Question 1

The present value of an annuity is the value now of a series of future receipts or payments, discounted assuming compound interest.

Accepted Answer

A) True 
 B)False

Question 2

Under the equity method, the Stock Investments account is increased when the

Accepted Answer

A) investee company reports net income. 
B) investee company pays a dividend. 
C) investee company reports a loss. 
D) stock investment is sold at a gain. 
A) investee company reports net income. 
B) investee company pays a dividend. 
C) investee company reports a loss. 
D) stock investment is sold at a gain.

Question 3

The future value of a single amount is the value at a future date of a given amount invested now, assuming compound interest.

Accepted Answer

A) True 
 B)False

Question 4

On January 1, Waverly Company purchased as an investment a $1,000, 7% bond for $1,000.The bond pays interest on January 1.What is the entry to record the interest accrual on December 31?

Accepted Answer

The answer of On January 1, Waverly Company purchased as...

Question 5

An unrealized gain or loss on trading securities is reported as a separate component of stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 6

When the cost method is used to account for a stock investment the carrying value of the investment is affected by

Accepted Answer

A) the earnings of the investee. 
B) the dividend distributions of the investee. 
C) the earnings and dividend distributions of the investee. 
D) neither the earnings nor the dividends of the investee. 
A) the earnings of the investee. 
B) the dividend distributions of the investee. 
C) the earnings and dividend distributions of the investee. 
D) neither the earnings nor the dividends of the investee.

Question 7

At December 31, 2022, Grey beard Inc.has these data on its security investments .

Accepted Answer

The answer of At December 31, 2022, Grey beard Inc.has...

Question 8

The cost method of accounting for investments in stock should be employed when the

Accepted Answer

A) investor owns more than 50% of the investee's stock. 
B) investor has significant influence on the investee and the stock held by the investor are marketable equity securities. 
C) market value of the shares held is greater than their historical cost. 
D) investor's influence on the investee is insignificant. 
A) investor owns more than 50% of the investee's stock. 
B) investor has significant influence on the investee and the stock held by the investor are marketable equity securities. 
C) market value of the shares held is greater than their historical cost. 
D) investor's influence on the investee is insignificant.

Question 9

On August 1, Basil Company buys 2,000 shares of Zingo common stock for $61,500 cash.On December 1, the stock investments are sold for $71,000 in cash.Which of the following are the correct journal entries of record for the purchase and sale of the common stock?

Accepted Answer

The answer of On August 1, Basil Company buys 2,000...

Question 10

The factor 1.0609 is taken from the 3% column and 2 periods row in a certain table.From what table is this factor taken?

Accepted Answer

A) Future value of 1 
B) Future value of an annuity of 1 
C) Present value of 1 
D) Present value of an annuity of 1 
A) Future value of 1 
B) Future value of an annuity of 1 
C) Present value of 1 
D) Present value of an annuity of 1

Question 11

In accordance with the historical cost principle, the cost of debt investments includes brokerage fees and accrued interest.

Accepted Answer

A) True 
 B)False

Question 12

On January 1, U.K.Enterprise purchased as an investment a $1,000, 7% bond for $1,000.The bond pays interest on January 1.The bond is sold on July 1 for $1,120 plus accrued interest.Interest has not been accrued since the last interest payment date.What is the entry to record the cash proceeds at the time the bond is sold?

Accepted Answer

The answer of On January 1, U.K.Enterprise purchased as an...

Question 13

All of the following are necessary to compute the future value of a single amount except the

Accepted Answer

A) interest rate. 
B) number of periods. 
C) principal. 
D) maturity value. 
A) interest rate. 
B) number of periods. 
C) principal. 
D) maturity value.

Question 14

Mazzeo Company acquires 80 Dodd's 10%, 5 year, $1,000 bonds on January 1, 2022 for $80,000.If Mazzeo sells all of its Dodd's Bonds for $78,900 what gain or loss is recognized?

Accepted Answer

A) Loss of $9,100 
B) Loss of $1,100 
C) Gain of $1,100 
D) Gain of $9,100 
A) Loss of $9,100 
B) Loss of $1,100 
C) Gain of $1,100 
D) Gain of $9,100

Question 15

All of the following statements about short-term investments are true except

Accepted Answer

A) short-term investments are also called marketable securities. 
B) trading securities are always classified as short-term investments. 
C) short-term investments are listed below accounts receivable in the current asset section of the balance sheet. 
D) short-term assets must be readily marketable. 
A) short-term investments are also called marketable securities. 
B) trading securities are always classified as short-term investments. 
C) short-term investments are listed below accounts receivable in the current asset section of the balance sheet. 
D) short-term assets must be readily marketable.

Question 16

The Fair Value Adjustment account can only have a credit balance or a zero balance.

Accepted Answer

A) True 
 B)False

Question 17

At the end of the first year of operations, the total cost of the trading securities portfolio is $245,000.Total fair value is $250,000.The financial statements should show

Accepted Answer

A) an addition to an asset of $5,000 and a realized gain of $5,000. 
B) an addition to an asset of $5,000 and an unrealized gain of $5,000 in the stockholders' equity section. 
C) an addition to an asset of $5,000 in the current assets section and an unrealized gain of $5,000 in "Other revenues and gains." 
D) an addition to an asset of $5,000 in the current assets section and a realized gain of $5,000 in "Other revenues and gains." 
A) an addition to an asset of $5,000 and a realized gain of $5,000. 
B) an addition to an asset of $5,000 and an unrealized gain of $5,000 in the stockholders' equity section. 
C) an addition to an asset of $5,000 in the current assets section and an unrealized gain of $5,000 in "Other revenues and gains." 
D) an addition to an asset of $5,000 in the current assets section and a realized gain of $5,000 in "Other revenues and gains."

Question 18

When an investor owns between 20% and 50% of the common stock of a corporation, it is generally presumed that the investor

Accepted Answer

A) has insignificant influence on the investee and that the cost method should be used to account for the investment. 
B) should apply the cost method in accounting for the investment. 
C) will prepare consolidated financial statements. 
D) has significant influence on the investee and that the equity method should be used to account for the investment. 
A) has insignificant influence on the investee and that the cost method should be used to account for the investment. 
B) should apply the cost method in accounting for the investment. 
C) will prepare consolidated financial statements. 
D) has significant influence on the investee and that the equity method should be used to account for the investment.

Question 19

When a company holds stock of several different corporations, the group of securities is identified as a(n)

Accepted Answer

A) affiliated investment. 
B) consolidated portfolio. 
C) investment portfolio. 
D) controlling interest. 
A) affiliated investment. 
B) consolidated portfolio. 
C) investment portfolio. 
D) controlling interest.

Question 20

Trading securities are reported on the balance sheet at

Accepted Answer

A) fair value. 
B) cost. 
C) cost, adjusted for the effects of interest. 
D) lower of cost or market. 
A) fair value. 
B) cost. 
C) cost, adjusted for the effects of interest. 
D) lower of cost or market.

The present value of an annuity is the value now of a series of future receipts or payments, discounted assuming compound interest.

Under the equity method, the Stock Investments account is increased when the

The future value of a single amount is the value at a future date of a given amount invested now, assuming compound interest.

On January 1, Waverly Company purchased as an investment a $1,000, 7% bond for $1,000.The bond pays interest on January 1.What is the entry to record the interest accrual on December 31?

An unrealized gain or loss on trading securities is reported as a separate component of stockholders' equity.

When the cost method is used to account for a stock investment the carrying value of the investment is affected by

At December 31, 2022, Grey beard Inc.has these data on its security investments .

The cost method of accounting for investments in stock should be employed when the

On August 1, Basil Company buys 2,000 shares of Zingo common stock for $61,500 cash.On December 1, the stock investments are sold for $71,000 in cash.Which of the following are the correct journal entries of record for the purchase and sale of the common stock?

The factor 1.0609 is taken from the 3% column and 2 periods row in a certain table.From what table is this factor taken?

In accordance with the historical cost principle, the cost of debt investments includes brokerage fees and accrued interest.

All of the following are necessary to compute the future value of a single amount except the

Mazzeo Company acquires 80 Dodd's 10%, 5 year, $1,000 bonds on January 1, 2022 for $80,000.If Mazzeo sells all of its Dodd's Bonds for $78,900 what gain or loss is recognized?

All of the following statements about short-term investments are true except

The Fair Value Adjustment account can only have a credit balance or a zero balance.

At the end of the first year of operations, the total cost of the trading securities portfolio is $245,000.Total fair value is $250,000.The financial statements should show

When an investor owns between 20% and 50% of the common stock of a corporation, it is generally presumed that the investor

When a company holds stock of several different corporations, the group of securities is identified as a(n)

Trading securities are reported on the balance sheet at

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Filters

Exam 14: Understanding Investments in Debt and Equity Securities

The present value of an annuity is the value now of a series of future receipts or payments, discounted assuming compound interest.

Under the equity method, the Stock Investments account is increased when the

The future value of a single amount is the value at a future date of a given amount invested now, assuming compound interest.

On January 1, Waverly Company purchased as an investment a $1,000, 7% bond for $1,000.The bond pays interest on January 1.What is the entry to record the interest accrual on December 31?

An unrealized gain or loss on trading securities is reported as a separate component of stockholders' equity.

When the cost method is used to account for a stock investment the carrying value of the investment is affected by

At December 31, 2022, Grey beard Inc.has these data on its security investments .

The cost method of accounting for investments in stock should be employed when the

On August 1, Basil Company buys 2,000 shares of Zingo common stock for $61,500 cash.On December 1, the stock investments are sold for $71,000 in cash.Which of the following are the correct journal entries of record for the purchase and sale of the common stock?

The factor 1.0609 is taken from the 3% column and 2 periods row in a certain table.From what table is this factor taken?

In accordance with the historical cost principle, the cost of debt investments includes brokerage fees and accrued interest.

All of the following are necessary to compute the future value of a single amount except the

Mazzeo Company acquires 80 Dodd's 10%, 5 year, $1,000 bonds on January 1, 2022 for $80,000.If Mazzeo sells all of its Dodd's Bonds for $78,900 what gain or loss is recognized?

All of the following statements about short-term investments are true except

The Fair Value Adjustment account can only have a credit balance or a zero balance.

At the end of the first year of operations, the total cost of the trading securities portfolio is $245,000.Total fair value is $250,000.The financial statements should show

When an investor owns between 20% and 50% of the common stock of a corporation, it is generally presumed that the investor

When a company holds stock of several different corporations, the group of securities is identified as a(n)

Trading securities are reported on the balance sheet at

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Filters