Question 1

Ownership in a corporation is represented by shares of common or preferred stock called ____________________ securities.

Accepted Answer

The answer of Ownership in a corporation is represented by...

Question 2

Julie expects to receive payments of $1,200 at the end of the year for the next 3 years. Assuming Julie invests the payments into an account earning 8%, how much will she have at the end of the 3 years?

Accepted Answer

A) $3,985.68 
B) $3,600.00 
C) $10,670.81 
D) $3,092.52 
A) $3,985.68 
B) $3,600.00 
C) $10,670.81 
D) $3,092.52

Question 3

An advantage of the equity method over the fair value method is that it prevents an investor from manipulating its own income by exerting influence over the amount and timing of investee dividends.

Accepted Answer

A) True 
 B)False

Question 4

Marvin's Manufacturing can invest in a new process, but will need to purchase new equipment. The cost of the equipment is $75,000 and needs to be in place in 8 years. The company invests the money at 8% interest compounded semiannually. How much will they need to invest in order to have $75,000 in 8 years?

Accepted Answer

$40,043.25 (or $40,043.14)This problem w

Question 5

If the investor holds 50% or more of the investee's outstanding common stock, then the investor is referred to as the parent and the investee is called the subsidiary.

Accepted Answer

A) True 
 B)False

Question 6

The excess of acquisition cost over the current value of the investee's identifiable net assets, referred to as goodwill, may not be recorded by the investor under current generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 7

The equity method of accounting for an investment is used when a company purchases

Accepted Answer

A) more than 20% of the debt securities of another company. 
B) 100% of the debt securities of another company. 
C) 15% of the equity securities of another company. 
D) between 20-50% of the equity securities of another company. 
A) more than 20% of the debt securities of another company. 
B) 100% of the debt securities of another company. 
C) 15% of the equity securities of another company. 
D) between 20-50% of the equity securities of another company.

Question 8

The amount to which an account will grow when interest is compounded is the ______________ value.

Accepted Answer

The answer of The amount to which an account will...

Question 9

What is the interest rate of a single $20,000 cash flow in 3 years if the present value is $15,443.60?

Accepted Answer

A) 7% 
B) 8% 
C) 9% 
D) 10% 
A) 7% 
B) 8% 
C) 9% 
D) 10%

Question 10

Match the following terms to their correct definition:
-Equity or debt investments that management intends to sell in the near term, typically within a single month

Accepted Answer

A) equity security 
B) debt security 
C) passive 
D) significant influence 
E) control
F)parent
G)subsidiary
H)trading securities
I)available-for-sale securities
J)held-to-maturity securities
K)amortized cost method
L)fair value method
M)unrealized gains and losses
N)equity method
O)consolidation worksheet
P)minority interest
Q)business combination
R)goodwill 
A) equity security 
B) debt security 
C) passive 
D) significant influence 
E) control
F)parent
G)subsidiary
H)trading securities
I)available-for-sale securities
J)held-to-maturity securities
K)amortized cost method
L)fair value method
M)unrealized gains and losses
N)equity method
O)consolidation worksheet
P)minority interest
Q)business combination
R)goodwill

Question 11

Any transaction or set of transactions that brings together two or more previously separate entities to form a single accounting entity is called a ____________________.

Accepted Answer

business c

Question 12

If the investor holds 50% or more of the common stock of the investee, then the investor is referred to as the ____________________ and the investee is referred to as the ____________________.

Accepted Answer

The answer of If the investor holds 50% or more...

Question 13

A passive investment is one in which the owner

Accepted Answer

A) is not attempting to exert influence over the company. 
B) owns between 15-25% of the company's outstanding stock. 
C) uses the equity method of accounting for the investment. 
D) is gradually attempting to gain control over the company. 
A) is not attempting to exert influence over the company. 
B) owns between 15-25% of the company's outstanding stock. 
C) uses the equity method of accounting for the investment. 
D) is gradually attempting to gain control over the company.

Question 14

On January 1, 2012, Parent, Inc., purchased 80% of the outstanding common stock of Sub Corporation for $750,000. Since Parent has control over Sub, a consolidated balance sheet must be prepared from the individual balance sheets of both companies. Complete the following worksheet to prepare the consolidated balance sheet on January 1, 2012.

Accepted Answer

The minority interest is $150,

Question 15

Match the following terms to their correct definition:
-Result when the value of securities must be written up or down to fair market value at the balance sheet date, a process referred to as "marking to market"

Accepted Answer

A) equity security 
B) debt security 
C) passive 
D) significant influence 
E) control
F)parent
G)subsidiary
H)trading securities
I)available-for-sale securities
J)held-to-maturity securities
K)amortized cost method
L)fair value method
M)unrealized gains and losses
N)equity method
O)consolidation worksheet
P)minority interest
Q)business combination
R)goodwill 
A) equity security 
B) debt security 
C) passive 
D) significant influence 
E) control
F)parent
G)subsidiary
H)trading securities
I)available-for-sale securities
J)held-to-maturity securities
K)amortized cost method
L)fair value method
M)unrealized gains and losses
N)equity method
O)consolidation worksheet
P)minority interest
Q)business combination
R)goodwill

Question 16

What is the difference between trading securities and available-for-sale securities? What are the similarities in terms of their accounting treatment?

Accepted Answer

Trading securities are debt or equity in

Question 17

When a company purchases less than 50% of the equity securities of another company, which of the following statements is true?

Accepted Answer

A) Both companies' financial statements must be combined in consolidation. 
B) The equity method of accounting will be required if the company's investment is at least 20%. 
C) The fair value method of accounting will be used only if the securities are classified as available-for-sale. 
D) The fair value method of accounting will be used only if they are trading securities. 
A) Both companies' financial statements must be combined in consolidation. 
B) The equity method of accounting will be required if the company's investment is at least 20%. 
C) The fair value method of accounting will be used only if the securities are classified as available-for-sale. 
D) The fair value method of accounting will be used only if they are trading securities.

Question 18

Match the following terms to their correct definition:
-Represents an ownership interest in a corporation, usually common stock

Accepted Answer

A) equity security 
B) debt security 
C) passive 
D) significant influence 
E) control
F)parent
G)subsidiary
H)trading securities
I)available-for-sale securities
J)held-to-maturity securities
K)amortized cost method
L)fair value method
M)unrealized gains and losses
N)equity method
O)consolidation worksheet
P)minority interest
Q)business combination
R)goodwill 
A) equity security 
B) debt security 
C) passive 
D) significant influence 
E) control
F)parent
G)subsidiary
H)trading securities
I)available-for-sale securities
J)held-to-maturity securities
K)amortized cost method
L)fair value method
M)unrealized gains and losses
N)equity method
O)consolidation worksheet
P)minority interest
Q)business combination
R)goodwill

Question 19

Match the following terms to their correct definition:
-Device that facilitates combining the financial statements of the investor and investee companies

Accepted Answer

A) equity security 
B) debt security 
C) passive 
D) significant influence 
E) control
F)parent
G)subsidiary
H)trading securities
I)available-for-sale securities
J)held-to-maturity securities
K)amortized cost method
L)fair value method
M)unrealized gains and losses
N)equity method
O)consolidation worksheet
P)minority interest
Q)business combination
R)goodwill 
A) equity security 
B) debt security 
C) passive 
D) significant influence 
E) control
F)parent
G)subsidiary
H)trading securities
I)available-for-sale securities
J)held-to-maturity securities
K)amortized cost method
L)fair value method
M)unrealized gains and losses
N)equity method
O)consolidation worksheet
P)minority interest
Q)business combination
R)goodwill

Question 20

Compound interest is computed on which of the following?

Accepted Answer

A) Only the original amount. 
B) The original amount and any undistributed interest earned in prior periods. 
C) The original amount and any distributed or undistributed interest earned in prior periods. 
D) Only the distributed and undistributed interest earned in prior periods. 
A) Only the original amount. 
B) The original amount and any undistributed interest earned in prior periods. 
C) The original amount and any distributed or undistributed interest earned in prior periods. 
D) Only the distributed and undistributed interest earned in prior periods.

Ownership in a corporation is represented by shares of common or preferred stock called ____________________ securities.

Julie expects to receive payments of $1,200 at the end of the year for the next 3 years. Assuming Julie invests the payments into an account earning 8%, how much will she have at the end of the 3 years?

An advantage of the equity method over the fair value method is that it prevents an investor from manipulating its own income by exerting influence over the amount and timing of investee dividends.

If the investor holds 50% or more of the investee's outstanding common stock, then the investor is referred to as the parent and the investee is called the subsidiary.

The excess of acquisition cost over the current value of the investee's identifiable net assets, referred to as goodwill, may not be recorded by the investor under current generally accepted accounting principles.

The equity method of accounting for an investment is used when a company purchases

The amount to which an account will grow when interest is compounded is the ______________ value.

What is the interest rate of a single $20,000 cash flow in 3 years if the present value is $15,443.60?

Match the following terms to their correct definition: -Equity or debt investments that management intends to sell in the near term, typically within a single month

Any transaction or set of transactions that brings together two or more previously separate entities to form a single accounting entity is called a ____________________.

If the investor holds 50% or more of the common stock of the investee, then the investor is referred to as the and the investee is referred to as the .

A passive investment is one in which the owner

Match the following terms to their correct definition: -Result when the value of securities must be written up or down to fair market value at the balance sheet date, a process referred to as "marking to market"

What is the difference between trading securities and available-for-sale securities? What are the similarities in terms of their accounting treatment?

When a company purchases less than 50% of the equity securities of another company, which of the following statements is true?

Match the following terms to their correct definition: -Represents an ownership interest in a corporation, usually common stock

Match the following terms to their correct definition: -Device that facilitates combining the financial statements of the investor and investee companies

Compound interest is computed on which of the following?

Accounting and The Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control And Cash

Sales And Receivables

Cost Of Goods Sold and Inventory

Operating Assets

Current and Contingent Liabilities

Long Term Liabilities

Stockholders Apos Equity

The Statement Of Cash Flows

Financial Statement Analysis

Filters

Exam 13: Finance and Stock Market Equilibrium

Ownership in a corporation is represented by shares of common or preferred stock called ____________________ securities.

Julie expects to receive payments of $1,200 at the end of the year for the next 3 years. Assuming Julie invests the payments into an account earning 8%, how much will she have at the end of the 3 years?

An advantage of the equity method over the fair value method is that it prevents an investor from manipulating its own income by exerting influence over the amount and timing of investee dividends.

If the investor holds 50% or more of the investee's outstanding common stock, then the investor is referred to as the parent and the investee is called the subsidiary.

The excess of acquisition cost over the current value of the investee's identifiable net assets, referred to as goodwill, may not be recorded by the investor under current generally accepted accounting principles.

The equity method of accounting for an investment is used when a company purchases

The amount to which an account will grow when interest is compounded is the ______________ value.

What is the interest rate of a single $20,000 cash flow in 3 years if the present value is $15,443.60?

Match the following terms to their correct definition: -Equity or debt investments that management intends to sell in the near term, typically within a single month

Any transaction or set of transactions that brings together two or more previously separate entities to form a single accounting entity is called a ____________________.

If the investor holds 50% or more of the common stock of the investee, then the investor is referred to as the ____________________ and the investee is referred to as the ____________________.

A passive investment is one in which the owner

Match the following terms to their correct definition: -Result when the value of securities must be written up or down to fair market value at the balance sheet date, a process referred to as "marking to market"

What is the difference between trading securities and available-for-sale securities? What are the similarities in terms of their accounting treatment?

When a company purchases less than 50% of the equity securities of another company, which of the following statements is true?

Match the following terms to their correct definition: -Represents an ownership interest in a corporation, usually common stock

Match the following terms to their correct definition: -Device that facilitates combining the financial statements of the investor and investee companies

Compound interest is computed on which of the following?

Accounting and The Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control And Cash

Sales And Receivables

Cost Of Goods Sold and Inventory

Operating Assets

Current and Contingent Liabilities

Long Term Liabilities

Stockholders Apos Equity

The Statement Of Cash Flows

Financial Statement Analysis

Filters

If the investor holds 50% or more of the common stock of the investee, then the investor is referred to as the and the investee is referred to as the .