Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) Market value method with market adjustment to income 
B) Market value method with market adjustment to equity 
C) Cost method with amortization 
D) Cost method without amortization 
E) Equity method 
A) Market value method with market adjustment to income 
B) Market value method with market adjustment to equity 
C) Cost method with amortization 
D) Cost method without amortization 
E) Equity method

Question 3

Micron owns 3,000 shares of JVT.JVT has 25,000 total shares of stock outstanding.JVT paid $3 per share in cash dividends to its stockholders.Micron should record a:

Accepted Answer

A) Debit to Dividends for $75,000 
B) Debit to Dividends for $9,000 
C) Debit to Cash for $9,000 
D) Debit to Long-Term Investments for $9,000 
E) Credit to Long-Term Investments for $9,000 
A) Debit to Dividends for $75,000 
B) Debit to Dividends for $9,000 
C) Debit to Cash for $9,000 
D) Debit to Long-Term Investments for $9,000 
E) Credit to Long-Term Investments for $9,000

Question 4

Chung owns 40% of Lu's common stock.Lu pays $97,000 in total cash dividends to its shareholders.Chung'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 5

A company's return on total assets equals 30%.If net income and net sales are $900,000 and $8,900,000 respectively,what is the amount of total assets?

Accepted Answer

A) $2,670,000 
B) $270,000 
C) $29,666,667 
D) $3,000,000 
E) $2,940,000 
A) $2,670,000 
B) $270,000 
C) $29,666,667 
D) $3,000,000 
E) $2,940,000

Question 6

A long-term investment is recorded at cost when purchased.

Accepted Answer

A) True 
 B)False

Question 7

On January 1,2009,Frederich Corporation purchased 7,500 shares of Sport Tech,Inc.as a long-term investment for a total of $235,000.The 7,500 shares represent 30% of the outstanding (25,000)shares of Sport Tech.Prepare the journal entries for Frederich to record the following transactions and events:
 $\begin{array}{|l|l|}
\hline \text { December } 31,2009 & \text { SportTech reported net income of } \$ 66,000 \text { for } 2009 . \
\hline \text { February 1,2010 } & \begin{array}{l}
\text { Sold } 1,875 \text { of the SportTech shares for } \$ 34 \text { per share. In addition, } \
\$ 1,350 \text { in fees and commissions were paid by Frederich on this } \
\text { sale. }
\end{array} \
\hline \text { November } 1,2010 & \begin{array}{l}
\text { Frederich received a } \$ 0.90 \text { per share cash dividend from } \
\text { SportTech. }
\end{array} \
\hline \text { December 31,2010 } & \begin{array}{l}
\text { SportTech reported net income of } \$ 146,000 \text { for } 2010
\end{array} \
\hline
\end{array}$

Accepted Answer

None

Question 8

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

Accepted Answer

When a selling company makes a credit sa

Question 9

Consolidated statements are prepared as if a company is organized as one entity,with the amounts allocated for subsidiaries reported in the investment accounts.

Accepted Answer

A) True 
 B)False

Question 10

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

None

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The price of one currency stated in terms of another currency is called a(n):

Accepted Answer

A) Foreign exchange rate 
B) Currency transaction 
C) Historical exchange rate 
D) International conversion rate 
E) Currency rate 
A) Foreign exchange rate 
B) Currency transaction 
C) Historical exchange rate 
D) International conversion rate 
E) Currency rate

Question 13

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

Accepted Answer

Comprehensive income refers to all chang

Question 14

A company paid $37,800 plus a broker's fee of $525 to acquire 8% bonds with a $40,000 maturity value.The company intends to hold the bonds to maturity.The cash proceeds the company will receive upon the maturity of the bond is:

Accepted Answer

A) $37,800 
B) $38,325 
C) $40,000 
D) $40,525 
E) $43,200 
A) $37,800 
B) $38,325 
C) $40,000 
D) $40,525 
E) $43,200

Question 15

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 16

A company reported net income of $275,000,net sales of $2,500,000 and average total assets of $2,100,000 for the current year.Calculate this company's profit margin,total asset turnover and return on total assets.

Accepted Answer

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\hline \t

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Wiffery Company had the following trading securities in its portfolio at December 31.The Market Adjustment - Trading account had balance of zero prior to year-end adjustment.Prepare the appropriate adjusting journal entry.

Accepted Answer

$167,700 -

Question 19

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 20

IFRS requires uniform accounting policies to be used throughout the group
of consolidated subsidiaries.

Accepted Answer

A) True 
 B)False

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

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

Micron owns 3,000 shares of JVT.JVT has 25,000 total shares of stock outstanding.JVT paid $3 per share in cash dividends to its stockholders.Micron should record a:

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

A company's return on total assets equals 30%.If net income and net sales are $900,000 and $8,900,000 respectively,what is the amount of total assets?

A long-term investment is recorded at cost when purchased.

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

Consolidated statements are prepared as if a company is organized as one entity,with the amounts allocated for subsidiaries reported in the investment accounts.

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.

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

The price of one currency stated in terms of another currency is called a(n):

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

A company paid $37,800 plus a broker's fee of $525 to acquire 8% bonds with a $40,000 maturity value.The company intends to hold the bonds to maturity.The cash proceeds the company will receive upon the maturity of the bond is:

Long-term investments are reported in the:

A company reported net income of $275,000,net sales of $2,500,000 and average total assets of $2,100,000 for the current year.Calculate this company's profit margin,total asset turnover and return on total assets.

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

Wiffery Company had the following trading securities in its portfolio at December 31.The Market Adjustment - Trading account had balance of zero prior to year-end adjustment.Prepare the appropriate adjusting journal entry.

Short-term investments:

IFRS requires uniform accounting policies to be used throughout the group of consolidated subsidiaries.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing 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

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters

Exam 14: Investments and International Operations

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

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

Micron owns 3,000 shares of JVT.JVT has 25,000 total shares of stock outstanding.JVT paid $3 per share in cash dividends to its stockholders.Micron should record a:

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

A company's return on total assets equals 30%.If net income and net sales are $900,000 and $8,900,000 respectively,what is the amount of total assets?

A long-term investment is recorded at cost when purchased.

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

Consolidated statements are prepared as if a company is organized as one entity,with the amounts allocated for subsidiaries reported in the investment accounts.

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.

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

The price of one currency stated in terms of another currency is called a(n):

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

A company paid $37,800 plus a broker's fee of $525 to acquire 8% bonds with a $40,000 maturity value.The company intends to hold the bonds to maturity.The cash proceeds the company will receive upon the maturity of the bond is:

Long-term investments are reported in the:

A company reported net income of $275,000,net sales of $2,500,000 and average total assets of $2,100,000 for the current year.Calculate this company's profit margin,total asset turnover and return on total assets.

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

Wiffery Company had the following trading securities in its portfolio at December 31.The Market Adjustment - Trading account had balance of zero prior to year-end adjustment.Prepare the appropriate adjusting journal entry.

Short-term investments:

IFRS requires uniform accounting policies to be used throughout the group of consolidated subsidiaries.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing 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

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters