Question 1

Unrealized gains and losses on available-for-sale securities are reported on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

Use this information to answer the following question.These facts concern the long-term stock investments of DeBord Corporation:   
-The entry to record the sale of 1,000 shares of Vanhook Corporation common stock is:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 3

An influential but noncontrolling investment is defined as ownership of between 20 to 50 percent of the stock of another company.

Accepted Answer

A) True 
 B)False

Question 4

The equity method usually is the most appropriate method for accounting for investments of more than a 20 percent interest of another company's stock.

Accepted Answer

A) True 
 B)False

Question 5

Use this information to answer the following question.These facts concern the long-term stock investments of DeBord Corporation:  
-The entry to record the purchase of the Vanhook Corporation common stock is:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 6

The cost-adjusted-to-market method of accounting for investments allows for a departure from cost when the market value of the investment falls below or rises above cost.

Accepted Answer

A) True 
 B)False

Question 7

When the cost-adjusted-to-market method is used to account for an investment in stock,dividends received are accounted for as an increase to dividend income.

Accepted Answer

A) True 
 B)False

Question 8

In the United States,insider trading is considered

Accepted Answer

A) unethical,but not illegal. 
B) neither unethical nor illegal. 
C) both unethical and illegal. 
D) illegal,but not unethical. 
A) unethical,but not illegal. 
B) neither unethical nor illegal. 
C) both unethical and illegal. 
D) illegal,but not unethical.

Question 9

A credit balance in the account Allowance to Adjust Long-Term Investments to Market is disclosed in the financial statements as a

Accepted Answer

A) regular account in the stockholders' equity section of the balance sheet. 
B) contra account to Long-Term Investments. 
C) note to the financial statements. 
D) current asset. 
A) regular account in the stockholders' equity section of the balance sheet. 
B) contra account to Long-Term Investments. 
C) note to the financial statements. 
D) current asset.

Question 10

The year-end adjusting entry to reflect an increase in the value of trading securities includes a

Accepted Answer

A) credit to Unrealized Gain on Short-Term Investments. 
B) credit to Short-Term Investments. 
C) credit to Allowance to Adjust Short-Term Investments to Market. 
D) credit to Realized Gain on Investments. 
A) credit to Unrealized Gain on Short-Term Investments. 
B) credit to Short-Term Investments. 
C) credit to Allowance to Adjust Short-Term Investments to Market. 
D) credit to Realized Gain on Investments.

Question 11

Which of the following categories of investments can be both debt and equity securities?

Accepted Answer

A) Available-for-sale securities 
B) Trading securities 
C) Held-to-maturity securities 
D) Both available-for-sale and trading securities 
A) Available-for-sale securities 
B) Trading securities 
C) Held-to-maturity securities 
D) Both available-for-sale and trading securities

Question 12

If the maturity date of Treasury bills is less than 90 days,they are classified as

Accepted Answer

A) cash equivalents. 
B) short-term investments. 
C) long-term investments. 
D) current liabilities. 
A) cash equivalents. 
B) short-term investments. 
C) long-term investments. 
D) current liabilities.

Question 13

Distinguish between the financial statement presentation of unrealized gains and losses related to trading securities and the financial statement presentation of unrealized gains and losses related to available-for-sale securities.

Accepted Answer

Unrealized gains and losses on trading s

Question 14

Trading securities are valued on the balance sheet at

Accepted Answer

A) lower of cost or market. 
B) cost. 
C) market value. 
D) cost,adjusted for the effects of interest. 
A) lower of cost or market. 
B) cost. 
C) market value. 
D) cost,adjusted for the effects of interest.

Question 15

The ability of an investing company to affect the operating and financial policies of another company,even though the investor holds less than 50 percent of the voting stock,is known as

Accepted Answer

A) significant influence. 
B) control. 
C) minority interest. 
D) noninfluential control. 
A) significant influence. 
B) control. 
C) minority interest. 
D) noninfluential control.

Question 16

When a corporation owns more than 50 percent of the voting stock in another corporation,it usually should report its investment by using (the)

Accepted Answer

A) equity method. 
B) cost adjusted to market method. 
C) book value method. 
D) consolidated financial statements. 
A) equity method. 
B) cost adjusted to market method. 
C) book value method. 
D) consolidated financial statements.

Question 17

An ownership interest of greater than 50 percent is required for an investor to have accounting control over an investee.

Accepted Answer

A) True 
 B)False

Question 18

Investments with a maturity of less than ninety days are generally classified as cash equivalents.

Accepted Answer

A) True 
 B)False

Question 19

A short-term investment in a U.S.Treasury bill costs $24,400 and will mature six months later at $25,000.Management intends to hold the investment until it matures.The entry to record the initial investment is:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 20

All of the following are indications of significant influence over another company except

Accepted Answer

A) exchange of managerial personnel. 
B) representation on the board of directors. 
C) technological dependency between the two companies. 
D) ownership of all of the other company's debt securities. 
A) exchange of managerial personnel. 
B) representation on the board of directors. 
C) technological dependency between the two companies. 
D) ownership of all of the other company's debt securities.

Exam 28: Accounting for Investments

Unrealized gains and losses on available-for-sale securities are reported on the balance sheet.

Use this information to answer the following question.These facts concern the long-term stock investments of DeBord Corporation: -The entry to record the sale of 1,000 shares of Vanhook Corporation common stock is:

An influential but noncontrolling investment is defined as ownership of between 20 to 50 percent of the stock of another company.

The equity method usually is the most appropriate method for accounting for investments of more than a 20 percent interest of another company's stock.

Use this information to answer the following question.These facts concern the long-term stock investments of DeBord Corporation: -The entry to record the purchase of the Vanhook Corporation common stock is:

The cost-adjusted-to-market method of accounting for investments allows for a departure from cost when the market value of the investment falls below or rises above cost.

When the cost-adjusted-to-market method is used to account for an investment in stock,dividends received are accounted for as an increase to dividend income.

In the United States,insider trading is considered

A credit balance in the account Allowance to Adjust Long-Term Investments to Market is disclosed in the financial statements as a

The year-end adjusting entry to reflect an increase in the value of trading securities includes a

Which of the following categories of investments can be both debt and equity securities?

If the maturity date of Treasury bills is less than 90 days,they are classified as

Distinguish between the financial statement presentation of unrealized gains and losses related to trading securities and the financial statement presentation of unrealized gains and losses related to available-for-sale securities.

Trading securities are valued on the balance sheet at

The ability of an investing company to affect the operating and financial policies of another company,even though the investor holds less than 50 percent of the voting stock,is known as

When a corporation owns more than 50 percent of the voting stock in another corporation,it usually should report its investment by using (the)

An ownership interest of greater than 50 percent is required for an investor to have accounting control over an investee.

Investments with a maturity of less than ninety days are generally classified as cash equivalents.

A short-term investment in a U.S.Treasury bill costs $24,400 and will mature six months later at $25,000.Management intends to hold the investment until it matures.The entry to record the initial investment is:

All of the following are indications of significant influence over another company except

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

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