Question 1

The currency in which a company presents its financial statements is known as the:

Accepted Answer

A) Multinational currency. 
B) Price-level-adjusted currency. 
C) Specific currency. 
D) Reporting currency. 
E) Historical cost currency. 
A) Multinational currency. 
B) Price-level-adjusted currency. 
C) Specific currency. 
D) Reporting currency. 
E) Historical cost currency.

Question 2

Investments in held-to-maturity debt securities are always current assets.

Accepted Answer

A) True 
 B)False

Question 3

Trading securities are securities that are purchased by trading securities with other companies rather than by paying cash.

Accepted Answer

A) True 
 B)False

Question 4

Arkansana Inc. imports inventory from Costa Rica. Prepare the journal entries for Arkansana to record the following transactions. Include any year-end adjustments.

Accepted Answer

The answer of Arkansana Inc. imports inventory from Costa Rica....

Question 5

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment?

Accepted Answer

A) Equity method. 
B) Fair value method. 
C) Historical cost method. 
D) Cost with amortization method. 
E) Effective method. 
A) Equity method. 
B) Fair value method. 
C) Historical cost method. 
D) Cost with amortization method. 
E) Effective method.

Question 6

On January 4, Barber Company purchased 5,000 shares of Convell Company for $59,500 plus a broker's fee of $1,000. Convell Company has a total of 25,000 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During the next years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $72,000. What is the book value of Barber's investment in Convell at the end of this first year?

Accepted Answer

A) $69,650. 
B) $137,250. 
C) $68,650. 
D) $70,650. 
E) $131,500. 
A) $69,650. 
B) $137,250. 
C) $68,650. 
D) $70,650. 
E) $131,500.

Question 7

An investing company that owns more than ________ of another (investee) company's voting stock is presumed to have controlling influence over the investee.

Accepted Answer

The answer of An investing company that owns more than...

Question 8

Comprehensive income refers to all changes in equity during a period except those from owners' investments and dividends.

Accepted Answer

A) True 
 B)False

Question 9

A company had net income of $45,000, net sales of $390,000, and average total assets of $450,000 for the current year. Calculate the company's profit margin, total asset turnover, and return on total assets.

Accepted Answer

The answer of A company had net income of $45,000,...

Question 10

Landmark Corp. buys $300,000 of Schroeter Company's 8% five-year bonds payable at par value on September 1. Interest payments are made semiannually. Landmark plans to hold the bonds for the five 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.

Question 11

Comprehensive income includes all except:

Accepted Answer

A) Revenues and expenses reported in the income statement. 
B) Dividends paid to shareholders. 
C) Unrealized gains and losses on long-term available-for-sale securities. 
D) All changes in equity for a period except those due to investments and distributions to owners. 
E) Gains and losses reported in the income statement. 
A) Revenues and expenses reported in the income statement. 
B) Dividends paid to shareholders. 
C) Unrealized gains and losses on long-term available-for-sale securities. 
D) All changes in equity for a period except those due to investments and distributions to owners. 
E) Gains and losses reported in the income statement.

Question 12

On November 12, Higgins, Inc., a U.S. Company, sold merchandise on credit to Kagome of Japan at a price of 1,500,000 yen. The exchange rate was $0.00837 on the date of sale. On December 31, when Higgins prepared its financial statements, the exchange rate was $0.00843. Kagome paid in full on January 12, when the exchange rate was $0.00861. On January 12, Higgins should prepare the following journal entry:

Accepted Answer

A) Debit Cash $12,915; credit Accounts Receivable-Kagome $12,555; credit Foreign Exchange Gain $360. 
B) Debit Cash $12,555; debit Foreign Exchange Loss $360; credit Accounts Receivable-Kagome $12,915. 
C) Debit Cash $12,915; credit Accounts Receivable-Kagome $12,645; credit Foreign Exchange Gain $90. 
D) Debit Cash $12,645; debit Foreign Exchange Loss $90; credit Accounts Receivable-Kagome $12,915. 
E) Debit Cash $12,915; credit Accounts Receivable-Kagome $12,645; credit Foreign Exchange Gain $270. 
A) Debit Cash $12,915; credit Accounts Receivable-Kagome $12,555; credit Foreign Exchange Gain $360. 
B) Debit Cash $12,555; debit Foreign Exchange Loss $360; credit Accounts Receivable-Kagome $12,915. 
C) Debit Cash $12,915; credit Accounts Receivable-Kagome $12,645; credit Foreign Exchange Gain $90. 
D) Debit Cash $12,645; debit Foreign Exchange Loss $90; credit Accounts Receivable-Kagome $12,915. 
E) Debit Cash $12,915; credit Accounts Receivable-Kagome $12,645; credit Foreign Exchange Gain $270.

Question 13

On January 4, Year 1, Barber Company purchased 5,000 shares of Convell Company for $59,500 plus a broker's fee of $1,000. Convell Company has a total of 25,000 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $72,000 and $67,000 for Year 1 and Year 2, respectively. What is the book value of Barber's investment in Convell at the end of Year 2?

Accepted Answer

A) $60,500. 
B) $79,800. 
C) $52,000. 
D) $88,300. 
E) $87,300. 
A) $60,500. 
B) $79,800. 
C) $52,000. 
D) $88,300. 
E) $87,300.

Question 14

Foreign exchange rates fluctuate due to changes in all but which of the following?

Accepted Answer

A) Political conditions. 
B) Economic conditions. 
C) Supply and demand for currencies. 
D) Expectations of future events. 
E) Whether the companies prepare financial statements under U.S.GAAP or IFRS. 
A) Political conditions. 
B) Economic conditions. 
C) Supply and demand for currencies. 
D) Expectations of future events. 
E) Whether the companies prepare financial statements under U.S.GAAP or IFRS.

Question 15

____________________________ 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 16

Zhang Corp. owns 40% of Magnor Company's common stock. Magnor pays $97,000 in total cash dividends to its shareholders. Zhang'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 17

Investments in equity securities where the investor has a controlling influence are accounted for using the ________________________________.

Accepted Answer

equity met

Question 18

Draft Co. purchased 14,000 shares of Hamburg Corporation's 40,000 shares of common stock on January 1. This represented 35% of Hamburg's outstanding shares and gave Draft Co. significant influence over Hamburg's management and operations. On October 11, Hamburg declared and paid cash dividends of $30,000. On December 31, Hamburg reported net income of $125,000 for the year. Prepare the journal entries Draft Co. should record to account for the dividends received and the earnings reported by Hamburg Corporation.

Accepted Answer

The answer of Draft Co. purchased 14,000 shares of Hamburg...

Question 19

Six months ago, a company purchased an investment in stock for $70,000. The investment is classified as available-for-sale securities. The current fair value of the stock is $68,500. The year-end adjusting entry for this investment should include 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 20

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 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.

The currency in which a company presents its financial statements is known as the:

Investments in held-to-maturity debt securities are always current assets.

Trading securities are securities that are purchased by trading securities with other companies rather than by paying cash.

Arkansana Inc. imports inventory from Costa Rica. Prepare the journal entries for Arkansana to record the following transactions. Include any year-end adjustments.

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment?

An investing company that owns more than ________ of another (investee) company's voting stock is presumed to have controlling influence over the investee.

Comprehensive income refers to all changes in equity during a period except those from owners' investments and dividends.

A company had net income of $45,000, net sales of $390,000, and average total assets of $450,000 for the current year. Calculate the company's profit margin, total asset turnover, and return on total assets.

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

Comprehensive income includes all except:

Foreign exchange rates fluctuate due to changes in all but which of the following?

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

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

Investments in equity securities where the investor has a controlling influence are accounted for using the ________________________________.

Six months ago, a company purchased an investment in stock for $70,000. The investment is classified as available-for-sale securities. The current fair value of the stock is $68,500. The year-end adjusting entry for this investment should include a:

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 currency in which a company presents its financial statements is known as the:

Investments in held-to-maturity debt securities are always current assets.

Trading securities are securities that are purchased by trading securities with other companies rather than by paying cash.

Arkansana Inc. imports inventory from Costa Rica. Prepare the journal entries for Arkansana to record the following transactions. Include any year-end adjustments.

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment?

An investing company that owns more than ________ of another (investee) company's voting stock is presumed to have controlling influence over the investee.

Comprehensive income refers to all changes in equity during a period except those from owners' investments and dividends.

A company had net income of $45,000, net sales of $390,000, and average total assets of $450,000 for the current year. Calculate the company's profit margin, total asset turnover, and return on total assets.

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

Comprehensive income includes all except:

Foreign exchange rates fluctuate due to changes in all but which of the following?

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

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

Investments in equity securities where the investor has a controlling influence are accounted for using the ________________________________.

Six months ago, a company purchased an investment in stock for $70,000. The investment is classified as available-for-sale securities. The current fair value of the stock is $68,500. The year-end adjusting entry for this investment should include a:

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