively:

Held-to-maturity securities are equity securities a company intends and is able to hold until maturity.

A U.S.company makes a sale to a foreign customer receivable in 30 days in the customer's currency.The sale would be recorded by the U.S.company on the date:

When an investment in 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.

Six months ago,a company purchased an investment in stock for $70,000.The investment is classified as available-for-sale securities.This is the company's first and only investment in available-for-sale securities.The current fair value of the stock is $68,500.The company should record a:

When the cost of a short-term held-to-maturity debt security is different from the maturity value,the difference is amortized over the remaining life of the security.

If a U.S.Company's credit sale to an international customer allows payment to be made in a foreign currency,the same exchange rate must be used for the date of sale and the cash payment date.

Long-term investments are usually held as an investment of cash for use in current operations.

Kendall Corp.purchased at par value $75,000 of Shrem Company's 8% bonds that mature in three-years.The bonds pay interest semiannually on June 1 and December 1.Kendall plans to hold the bonds until they mature.When the bonds mature,Kendall should prepare the following journal entry:

Match the following terms with the appropriate definitions. -An accounting method for long-term investments in equity when the investor has significant influence over the investee.

All of the following statements regarding accounting for influential securities under U.S.GAAP and IFRS are true except:

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it is earned.

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:

Return on total assets is computed by dividing by .

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

________ are debt and equity securities that a company intends to actively manage and trade for a profit.

A company had net income of $43,000,net sales of $380,500,and average total assets of $220,000.Its profit margin and total asset turnover were,respectively:

Held-to-maturity securities are equity securities a company intends and is able to hold until maturity.

A U.S.company makes a sale to a foreign customer receivable in 30 days in the customer's currency.The sale would be recorded by the U.S.company on the date:

When an investment in 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.

Six months ago,a company purchased an investment in stock for $70,000.The investment is classified as available-for-sale securities.This is the company's first and only investment in available-for-sale securities.The current fair value of the stock is $68,500.The company should record a:

When the cost of a short-term held-to-maturity debt security is different from the maturity value,the difference is amortized over the remaining life of the security.

If a U.S.Company's credit sale to an international customer allows payment to be made in a foreign currency,the same exchange rate must be used for the date of sale and the cash payment date.

Long-term investments are usually held as an investment of cash for use in current operations.

Kendall Corp.purchased at par value $75,000 of Shrem Company's 8% bonds that mature in three-years.The bonds pay interest semiannually on June 1 and December 1.Kendall plans to hold the bonds until they mature.When the bonds mature,Kendall should prepare the following journal entry:

Match the following terms with the appropriate definitions. -An accounting method for long-term investments in equity when the investor has significant influence over the investee.

All of the following statements regarding accounting for influential securities under U.S.GAAP and IFRS are true except:

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it is earned.

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:

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

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

Return on total assets is computed by dividing by .