Question 1

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

Accepted Answer

A) True 
 B)False

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)  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 3

Foreign exchange rates fluctuate due to many factors including changing political and economic conditions.

Accepted Answer

A) True 
 B)False

Question 4

Pravis Corporation owns 30% of Kuster Corporation.Pravis Corporation received $9,000 in cash dividends from Kuster Corporation.The entry to record receipt of these dividends is:

Accepted Answer

A)  Debit Cash, $9,000; credit Long-Term Investments, $9,000. 
B)  Debt Long-Term Investment, $9,000; credit Cash, $9000. 
C)  Debit Cash, $9,000; credit Interest Revenue, $9,000. 
D)  Debit Unrealized Gain-Equity, $9,000; credit Cash, $9,000. 
E)  Debit Cash, $9,000; credit Dividend Revenue, $9,000. 
A)  Debit Cash, $9,000; credit Long-Term Investments, $9,000. 
B)  Debt Long-Term Investment, $9,000; credit Cash, $9000. 
C)  Debit Cash, $9,000; credit Interest Revenue, $9,000. 
D)  Debit Unrealized Gain-Equity, $9,000; credit Cash, $9,000. 
E)  Debit Cash, $9,000; credit Dividend Revenue, $9,000.

Question 5

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

Accepted Answer

Short-term investments are securities ex

Question 6

Return on total assets can be separated into the profit margin ratio and total asset turnover.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

Held-to-maturity (HTM)debt securities ar

Question 8

Available-for-sale securities are actively managed like trading securities because the company intends to trade them for profit in the short term.

Accepted Answer

A) True 
 B)False

Question 9

Hubbard Company had the following trading securities in its portfolio at December 31.The Fair Value Adjustment-Trading account had a balance of zero prior to year-end adjustment.Prepare the appropriate adjusting journal entry.
 $$\begin{array} { | l | r | r | } 
\hline { \text { Short-Term Investments } } & { \text { Cost } } & { \text { FairValue } } \
\hline \text { XBM } & \$ 24,500 & \$ 25,900 \
\hline \text { Micro } & 51,000 & 48,600 \
\hline \text { Outel } & 62,300 & 61,000 \
\hline \text { Dull } & 29,900 & 30,200 \
\hline \text { Totals } & \$ 167,700 & \$ 165,700 \
\hline
\end{array}$$

Accepted Answer

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

Question 10

On May 1 of the current year,a company paid $200,000 cash to purchase 6%,10-year bonds with a par value of $200,000; interest is paid semiannually each May 1 and November 1.The company intends to hold these bonds until they mature.Prepare the journal entry to record the receipt of the first semiannual interest payment on November 1.

Accepted Answer

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

Question 11

A company received dividends of $0.35 per share on 300 shares of stock it holds as an investment.The journal entry to record this transaction would be to debit Cash for $105 and credit Dividend Revenue for $105.

Accepted Answer

A) True 
 B)False

Question 12

Barnes Company purchased $50,000 of 8% bonds at par.The bonds mature in six years and are a held-to-maturity security.Which of the following is the correct journal entry to record the receipt of the semiannual interest payment?

Accepted Answer

A)  debit Cash, $4,000; credit Long-Term Investments-HTM, $4,000. 
B)  debt Cash, $2,000; credit Long-Term Investments-HTM, $2000. 
C)  debit Cash, $2,000; credit Interest Revenue, $2,000. 
D)  debit Unrealized Gain-Equity, $2,000; credit Cash, $2,000. 
E)  debit Cash, $4,000; credit Unrealized Gain-Equity, $4,000. 
A)  debit Cash, $4,000; credit Long-Term Investments-HTM, $4,000. 
B)  debt Cash, $2,000; credit Long-Term Investments-HTM, $2000. 
C)  debit Cash, $2,000; credit Interest Revenue, $2,000. 
D)  debit Unrealized Gain-Equity, $2,000; credit Cash, $2,000. 
E)  debit Cash, $4,000; credit Unrealized Gain-Equity, $4,000.

Question 13

The two business entities involved in an investment in securities with controlling influence,for which consolidated financial statements are prepared,are known as:

Accepted Answer

A)  Parent and Investor 
B)  Subsidiary and Investee 
C)  Consolidator and Parent 
D)  Parent and Subsidiary 
E)  Both are referred to as partners. 
A)  Parent and Investor 
B)  Subsidiary and Investee 
C)  Consolidator and Parent 
D)  Parent and Subsidiary 
E)  Both are referred to as partners.

Question 14

Any cash dividends received from equity securities are recorded as Dividend Expense.

Accepted Answer

A) True 
 B)False

Question 15

Landmark buys $300,000 of Schroeter Company's 8%,5-year bonds payable at par value on September 1.Interest payments are made semiannually on March 1 and September 1.The journal entry Landmark should record to accrue interest earned at year-end December 31 is:

Accepted Answer

A)  Debit Interest Receivable $8,000, credit Interest Revenue $8,000. 
B)  Debit Interest Receivable $12,000, credit Interest Revenue $12,000. 
C)  Debit Cash $8,000, credit Interest Revenue $8,000. 
D)  Debit Cash $12,000, credit Interest Revenue $12,000. 
E)  Debit Interest Revenue $8,000, credit Interest Receivable $8,000. 
A)  Debit Interest Receivable $8,000, credit Interest Revenue $8,000. 
B)  Debit Interest Receivable $12,000, credit Interest Revenue $12,000. 
C)  Debit Cash $8,000, credit Interest Revenue $8,000. 
D)  Debit Cash $12,000, credit Interest Revenue $12,000. 
E)  Debit Interest Revenue $8,000, credit Interest Receivable $8,000.

Question 16

If the exchange rate for Canadian and U.S.dollars is 0.82777 to 1,this implies that 3 Canadian dollars will buy ________ worth of U.S.dollars.

Accepted Answer

A)  $0.2759 
B)  $0.82777 
C)  $1.82777 
D)  $2.48 
E)  $1.00 
A)  $0.2759 
B)  $0.82777 
C)  $1.82777 
D)  $2.48 
E)  $1.00

Question 17

Debt securities are recorded at cost when purchased,and interest revenue for investments in debt securities is recorded when earned.

Accepted Answer

A) True 
 B)False

Question 18

All of the following statements relating to accounting for international operations are true except:

Accepted Answer

A)  Foreign exchange gains or losses can occur when accounting for international sales transactions. 
B)  Gains and losses from foreign exchange transactions are accumulated in the Fair Value Adjustment Account and are reported on the balance sheet. 
C)  Gains and losses from foreign exchange transactions are accumulated in the Foreign Exchange Gain (or Loss) account. 
D)  The balance in the Foreign Exchange Gain (or Loss) account is reported on the income statement. 
E)  Foreign exchange gains or losses can occur when accounting for international purchases transactions. 
A)  Foreign exchange gains or losses can occur when accounting for international sales transactions. 
B)  Gains and losses from foreign exchange transactions are accumulated in the Fair Value Adjustment Account and are reported on the balance sheet. 
C)  Gains and losses from foreign exchange transactions are accumulated in the Foreign Exchange Gain (or Loss) account. 
D)  The balance in the Foreign Exchange Gain (or Loss) account is reported on the income statement. 
E)  Foreign exchange gains or losses can occur when accounting for international purchases transactions.

Question 19

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for the securities are true except:

Accepted Answer

A)  The debt securities should be recorded at cost, $300,000. 
B)  The securities will have a maturity value of $300,000. 
C)  The semiannual interest payment amount is $12,000. 
D)  The semiannual interest payment amount is $24,000. 
E)  Interest Revenue should be credited when an interest payment is received. 
A)  The debt securities should be recorded at cost, $300,000. 
B)  The securities will have a maturity value of $300,000. 
C)  The semiannual interest payment amount is $12,000. 
D)  The semiannual interest payment amount is $24,000. 
E)  Interest Revenue should be credited when an interest payment is received.

Question 20

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds payable at par value on September 1.Interest payments are made semiannually.Landmark plans to hold the bonds for the 5-year life.The journal entry to record the purchase should include:

Accepted Answer

A)  A debit to Long-Term Investments-AFS $300,000. 
B)  A debit to Short-Term Investments-Trading $300,000. 
C)  A debit to Long-Term Investments-HTM $300,000. 
D)  A debit to Short-Term Investments-AFS $300,000. 
E)  A debit to Cash $300,000. 
A)  A debit to Long-Term Investments-AFS $300,000. 
B)  A debit to Short-Term Investments-Trading $300,000. 
C)  A debit to Long-Term Investments-HTM $300,000. 
D)  A debit to Short-Term Investments-AFS $300,000. 
E)  A debit to Cash $300,000.

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

Long-term investments are reported in the:

Foreign exchange rates fluctuate due to many factors including changing political and economic conditions.

Pravis Corporation owns 30% of Kuster Corporation.Pravis Corporation received $9,000 in cash dividends from Kuster Corporation.The entry to record receipt of these dividends is:

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

Return on total assets can be separated into the profit margin ratio and total asset turnover.

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

Available-for-sale securities are actively managed like trading securities because the company intends to trade them for profit in the short term.

A company received dividends of $0.35 per share on 300 shares of stock it holds as an investment.The journal entry to record this transaction would be to debit Cash for $105 and credit Dividend Revenue for $105.

Barnes Company purchased $50,000 of 8% bonds at par.The bonds mature in six years and are a held-to-maturity security.Which of the following is the correct journal entry to record the receipt of the semiannual interest payment?

The two business entities involved in an investment in securities with controlling influence,for which consolidated financial statements are prepared,are known as:

Any cash dividends received from equity securities are recorded as Dividend Expense.

Landmark buys $300,000 of Schroeter Company's 8%,5-year bonds payable at par value on September 1.Interest payments are made semiannually on March 1 and September 1.The journal entry Landmark should record to accrue interest earned at year-end December 31 is:

If the exchange rate for Canadian and U.S.dollars is 0.82777 to 1,this implies that 3 Canadian dollars will buy ________ worth of U.S.dollars.

Debt securities are recorded at cost when purchased,and interest revenue for investments in debt securities is recorded when earned.

All of the following statements relating to accounting for international operations are true except:

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for the securities are true except:

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds payable at par value on September 1.Interest payments are made semiannually.Landmark plans to hold the bonds for the 5-year life.The journal entry to record the purchase should include:

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

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Exam 15: Investments

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

Long-term investments are reported in the:

Foreign exchange rates fluctuate due to many factors including changing political and economic conditions.

Pravis Corporation owns 30% of Kuster Corporation.Pravis Corporation received $9,000 in cash dividends from Kuster Corporation.The entry to record receipt of these dividends is:

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

Return on total assets can be separated into the profit margin ratio and total asset turnover.

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

Available-for-sale securities are actively managed like trading securities because the company intends to trade them for profit in the short term.

A company received dividends of $0.35 per share on 300 shares of stock it holds as an investment.The journal entry to record this transaction would be to debit Cash for $105 and credit Dividend Revenue for $105.

Barnes Company purchased $50,000 of 8% bonds at par.The bonds mature in six years and are a held-to-maturity security.Which of the following is the correct journal entry to record the receipt of the semiannual interest payment?

The two business entities involved in an investment in securities with controlling influence,for which consolidated financial statements are prepared,are known as:

Any cash dividends received from equity securities are recorded as Dividend Expense.

Landmark buys $300,000 of Schroeter Company's 8%,5-year bonds payable at par value on September 1.Interest payments are made semiannually on March 1 and September 1.The journal entry Landmark should record to accrue interest earned at year-end December 31 is:

If the exchange rate for Canadian and U.S.dollars is 0.82777 to 1,this implies that 3 Canadian dollars will buy ________ worth of U.S.dollars.

Debt securities are recorded at cost when purchased,and interest revenue for investments in debt securities is recorded when earned.

All of the following statements relating to accounting for international operations are true except:

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for the securities are true except:

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds payable at par value on September 1.Interest payments are made semiannually.Landmark plans to hold the bonds for the 5-year life.The journal entry to record the purchase should include:

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