Question 1

When using the equity method,receipt of cash dividends increases the carrying value of an investment in equity securities.

Accepted Answer

A) True 
 B)False

Question 2

Accounting for long-term investments in equity securities with controlling influence uses the:

Accepted Answer

A) Controlling method. 
B) Equity method with consolidation. 
C) Investor method. 
D) Investment method. 
E) Consolidated method.

Question 3

Management's intent and the marketability of a security determine whether or not a security is classified as a long-term or short-term investment.

Accepted Answer

A) True 
 B)False

Question 4

Haladam Company had the following transactions relating to investments in trading securities during the year.Prepare the required general journal entries for these transactions.

Accepted Answer

The answer of Haladam Company had the following transactions relating...

Question 5

Unrealized gains and losses on trading securities are reported as part of net income.

Accepted Answer

A) True 
 B)False

Question 6

A controlling investor is referred to as the parent and the investee company is referred to as the subsidiary.

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

A company reported net income for 2012 of $98,000 and $106,000 in 2013.It also reported net sales of $735,000 in 2012 and $798,000 in 2013.The company's average total assets in 2012 were $1,850,000 and $1,720,000 in 2013.Calculate this company's profit margin,total asset turnover,and return on total assets for 2012 and 2013.Comment on the results.

Accepted Answer

The answer of A company reported net income for 2012...

Question 9

If a long-term investment in an equity security gives the investor significant influence over the investee,the investment is classified as available-for-sale.

Accepted Answer

A) True 
 B)False

Question 10

________________________ refers to all changes in equity for a period except for those due to investments and distributions to owners.

Accepted Answer

The answer of ________________________ refers to all changes in equity...

Question 11

__________________________ are investments in securities that are not readily convertible to cash or are not intended to be converted to cash in the short-term.

Accepted Answer

The answer of __________________________ are investments in securities that are...

Question 12

Multinational corporations can be U.S.companies with operations in other countries.

Accepted Answer

A) True 
 B)False

Question 13

Return on total assets measures a company's ability to:

Accepted Answer

A) Produce net income from net sales. 
B) Produce sales from net assets. 
C) Produce net income from net assets. 
D) Increase its asset base from sales. 
E) Increase its asset base from net income.

Question 14

Management's intent determines whether an available-for-sale security is classified as long term or short term.

Accepted Answer

A) True 
 B)False

Question 15

Doherty Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is equal to:

Accepted Answer

A) 3% 
B) 200% 
C) 6% 
D) 17% 
E) 1.5%

Question 16

Long-term investments in available-for-sale securities are reported at market value on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

The answer of Texana Inc.imports inventory from Mexico.Prepare the journal...

Question 18

Acme owns 4,000 shares of XYZ.XYZ has 50,000 total shares of stock outstanding.XYZ paid $0.82 per share in cash dividends to its stockholders.Acme should record a:

Accepted Answer

A) Debit to Dividends for $41,000. 
B) Debit to Dividends for $3,280. 
C) Debit to Cash for $3,280. 
D) Debit to Long-Term Investments for $3,280. 
E) Credit to Long-Term Investments for $3,280.

Question 19

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

The answer of A company reported net income of $275,000,net...

Question 20

A company paid $500,000 for 12% bonds with a par value of $500,000.The bonds pay 6% interest semiannually on September 1 and March 1.The company intends to hold the bonds until they mature.Prepare the journal entries for the following dates and transactions related to this bond acquisition.
(1) Bonds purchased on September 1,2012.
(2) Year-end adjusting entry,December 31,2012.
(3) Receipt of semiannual interest March 1,2013.
(4) Redemption of the bonds at maturity on August 31,2019.

Accepted Answer

The answer of A company paid $500,000 for 12% bonds...

Exam 15: Investments and International Operations

When using the equity method,receipt of cash dividends increases the carrying value of an investment in equity securities.

Accounting for long-term investments in equity securities with controlling influence uses the:

Management's intent and the marketability of a security determine whether or not a security is classified as a long-term or short-term investment.

Haladam Company had the following transactions relating to investments in trading securities during the year.Prepare the required general journal entries for these transactions.

Unrealized gains and losses on trading securities are reported as part of net income.

A controlling investor is referred to as the parent and the investee company is referred to as the subsidiary.

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

If a long-term investment in an equity security gives the investor significant influence over the investee,the investment is classified as available-for-sale.

________________________ refers to all changes in equity for a period except for those due to investments and distributions to owners.

__________________________ are investments in securities that are not readily convertible to cash or are not intended to be converted to cash in the short-term.

Multinational corporations can be U.S.companies with operations in other countries.

Return on total assets measures a company's ability to:

Management's intent determines whether an available-for-sale security is classified as long term or short term.

Doherty Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is equal to:

Long-term investments in available-for-sale securities are reported at market value on the balance sheet.

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

Acme owns 4,000 shares of XYZ.XYZ has 50,000 total shares of stock outstanding.XYZ paid $0.82 per share in cash dividends to its stockholders.Acme should record a:

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.