Question 1

If a common stock investment is sold at a gain, the gain

Accepted Answer

A) is reported as operating revenue. 
B) is reported under a special section, "Discontinued investments," on the income statement. 
C) is reported in the Other revenues and gains section of the income statement. 
D) contributes to gross profit on the income statement. 
A) is reported as operating revenue. 
B) is reported under a special section, "Discontinued investments," on the income statement. 
C) is reported in the Other revenues and gains section of the income statement. 
D) contributes to gross profit on the income statement.

Question 2

Brandy Corporation's trading portfolio at the end of the year is as follows:   At the end of the year, Brandy Corporation should

Accepted Answer

A) set up a Fair Value Adjustment account for Stock D. 
B) set up a Fair Value Adjustment account for the portfolio. 
C) recognize an Unrealized Gain or Loss-Income for $4,000. 
D) report a loss on the income statement for $4,000 under "Other expenses and losses." 
A) set up a Fair Value Adjustment account for Stock D. 
B) set up a Fair Value Adjustment account for the portfolio. 
C) recognize an Unrealized Gain or Loss-Income for $4,000. 
D) report a loss on the income statement for $4,000 under "Other expenses and losses."

Question 3

On January 1, 2014, Grgante Corporation purchased 25% of the common stock outstanding of Long Corporation for $270,000. During 2014, Long Corporation reported net income of $80,000 and paid cash dividends of $40,000. The balance of the Stock Investments-Long account on the books of Grgante Corporation at December 31, 2014 is

Accepted Answer

A) $270,000. 
B) $310,000. 
C) $350,000. 
D) $280,000. 
A) $270,000. 
B) $310,000. 
C) $350,000. 
D) $280,000.

Question 4

For accounting purposes, the method used to account for long-term investments in common stock is determined by

Accepted Answer

A) the amount paid for the stock by the investor. 
B) the extent of an investor's influence on the operating and financial affairs of the investee. 
C) whether the stock has paid dividends in past years. 
D) whether the acquisition of the stock by the investor was "friendly" or "hostile." 
A) the amount paid for the stock by the investor. 
B) the extent of an investor's influence on the operating and financial affairs of the investee. 
C) whether the stock has paid dividends in past years. 
D) whether the acquisition of the stock by the investor was "friendly" or "hostile."

Question 5

Pension funds and mutual funds regularly invest in debt and stock securities to

Accepted Answer

A) generate earnings. 
B) house excess cash until needed. 
C) meet strategic goals. 
D) control the company in which they invest. 
A) generate earnings. 
B) house excess cash until needed. 
C) meet strategic goals. 
D) control the company in which they invest.

Question 6

Cruz Inc. earns $450,000 and pays cash dividends of $150,000 during 2014. Cruz Corporation owns 73,500 of the 210,000 outstanding shares of Viejo. How much revenue from investment should Viejo report in 2014?

Accepted Answer

A) $52,500 
B) $105,000 
C) $157,500 
D) $210,000 
A) $52,500 
B) $105,000 
C) $157,500 
D) $210,000

Question 7

On January 2, Angle Corporation acquired 40% of the outstanding common stock of Bobbe Company for $550,000. For the year ended December 31, Bobbe reported net income of $90,000 and paid cash dividends of $30,000 on its common stock. At December 31, the carrying value of Angle's investment in Bobbe under the equity method is

Accepted Answer

A) $538,000. 
B) $550,000. 
C) $586,000. 
D) $574,000. 
A) $538,000. 
B) $550,000. 
C) $586,000. 
D) $574,000.

Question 8

One of the reasons a corporation may purchase investments is that it has excess cash.

Accepted Answer

A) True 
 B)False

If a common stock investment is sold at a gain, the gain

Brandy Corporation's trading portfolio at the end of the year is as follows: At the end of the year, Brandy Corporation should

For accounting purposes, the method used to account for long-term investments in common stock is determined by

Pension funds and mutual funds regularly invest in debt and stock securities to

Cruz Inc. earns $450,000 and pays cash dividends of $150,000 during 2014. Cruz Corporation owns 73,500 of the 210,000 outstanding shares of Viejo. How much revenue from investment should Viejo report in 2014?

One of the reasons a corporation may purchase investments is that it has excess cash.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 12: Investments

If a common stock investment is sold at a gain, the gain

Brandy Corporation's trading portfolio at the end of the year is as follows: At the end of the year, Brandy Corporation should

For accounting purposes, the method used to account for long-term investments in common stock is determined by

Pension funds and mutual funds regularly invest in debt and stock securities to

Cruz Inc. earns $450,000 and pays cash dividends of $150,000 during 2014. Cruz Corporation owns 73,500 of the 210,000 outstanding shares of Viejo. How much revenue from investment should Viejo report in 2014?

One of the reasons a corporation may purchase investments is that it has excess cash.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Filters