Question 1

Consolidated financial statements should be prepared only when a subsidiary company has a controlling interest in the parent company.

Accepted Answer

A) True 
 B)False

Question 2

If you are able to earn a 15% rate of return, what amount would you need to invest to have $15,000 one year from now?

Accepted Answer

A) $14,852 
B) $13,125 
C) $12,750 
D) $13,044 
A) $14,852 
B) $13,125 
C) $12,750 
D) $13,044

Question 3

Bing Company owns 30% interest in the stock of Yeti Corporation.During the year, Yeti pays $75,000 in dividends to Bing, and reports $400,000 in net income.Bing Company's investment in Yeti will increase Bing net income by

Accepted Answer

A) $120,000. 
B) $97,500. 
C) $75,000. 
D) $22,500. 
A) $120,000. 
B) $97,500. 
C) $75,000. 
D) $22,500.

Question 4

McComb Inc.earns $1,350,000 and pays cash dividends for $450,000 during 2022.SFX Corporation owns 70,000 of the 210,000 outstanding shares of McComb.How much revenue from investment should SFX report in 2022?

Accepted Answer

A) $150,000 
B) $300,000 
C) $450,000 
D) $600,000 
A) $150,000 
B) $300,000 
C) $450,000 
D) $600,000

Question 5

Which table has a factor of 1.00000 for 1 period at every interest rate?

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 6

Consolidated financial statements are appropriate when an investor controls an investee by ownership of more than 50% of the investee's common stock.

Accepted Answer

A) True 
 B)False

Question 7

On January 1, 2022, the LaRoche Company purchased at face value, a $1,000, 5%, bond that pays interest on January 1.LaRoche Company has a calendar year end.The entry for the receipt of interest on January 1, 2023 is

Accepted Answer

The answer of On January 1, 2022, the LaRoche Company...

Question 8

Which one of the following would not be classified as a short-term investment?

Accepted Answer

A) Marketable equity securities. 
B) Marketable merchandise. 
C) Marketable debt securities. 
D) Short-term paper. 
A) Marketable equity securities. 
B) Marketable merchandise. 
C) Marketable debt securities. 
D) Short-term paper.

Question 9

Consolidated financial statements are useful to all of the following except

Accepted Answer

A) creditors of subsidiary companies. 
B) management of the parent company. 
C) stockholders of the parent company. 
D) board of directors of the parent company. 
A) creditors of subsidiary companies. 
B) management of the parent company. 
C) stockholders of the parent company. 
D) board of directors of the parent company.

Question 10

Dividends received on investments are accounted for in the same way under the cost and the equity method.

Accepted Answer

A) True 
 B)False

Question 11

When a company owns more than 50% of the common stock of another company

Accepted Answer

A) affiliated financial statements are prepared. 
B) consolidated financial statements are prepared. 
C) controlling financial statements are prepared. 
D) significant financial statements are prepared. 
A) affiliated financial statements are prepared. 
B) consolidated financial statements are prepared. 
C) controlling financial statements are prepared. 
D) significant financial statements are prepared.

Question 12

Baggles Company owns stock in Hampshire Industries, which it intends to hold indefinitely because of some negative tax consequences if sold.Which of the following statements is true regarding Baggles' reporting of the stock?

Accepted Answer

A) The stock would be classified as trading securities. 
B) The stock would be reported at fair value if the ownership level is less than 20%. 
C) The stock requires no market adjustments since there are no plans to sell it. 
D) Any losses on the stock are recorded in stockholders' equity. 
A) The stock would be classified as trading securities. 
B) The stock would be reported at fair value if the ownership level is less than 20%. 
C) The stock requires no market adjustments since there are no plans to sell it. 
D) Any losses on the stock are recorded in stockholders' equity.

Question 13

Deutsche Corporation's portfolio of stock holdings of less than 20% at the end of the year is as follows:   The year-end adjusting entry to reflect a decrease in the value of stock trading securities includes a

Accepted Answer

A) credit to Fair Value Adjustment-Stock. 
B) debit to Fair Value Adjustment-TStock. 
C) dcredit to Unrealized Gain or Loss-Income. 
D) credit to Stock Investments. 
A) credit to Fair Value Adjustment-Stock. 
B) debit to Fair Value Adjustment-TStock. 
C) dcredit to Unrealized Gain or Loss-Income. 
D) credit to Stock Investments.

Question 14

On January 1, 2022, Chic Corp.paid $750,000 for 100,000 shares of Toto Company's common stock, which represents 25% of Toto's outstanding common stock.Toto reported income of $300,000 and paid cash dividends of $80,000 during 2022 Chic should report the investment in Toto Company on its December 31, 2022, balance sheet at

Accepted Answer

A) $750,000 
B) $825,000 
C) $770,000 
D) $805,000 
A) $750,000 
B) $825,000 
C) $770,000 
D) $805,000

Question 15

A company that owns more than 50% of the common stock of another company is known as the

Accepted Answer

A) charge company. 
B) subsidiary company. 
C) parent company. 
D) management company. 
A) charge company. 
B) subsidiary company. 
C) parent company. 
D) management company.

Question 16

A stock investment (less than 20% ownership) is purchased for $73,500.At year end, when the market value of the stock is $65,000, the adjusting entry includes a

Accepted Answer

A) credit to Stock Investments. 
B) debit to Loss on Sale of Stock Investment. 
C) credit to Fair Value-Adjustment-Stock. 
D) credit to Unrealized Gain or Loss-Income. 
A) credit to Stock Investments. 
B) debit to Loss on Sale of Stock Investment. 
C) credit to Fair Value-Adjustment-Stock. 
D) credit to Unrealized Gain or Loss-Income.

Question 17

Dividends received on stock investments of less than 20% should be credited to the Stock Investments account.

Accepted Answer

A) True 
 B)False

Question 18

Hardin Park Company had these transactions pertaining to stock investments Feb.1 Purchased 5,000 shares of Raley Company (10%) for $89,000 cash.
June 1 Received cash dividends of $1 per share on Raley stock.
Oct)1 Sold 2,000 shares of Raley stock for 39,000.
Dec)1 Received cash dividends of $2 per share on Reley stock.
The entry to record the purchase of the Raley stock would include a

Accepted Answer

A) credit to the Stock Investments account for $89,000. 
B) credit to Cash for $90,000 
C) debit to the Stock Investments account for $89,000. 
D) debit to Investment Expense for $1,000. 
A) credit to the Stock Investments account for $89,000. 
B) credit to Cash for $90,000 
C) debit to the Stock Investments account for $89,000. 
D) debit to Investment Expense for $1,000.

Question 19

In a capital budgeting decision, a positive net present value means the decision to invest should be accepted.

Accepted Answer

A) True 
 B)False

Question 20

A $10,000, 6%, 5-year note payable that pays interest quarterly would be discounted back to its present value by using tables that would indicate which one of the following period-interest combinations?

Accepted Answer

A) 5 interest periods, 6% interest 
B) 20 interest periods, 6% interest 
C) 20 interest periods, 1.5% interest 
D) 5 interest periods, 1.5% interest 
A) 5 interest periods, 6% interest 
B) 20 interest periods, 6% interest 
C) 20 interest periods, 1.5% interest 
D) 5 interest periods, 1.5% interest

Consolidated financial statements should be prepared only when a subsidiary company has a controlling interest in the parent company.

If you are able to earn a 15% rate of return, what amount would you need to invest to have $15,000 one year from now?

Bing Company owns 30% interest in the stock of Yeti Corporation.During the year, Yeti pays $75,000 in dividends to Bing, and reports $400,000 in net income.Bing Company's investment in Yeti will increase Bing net income by

McComb Inc.earns $1,350,000 and pays cash dividends for $450,000 during 2022.SFX Corporation owns 70,000 of the 210,000 outstanding shares of McComb.How much revenue from investment should SFX report in 2022?

Which table has a factor of 1.00000 for 1 period at every interest rate?

Consolidated financial statements are appropriate when an investor controls an investee by ownership of more than 50% of the investee's common stock.

On January 1, 2022, the LaRoche Company purchased at face value, a $1,000, 5%, bond that pays interest on January 1.LaRoche Company has a calendar year end.The entry for the receipt of interest on January 1, 2023 is

Which one of the following would not be classified as a short-term investment?

Consolidated financial statements are useful to all of the following except

Dividends received on investments are accounted for in the same way under the cost and the equity method.

When a company owns more than 50% of the common stock of another company

Baggles Company owns stock in Hampshire Industries, which it intends to hold indefinitely because of some negative tax consequences if sold.Which of the following statements is true regarding Baggles' reporting of the stock?

Deutsche Corporation's portfolio of stock holdings of less than 20% at the end of the year is as follows: The year-end adjusting entry to reflect a decrease in the value of stock trading securities includes a

A company that owns more than 50% of the common stock of another company is known as the

A stock investment (less than 20% ownership) is purchased for $73,500.At year end, when the market value of the stock is $65,000, the adjusting entry includes a

Dividends received on stock investments of less than 20% should be credited to the Stock Investments account.

In a capital budgeting decision, a positive net present value means the decision to invest should be accepted.

A $10,000, 6%, 5-year note payable that pays interest quarterly would be discounted back to its present value by using tables that would indicate which one of the following period-interest combinations?

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

Consolidated financial statements should be prepared only when a subsidiary company has a controlling interest in the parent company.

If you are able to earn a 15% rate of return, what amount would you need to invest to have $15,000 one year from now?

Bing Company owns 30% interest in the stock of Yeti Corporation.During the year, Yeti pays $75,000 in dividends to Bing, and reports $400,000 in net income.Bing Company's investment in Yeti will increase Bing net income by

McComb Inc.earns $1,350,000 and pays cash dividends for $450,000 during 2022.SFX Corporation owns 70,000 of the 210,000 outstanding shares of McComb.How much revenue from investment should SFX report in 2022?

Which table has a factor of 1.00000 for 1 period at every interest rate?

Consolidated financial statements are appropriate when an investor controls an investee by ownership of more than 50% of the investee's common stock.

On January 1, 2022, the LaRoche Company purchased at face value, a $1,000, 5%, bond that pays interest on January 1.LaRoche Company has a calendar year end.The entry for the receipt of interest on January 1, 2023 is

Which one of the following would not be classified as a short-term investment?

Consolidated financial statements are useful to all of the following except

Dividends received on investments are accounted for in the same way under the cost and the equity method.

When a company owns more than 50% of the common stock of another company

Baggles Company owns stock in Hampshire Industries, which it intends to hold indefinitely because of some negative tax consequences if sold.Which of the following statements is true regarding Baggles' reporting of the stock?

Deutsche Corporation's portfolio of stock holdings of less than 20% at the end of the year is as follows: The year-end adjusting entry to reflect a decrease in the value of stock trading securities includes a

A company that owns more than 50% of the common stock of another company is known as the

A stock investment (less than 20% ownership) is purchased for $73,500.At year end, when the market value of the stock is $65,000, the adjusting entry includes a

Dividends received on stock investments of less than 20% should be credited to the Stock Investments account.

In a capital budgeting decision, a positive net present value means the decision to invest should be accepted.

A $10,000, 6%, 5-year note payable that pays interest quarterly would be discounted back to its present value by using tables that would indicate which one of the following period-interest combinations?

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

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