Question 1

Consolidated financial statements:

Accepted Answer

A)  Show the results of operations,cash flows,and the financial position of all entities under a parent's control,including all subsidiaries.
B)  Show the results of operations,cash flows,and the financial position of the parent only.
C)  Show the results of operations,cash flows,and the financial position of the subsidiary only.
D)  Include the investments in the subsidiaries on the balance sheet.
E)  Do not include a balance sheet.F) C) and D)
G) A) and B)

Question 2

At the end of the accounting period,the owners of debt securities:

Accepted Answer

A)  Must report the dividend income accrued on the debt securities.
B)  Must retire the debt.
C)  Must record a gain or loss on the interest income earned.
D)  Must record a gain or loss on the dividend income earned.
E)  Must record any interest earned on the debt securities during the period.F) A) and D)
G) All of the above

Question 3

A company has an investment in 9% bonds with a par value of $100,000 that pay interest on October 1 and April 1.The amount of interest accrued on December 31 (the company's year-end) would be:

Accepted Answer

A)  $750.
B)  $1,500.
C)  $2,250.
D)  $4,500.
E)  $9,000.F) C) and D)
G) D) and E)

Question 4

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.F) A) and B)
G) B) and C)

Question 5

On January 1,Jewel Company buys $200,000 of Marcelo Corp.12%,36-month notes.Interest is paid on the last day of each month.The notes are classified as available-for-sale securities.This is the company's first and only investment in available-for-sale securities.On December 31,the notes have a fair value of $204,000.The journal entry to record the receipt of the monthly interest on January 31 is:

Accepted Answer

A)  Debit Cash $24,000; credit Debt Investments-AFS $24,000.
B)  Debit Cash $2,000; credit Debt Investments-AFS $2,000.
C)  Debit Cash $2,000; credit Fair Value Adjustment-AFS (LT) $2,000.
D)  Debit Cash $2,000; credit Interest Revenue $2,000.
E)  Debit Cash $2,000; credit Fair Value Adjustment-AFS (ST) $2,000.F) A) and D)
G) A) and C)

Question 6

Explain how to record the sale of non-influential equity securities.

Accepted Answer

When non-influential equity securities a...

Question 7

________ securities reflect a creditor relationship while ________ securities reflect an owner relationship.

Accepted Answer

The answer of ________ securities reflect a creditor relationship while...

Question 8

A company purchased $60,000 of 5% bonds on May 1 at par value.The bonds pay interest on March 1 and September 1.The amount of interest accrued on December 31 (the company's year-end) would be:

Accepted Answer

A)  $1,000.
B)  $500.
C)  $1,250.
D)  $2,500.
E)  $1,500.F) C) and D)
G) A) and D)

Question 9

When the cost of a short-term held-to-maturity debt security is different from the maturity value,the difference is amortized over the remaining life of the security.

Accepted Answer

A) True 
 B)False

Question 10

When an investor has insignificant influence over another company's stock,presumably when it owns less than 20%,the stock investment is reported at fair value.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Consolidated financial statements show the financial statements of all entities under the parent's control,including all subsidiaries.

Accepted Answer

A) True 
 B)False

Question 13

Investments can be classified as all but which of the following:

Accepted Answer

A)  Intangible investments.
B)  Held-to-maturity debt securities.
C)  Available-for-sale debt securities.
D)  Available-for-sale equity securities.
E)  Trading securities.F) B) and E)
G) C) and E)

Question 14

Long-term investments include investments in land or other assets not used in a company's operations.

Accepted Answer

A) True 
 B)False

Question 15

Unrealized gains and losses on stock investments with insignificant influence are reported as a component of stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 16

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Accepted Answer

A)  5.71%
B)  8.66%
C)  12.34%
D)  13.61%
E)  19.32%F) A) and B)
G) B) and C)

Question 17

An investor presumed to have significant influence owns at least 20% but not more than 50% of another company's voting stock.

Accepted Answer

A) True 
 B)False

Question 18

Unrealized Loss−Equity and Unrealized Gain−Equity are permanent equity accounts.

Accepted Answer

A) True 
 B)False

Question 19

Kendall Corp.purchased at par value $160,000 of Barker Company's 7% bonds that mature in 10 months.The bonds pay interest semiannually on June 1 and December 1.Kendall plans to hold the bonds until they mature.The journal entry to record Kendall's purchase of the bonds is:

Accepted Answer

A)  debit Short-Term Debt Investments−HTM $160,000; credit Cash,$160,000.
B)  debit Cash,$169,333; credit,Short-Term Investments−HTM $169,333.
C)  debit Cash,$160,000; credit Short-Term Investments−HTM $160,000.
D)  debit Long-Term Debt Investments-HTM $160,000; credit Cash $160,000.
E)  debit Cash,$160,000; credit Long-Term Debt Investments-HTM $160,000.F) A) and C)
G) D) and E)

Question 20

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds payable at par value on September 1.Interest payments are made semiannually.Landmark plans to hold the bonds for the 5-year life.When the bonds mature,the journal entry to record the proceeds will be:

Accepted Answer

A)  Debit Debt Investments-HTM $300,000; credit Cash $300,000.
B)  Debit Cash $300,000; credit Interest Revenue $300,000.
C)  Debit Cash $300,000; credit Debt Investments-HTM $300,000.
D)  Debit Cash $300,000; credit Interest Receivable $300,000.
E)  Debit Cash $300,000; credit Bonds Payable $300,000.F) B) and E)
G) D) and E)

Exam 15: Investments

When the cost of a short-term held-to-maturity debt security is different from the maturity value,the difference is amortized over the remaining life of the security.

Correct Answer
verified

Unrealized Loss−Equity and Unrealized Gain−Equity are permanent equity accounts.

Correct Answer
verified

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds payable at par value on September 1.Interest payments are made semiannually.Landmark plans to hold the bonds for the 5-year life.When the bonds mature,the journal entry to record the proceeds will be:

Correct Answer
verified

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Correct Answer
verified

securities reflect a creditor relationship while securities reflect an owner relationship.

Correct Answer
verified

Consolidated financial statements:

Correct Answer
verified

A company has an investment in 9% bonds with a par value of $100,000 that pay interest on October 1 and April 1.The amount of interest accrued on December 31 (the company's year-end) would be:

Correct Answer
verified

Investments can be classified as all but which of the following:

Correct Answer
verified

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

Correct Answer
verified

Long-term investments include investments in land or other assets not used in a company's operations.

Correct Answer
verified

When an investor has insignificant influence over another company's stock,presumably when it owns less than 20%,the stock investment is reported at fair value.

Correct Answer
verified

An investor presumed to have significant influence owns at least 20% but not more than 50% of another company's voting stock.

Correct Answer
verified

A company purchased $60,000 of 5% bonds on May 1 at par value.The bonds pay interest on March 1 and September 1.The amount of interest accrued on December 31 (the company's year-end) would be:

Correct Answer
verified

Kendall Corp.purchased at par value $160,000 of Barker Company's 7% bonds that mature in 10 months.The bonds pay interest semiannually on June 1 and December 1.Kendall plans to hold the bonds until they mature.The journal entry to record Kendall's purchase of the bonds is:

Correct Answer
verified

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

Correct Answer
verified

At the end of the accounting period,the owners of debt securities:

Correct Answer
verified

Correct Answer
verified

Unrealized gains and losses on stock investments with insignificant influence are reported as a component of stockholders' equity.

Correct Answer
verified

Explain how to record the sale of non-influential equity securities.

Correct Answer
verified
When non-influential equity securities a...
View Answer

Consolidated financial statements show the financial statements of all entities under the parent's control,including all subsidiaries.

Correct Answer
verified

Exam 15: Investments

When the cost of a short-term held-to-maturity debt security is different from the maturity value,the difference is amortized over the remaining life of the security.

Correct AnswerverifiedShow Answer

Unrealized Loss−Equity and Unrealized Gain−Equity are permanent equity accounts.

Correct AnswerverifiedShow Answer

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds payable at par value on September 1.Interest payments are made semiannually.Landmark plans to hold the bonds for the 5-year life.When the bonds mature,the journal entry to record the proceeds will be:

Correct AnswerverifiedShow Answer

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Correct AnswerverifiedShow Answer

________ securities reflect a creditor relationship while ________ securities reflect an owner relationship.

Correct AnswerverifiedShow Answer

Consolidated financial statements:

Correct AnswerverifiedShow Answer

A company has an investment in 9% bonds with a par value of $100,000 that pay interest on October 1 and April 1.The amount of interest accrued on December 31 (the company's year-end) would be:

Correct AnswerverifiedShow Answer

Investments can be classified as all but which of the following:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Long-term investments include investments in land or other assets not used in a company's operations.

Correct AnswerverifiedShow Answer

When an investor has insignificant influence over another company's stock,presumably when it owns less than 20%,the stock investment is reported at fair value.

Correct AnswerverifiedShow Answer

An investor presumed to have significant influence owns at least 20% but not more than 50% of another company's voting stock.

Correct AnswerverifiedShow Answer

A company purchased $60,000 of 5% bonds on May 1 at par value.The bonds pay interest on March 1 and September 1.The amount of interest accrued on December 31 (the company's year-end) would be:

Correct AnswerverifiedShow Answer

Kendall Corp.purchased at par value $160,000 of Barker Company's 7% bonds that mature in 10 months.The bonds pay interest semiannually on June 1 and December 1.Kendall plans to hold the bonds until they mature.The journal entry to record Kendall's purchase of the bonds is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

At the end of the accounting period,the owners of debt securities:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Unrealized gains and losses on stock investments with insignificant influence are reported as a component of stockholders' equity.

Correct AnswerverifiedShow Answer

Explain how to record the sale of non-influential equity securities.

Correct AnswerverifiedWhen non-influential equity securities a...View AnswerShow Answer

Consolidated financial statements show the financial statements of all entities under the parent's control,including all subsidiaries.

Correct AnswerverifiedShow Answer

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securities reflect a creditor relationship while securities reflect an owner relationship.

Correct Answer
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When non-influential equity securities a...
View Answer

Correct Answer
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