Question 1

The controlling investor is called the:

Accepted Answer

A) Owner. 
B) Subsidiary. 
C) Parent. 
D) Investee. 
E) Senior entity. 
A) Owner. 
B) Subsidiary. 
C) Parent. 
D) Investee. 
E) Senior entity.

Question 2

At acquisition, debt securities are:

Accepted Answer

A) Recorded at their cost, plus total interest that will be received over the life of the security. 
B) Recorded at the amount of interest that will be received over the life of the security. 
C) Recorded at cost. 
D) Not recorded, because no interest is due yet. 
E) Recorded at cost plus the amount of dividend income to be received. 
A) Recorded at their cost, plus total interest that will be received over the life of the security. 
B) Recorded at the amount of interest that will be received over the life of the security. 
C) Recorded at cost. 
D) Not recorded, because no interest is due yet. 
E) Recorded at cost plus the amount of dividend income to be received.

Question 3

Rainier Importers purchases automotive parts from Austria. Prepare journal entries for the following transactions of Rainier.

Accepted Answer

The answer of Rainier Importers purchases automotive parts from Austria....

Question 4

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

Accepted Answer

Short-term investments are securities ex

Question 5

Long-term investments include:

Accepted Answer

A) Investments in bonds and stocks that are not readily convertible to cash or not intended to be converted to cash in the short term. 
B) Investments in marketable stocks that are intended to be converted into cash in the short-term. 
C) Investments in marketable bonds that are intended to be converted into cash in the short-term. 
D) Only investments readily convertible to cash. 
E) Investments intended to be converted to cash within one year. 
A) Investments in bonds and stocks that are not readily convertible to cash or not intended to be converted to cash in the short term. 
B) Investments in marketable stocks that are intended to be converted into cash in the short-term. 
C) Investments in marketable bonds that are intended to be converted into cash in the short-term. 
D) Only investments readily convertible to cash. 
E) Investments intended to be converted to cash within one year.

Question 6

Silver Era Co. exports Southwestern artwork to Japan. Prepare journal entries for the following transactions.

Accepted Answer

The answer of Silver Era Co. exports Southwestern artwork to...

Question 7

Unrealized gains and losses on trading securities are reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 8

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 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 journal entry to record the dividend on April 15 is:

Accepted Answer

A) Debit Cash $7,350; credit Dividend Revenue $7,350. 
B) Debit Cash $8,050; credit Dividend Revenue $8,050. 
C) Debit Cash $8,050; credit Interest Revenue $8,050. 
D) Debit Cash $7,350; credit Interest Revenue $7,350. 
E) Debit Cash $8,050; credit Gain on Sale of Investments $8,050. 
A) Debit Cash $7,350; credit Dividend Revenue $7,350. 
B) Debit Cash $8,050; credit Dividend Revenue $8,050. 
C) Debit Cash $8,050; credit Interest Revenue $8,050. 
D) Debit Cash $7,350; credit Interest Revenue $7,350. 
E) Debit Cash $8,050; credit Gain on Sale of Investments $8,050.

Question 9

The investee company in a long term investment with controlling interest is called the:

Accepted Answer

A) Owner. 
B) Subsidiary. 
C) Parent. 
D) Creditor. 
E) Senior entity. 
A) Owner. 
B) Subsidiary. 
C) Parent. 
D) Creditor. 
E) Senior entity.

Question 10

On May 1, Jorge Co. purchases 2,000 shares of Radiotech stock for $25,000. This investment is considered to be an available-for-sale investment. On July 31 (Jorge's year-end), the stock had a market value of $28,000. Jorge should record a credit to Unrealized Gain-Equity for $3,000.

Accepted Answer

A) True 
 B)False

Question 11

J.P. Industries purchased 2,000 shares of Yang's common stock for $143,000 as a long-term investment. The investment is classified as available-for-sale securities. The par value of the stock was $1 per share. J.P. paid $375 in commissions on the transaction. J.P.'s entry to record the purchase transaction would include a:

Accepted Answer

A) Credit to Common Stock for $2,000. 
B) Credit to Common Stock for $143,000. 
C) Credit to Common Stock for $143,375. 
D) Debit to Long-Term Investments-AFS for $143,000. 
E) Debit to Long-Term Investments-AFS for $143,375. 
A) Credit to Common Stock for $2,000. 
B) Credit to Common Stock for $143,000. 
C) Credit to Common Stock for $143,375. 
D) Debit to Long-Term Investments-AFS for $143,000. 
E) Debit to Long-Term Investments-AFS for $143,375.

Question 12

Long-term investments:

Accepted Answer

A) Are current assets. 
B) Include funds earmarked for a special purpose such as bond sinking funds. 
C) Must be readily convertible to cash. 
D) Are expected to be converted into cash within one year. 
E) Include only equity securities. 
A) Are current assets. 
B) Include funds earmarked for a special purpose such as bond sinking funds. 
C) Must be readily convertible to cash. 
D) Are expected to be converted into cash within one year. 
E) Include only equity securities.

Question 13

Canberry Corporation had net income of $80,000, beginning total assets of $640,000 and ending total assets of $580,000. Its return on total assets is:

Accepted Answer

A) 13.1% 
B) 12.5% 
C) 13.8% 
D) 800% 
E) 725% 
A) 13.1% 
B) 12.5% 
C) 13.8% 
D) 800% 
E) 725%

Question 14

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 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 on its year-end December 31 income statement related to the investment in Marcelo Corp. is:

Accepted Answer

A) $10,295. 
B) $8,050. 
C) $2,245. 
D) $3,195. 
E) $5,440. 
A) $10,295. 
B) $8,050. 
C) $2,245. 
D) $3,195. 
E) $5,440.

Question 15

Cash equivalents are investments that are readily converted to known amounts of cash and mature within three months.

Accepted Answer

A) True 
 B)False

Question 16

All of the following statements regarding equity securities are true except:

Accepted Answer

A) Equity securities should be recorded at cost when acquired. 
B) Equity securities are valued at fair value if classified as trading securities. 
C) Equity securities are valued at fair value if classified as significant influence securities. 
D) Equity securities are valued at fair value if classified as available-for-sale securities. 
E) Equity securities classified as available-for-sale record the dividend revenue when received. 
A) Equity securities should be recorded at cost when acquired. 
B) Equity securities are valued at fair value if classified as trading securities. 
C) Equity securities are valued at fair value if classified as significant influence securities. 
D) Equity securities are valued at fair value if classified as available-for-sale securities. 
E) Equity securities classified as available-for-sale record the dividend revenue when received.

Question 17

Long-term investments in held-to-maturity debt securities are accounted for using the ___________________________.

Accepted Answer

cost metho

Question 18

All of the following are true for Available-for-sale equity securities except:

Accepted Answer

A) Are recorded at cost when acquired. 
B) May earn dividends that are reported in that year's income statement. 
C) May be classified as either short-term or long-term securities. 
D) Are reported at market value on the balance sheet. 
E) Are actively managed like Trading Securities. 
A) Are recorded at cost when acquired. 
B) May earn dividends that are reported in that year's income statement. 
C) May be classified as either short-term or long-term securities. 
D) Are reported at market value on the balance sheet. 
E) Are actively managed like Trading Securities.

Question 19

On May 1 of the current year, a company paid $200,000 to purchase 7%, 10-year bonds with a par value of $200,000; interest is paid semiannually on May 1 and November 1. The company intends to hold the bonds until they mature. Prepare the journal entries to record (1) the bond purchase, (2) the receipt of the first semiannual interest payment on November 1 of the current year, (3) the accrual of interest for year-end December 31, and (4) the receipt of the second semiannual payment on May 1.

Accepted Answer

The answer of On May 1 of the current year,...

Question 20

On January 1, 2014, Rickson Corporation purchased 7,500 shares of AutoTech as a long-term investment for a total of $235,000. The 7,500 shares represent 30% of the outstanding (25,000) shares of AutoTech. Prepare the journal entries for Rickson to record the following transactions and events:

Accepted Answer

The answer of On January 1, 2014, Rickson Corporation purchased...

The controlling investor is called the:

At acquisition, debt securities are:

Rainier Importers purchases automotive parts from Austria. Prepare journal entries for the following transactions of Rainier.

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

Long-term investments include:

Silver Era Co. exports Southwestern artwork to Japan. Prepare journal entries for the following transactions.

Unrealized gains and losses on trading securities are reported on the income statement.

The investee company in a long term investment with controlling interest is called the:

On May 1, Jorge Co. purchases 2,000 shares of Radiotech stock for $25,000. This investment is considered to be an available-for-sale investment. On July 31 (Jorge's year-end), the stock had a market value of $28,000. Jorge should record a credit to Unrealized Gain-Equity for $3,000.

Long-term investments:

Canberry Corporation had net income of $80,000, beginning total assets of $640,000 and ending total assets of $580,000. Its return on total assets is:

Cash equivalents are investments that are readily converted to known amounts of cash and mature within three months.

All of the following statements regarding equity securities are true except:

Long-term investments in held-to-maturity debt securities are accounted for using the ___________________________.

All of the following are true for Available-for-sale equity securities except:

On January 1, 2014, Rickson Corporation purchased 7,500 shares of AutoTech as a long-term investment for a total of $235,000. The 7,500 shares represent 30% of the outstanding (25,000) shares of AutoTech. Prepare the journal entries for Rickson to record the following transactions and events:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for 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

Applying Present and Future Values

Reporting and Analyzing Partnerships

Filters

Exam 15: Investments and International Operations

The controlling investor is called the:

At acquisition, debt securities are:

Rainier Importers purchases automotive parts from Austria. Prepare journal entries for the following transactions of Rainier.

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

Long-term investments include:

Silver Era Co. exports Southwestern artwork to Japan. Prepare journal entries for the following transactions.

Unrealized gains and losses on trading securities are reported on the income statement.

The investee company in a long term investment with controlling interest is called the:

On May 1, Jorge Co. purchases 2,000 shares of Radiotech stock for $25,000. This investment is considered to be an available-for-sale investment. On July 31 (Jorge's year-end), the stock had a market value of $28,000. Jorge should record a credit to Unrealized Gain-Equity for $3,000.

Long-term investments:

Canberry Corporation had net income of $80,000, beginning total assets of $640,000 and ending total assets of $580,000. Its return on total assets is:

Cash equivalents are investments that are readily converted to known amounts of cash and mature within three months.

All of the following statements regarding equity securities are true except:

Long-term investments in held-to-maturity debt securities are accounted for using the ___________________________.

All of the following are true for Available-for-sale equity securities except:

On January 1, 2014, Rickson Corporation purchased 7,500 shares of AutoTech as a long-term investment for a total of $235,000. The 7,500 shares represent 30% of the outstanding (25,000) shares of AutoTech. Prepare the journal entries for Rickson to record the following transactions and events:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for 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

Applying Present and Future Values

Reporting and Analyzing Partnerships

Filters