Question 1

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 2

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.

Question 3

For available-for-sale equity securities,the Unrealized Loss on Long-Term Investments account should be reported as a(n)

Accepted Answer

A) realized loss item on the income statement. 
B) prior period adjustment. 
C) contra-asset on the balance sheet. 
D) other comprehensive income (loss). 
A) realized loss item on the income statement. 
B) prior period adjustment. 
C) contra-asset on the balance sheet. 
D) other comprehensive income (loss).

Question 4

Company A purchases U.S.Treasury bills for $23,700.This investment will be held to maturity.The bills will mature in 90 days at $24,000.The entry to record the initial investment will include a

Accepted Answer

A) credit to Short-Term Investments for $23,700. 
B) debit to Short-Term Investments for $23,700. 
C) debit to Short-Term Investments for $24,000. 
D) credit to Interest Receivable for $300. 
A) credit to Short-Term Investments for $23,700. 
B) debit to Short-Term Investments for $23,700. 
C) debit to Short-Term Investments for $24,000. 
D) credit to Interest Receivable for $300.

Question 5

Long-term bond investments that are classified as available-for-sale must be valued on the balance sheet at fair value.

Accepted Answer

A) True 
 B)False

Question 6

If a long-term investment suffers a permanent decline in value,a loss only has to be recorded if the investment is sold.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a category of investments?

Accepted Answer

A) Held-to-maturity securities 
B) Trading securities 
C) Collateral securities 
D) Available-for-sale securities 
A) Held-to-maturity securities 
B) Trading securities 
C) Collateral securities 
D) Available-for-sale securities

Question 8

Trading securities appear as current assets on the balance sheet at their historical cost regardless of subsequent increases or decreases in market value.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following categories of investments can be debt but not equity securities?

Accepted Answer

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

Question 10

Held-to-maturity securities that will mature within one year are classified as short-term investments and valued on the balance sheet at fair value.

Accepted Answer

A) True 
 B)False

Question 11

Using the cost-adjusted-to-market method of accounting for a long-term investment in stock,the journal entry to record the receipt of dividends involves a debit to Dividend Income.

Accepted Answer

A) True 
 B)False

Question 12

Significant influence is defined as owning what percent of the stock of another company?

Accepted Answer

A) 15 to 60 percent 
B) More than 50 percent 
C) 20 to 50 percent 
D) 75 percent 
A) 15 to 60 percent 
B) More than 50 percent 
C) 20 to 50 percent 
D) 75 percent

Question 13

When the accounting period ends before U.S.Treasury bills are scheduled to mature,the investor's adjusting entry would include a

Accepted Answer

A) debit to Short-Term Investments. 
B) credit to Cash. 
C) debit to Interest Income. 
D) credit to Short-Term Investments. 
A) debit to Short-Term Investments. 
B) credit to Cash. 
C) debit to Interest Income. 
D) credit to Short-Term Investments.

Question 14

Unrealized gains and losses on trading securities appear on the income statement.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Foltz Corporation purchased 3,000 shares of Craver Corporation common stock for $160 per share on January 1,2013,as a long-term investment.Craver reported net income of $140,000 and $180,000 for 2013 and 2014,respectively,and paid dividends of $50,000 and $60,000 during 2013 and 2014,respectively.Craver has a total of 10,000 shares outstanding.Compute the following amounts:
a. Investment income recognized by Foltz Corporation during 2013
b. Balance of Investment in Craver Corporation account at end of 2013
c. Amount of investment income recognized by Foltz Corporation during 2014
d. Balance of Investment in Craver Corporation account at end of 2014

Accepted Answer

a. $42,000 (140,000 × 0.3) b.

Question 17

When the market value of available-for-sale securities exceeds cost,an unrealized loss appears in stockholders' equity as an addition.

Accepted Answer

A) True 
 B)False

Question 18

Which is the only type of investment that is always classified as short-term?

Accepted Answer

A) Trading securities 
B) Held-to-maturity securities 
C) Available-for-sale securities 
D) Equity securities 
A) Trading securities 
B) Held-to-maturity securities 
C) Available-for-sale securities 
D) Equity securities

Question 19

As long as an investment can be sold within a short period of time,it must be classified as a current asset.

Accepted Answer

A) True 
 B)False

Question 20

Under the cost-adjusted-to-market method of accounting for an investment,

Accepted Answer

A) Dividend Income is credited when dividends are received. 
B) the investment account is credited when dividends are received. 
C) the investment account is credited when the investee reports a net income. 
D) Investment Income is credited when the invested reports a net income. 
A) Dividend Income is credited when dividends are received. 
B) the investment account is credited when dividends are received. 
C) the investment account is credited when the investee reports a net income. 
D) Investment Income is credited when the invested reports a net income.

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

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

For available-for-sale equity securities,the Unrealized Loss on Long-Term Investments account should be reported as a(n)

Company A purchases U.S.Treasury bills for $23,700.This investment will be held to maturity.The bills will mature in 90 days at $24,000.The entry to record the initial investment will include a

Long-term bond investments that are classified as available-for-sale must be valued on the balance sheet at fair value.

If a long-term investment suffers a permanent decline in value,a loss only has to be recorded if the investment is sold.

Which of the following is not a category of investments?

Trading securities appear as current assets on the balance sheet at their historical cost regardless of subsequent increases or decreases in market value.

Which of the following categories of investments can be debt but not equity securities?

Held-to-maturity securities that will mature within one year are classified as short-term investments and valued on the balance sheet at fair value.

Using the cost-adjusted-to-market method of accounting for a long-term investment in stock,the journal entry to record the receipt of dividends involves a debit to Dividend Income.

Significant influence is defined as owning what percent of the stock of another company?

When the accounting period ends before U.S.Treasury bills are scheduled to mature,the investor's adjusting entry would include a

Unrealized gains and losses on trading securities appear on the income statement.

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 market value of available-for-sale securities exceeds cost,an unrealized loss appears in stockholders' equity as an addition.

Which is the only type of investment that is always classified as short-term?

As long as an investment can be sold within a short period of time,it must be classified as a current asset.

Under the cost-adjusted-to-market method of accounting for an investment,

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

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Exam 19: Accounting for Investments

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

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

For available-for-sale equity securities,the Unrealized Loss on Long-Term Investments account should be reported as a(n)

Company A purchases U.S.Treasury bills for $23,700.This investment will be held to maturity.The bills will mature in 90 days at $24,000.The entry to record the initial investment will include a

Long-term bond investments that are classified as available-for-sale must be valued on the balance sheet at fair value.

If a long-term investment suffers a permanent decline in value,a loss only has to be recorded if the investment is sold.

Which of the following is not a category of investments?

Trading securities appear as current assets on the balance sheet at their historical cost regardless of subsequent increases or decreases in market value.

Which of the following categories of investments can be debt but not equity securities?

Held-to-maturity securities that will mature within one year are classified as short-term investments and valued on the balance sheet at fair value.

Using the cost-adjusted-to-market method of accounting for a long-term investment in stock,the journal entry to record the receipt of dividends involves a debit to Dividend Income.

Significant influence is defined as owning what percent of the stock of another company?

When the accounting period ends before U.S.Treasury bills are scheduled to mature,the investor's adjusting entry would include a

Unrealized gains and losses on trading securities appear on the income statement.

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 market value of available-for-sale securities exceeds cost,an unrealized loss appears in stockholders' equity as an addition.

Which is the only type of investment that is always classified as short-term?

As long as an investment can be sold within a short period of time,it must be classified as a current asset.

Under the cost-adjusted-to-market method of accounting for an investment,

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Filters