Question 1

What are the accounting basics for debt securities,including recording their acquisition,interest earned,and their disposal?

Accepted Answer

At acquisition,debt securities are recor

Question 2

Doherty Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is:

Accepted Answer

A) 3% 
B) 200% 
C) 6% 
D) 17% 
E) 1.5% 
A) 3% 
B) 200% 
C) 6% 
D) 17% 
E) 1.5%

Question 3

Explain the difference between short-term and long-term investments.Cite examples of each.

Accepted Answer

Short-term investments are securities ex

Question 4

Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value on September 1.Interest payments are made semiannually on March 1 and September 1.The journal entry to accrue interest earned at year-end December 31 is:

Accepted Answer

A) Debit Interest Receivable $8,000, credit Interest Revenue $8,000. 
B) Debit Interest Receivable $12,000, credit Interest Revenue $12,000. 
C) Debit Cash $8,000, credit Interest Revenue $8,000. 
D) Debit Cash $12,000, credit Interest Revenue $12,000. 
E) Debit Interest Revenue $8,000, credit Interest Receivable $8,000. 
A) Debit Interest Receivable $8,000, credit Interest Revenue $8,000. 
B) Debit Interest Receivable $12,000, credit Interest Revenue $12,000. 
C) Debit Cash $8,000, credit Interest Revenue $8,000. 
D) Debit Cash $12,000, credit Interest Revenue $12,000. 
E) Debit Interest Revenue $8,000, credit Interest Receivable $8,000.

Question 5

Micron owns 30% of JVT stock.Micron received $6,500 in cash dividends from its investment in JVT.The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.

Accepted Answer

A) True 
 B)False

Question 6

Short-term investments in held-to-maturity debt securities are accounted for using the:

Accepted Answer

A) Fair value method with fair value adjustment to income. 
B) Fair value method with fair value adjustment to equity. 
C) Cost method with amortization. 
D) Cost method without amortization. 
E) Equity method. 
A) Fair value method with fair value adjustment to income. 
B) Fair value method with fair value adjustment to equity. 
C) Cost method with amortization. 
D) Cost method without amortization. 
E) Equity method.

Question 7

If the exchange rate for Canadian and U.S.dollars is 0.7382 to 1,this implies that 2 Canadian dollars will buy 1.48 worth of U.S.dollars.

Accepted Answer

A) True 
 B)False

Question 8

If a U.S.company makes a credit sale to a foreign company,the sales price must be translated into dollars as of the date of _____________.

Accepted Answer

The answer of If a U.S.company makes a credit sale...

Question 9

If the exchange rate for Canadian and U.S.dollars is 0.82777 to 1,this implies that 3 Canadian dollars will buy ____ worth of U.S.dollars.

Accepted Answer

A) $ 0.2759 
B) $0.82777 
C) $1.82777 
D) $2.48 
E) $1.00 
A) $ 0.2759 
B) $0.82777 
C) $1.82777 
D) $2.48 
E) $1.00

Question 10

Morgan Company purchased 2,000 shares of Asta's common stock for $143,000 as a long-term investment.The investment is classified as available-for-sale securities.The par value of the stock was $1 per share.Morgan paid $375 in commissions on the transaction.The entry to record the transaction would include a:

Accepted Answer

A) Credit to Common Stock for $2,000. 
B) Credit to Common Stock for $143,000. 
C) Credit to Common Stock for $143,375. 
D) Debit to Long-Term Investments-AFS for $143,000. 
E) Debit to Long-Term Investments-AFS for $143,375. 
A) Credit to Common Stock for $2,000. 
B) Credit to Common Stock for $143,000. 
C) Credit to Common Stock for $143,375. 
D) Debit to Long-Term Investments-AFS for $143,000. 
E) Debit to Long-Term Investments-AFS for $143,375.

Question 11

Long-term investments:

Accepted Answer

A) Are current assets. 
B) Include funds earmarked for a special purpose such as bond sinking funds. 
C) Must be readily convertible to cash. 
D) Are expected to be converted into cash within one year. 
E) Include only equity securities. 
A) Are current assets. 
B) Include funds earmarked for a special purpose such as bond sinking funds. 
C) Must be readily convertible to cash. 
D) Are expected to be converted into cash within one year. 
E) Include only equity securities.

Question 12

A company owns 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. 
A) $ 750. 
B) $1,500. 
C) $2,250. 
D) $4,500. 
E) $9,000.

Question 13

A company paid $500,000 for 12% bonds with a par value of $500,000.The bonds pay 6% interest semiannually on September 1 and March 1.The company intends to hold the bonds until they mature.Prepare the journal entries for the following dates and transactions related to this bond acquisition.
(1)Bonds purchased on September 1.
(2)Year-end adjusting entry,December 31.
(3)Receipt of semiannual interest March 1.
(4)Redemption of the bonds at maturity on August 31.

Accepted Answer

The answer of A company paid $500,000 for 12% bonds...

Question 14

Kramer Corporation had the following long-term investment transactions.
   Prepare the journal entries Kramer Corporation should record for these transactions and events.

Accepted Answer

The answer of Kramer Corporation had the following long-term investment...

Question 15

Debt securities are recorded at cost when purchased.

Accepted Answer

A) True 
 B)False

Question 16

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. 
A) Controlling method. 
B) Equity method with consolidation. 
C) Investor method. 
D) Investment method. 
E) Consolidated method.

Question 17

Long-term investments are reported in the:

Accepted Answer

A) Current asset section of the balance sheet. 
B) Intangible asset section of the balance sheet. 
C) Non-current section of the balance sheet called long-term investments. 
D) Plant assets section of the balance sheet. 
E) Equity section of the balance sheet. 
A) Current asset section of the balance sheet. 
B) Intangible asset section of the balance sheet. 
C) Non-current section of the balance sheet called long-term investments. 
D) Plant assets section of the balance sheet. 
E) Equity section of the balance sheet.

Question 18

An investor purchased at par value $75,000 of Cort's 8% bonds,that mature in three-years.The bonds pay interest semiannually on June 1 and December 1.The investor plans to hold the bonds until they mature.When the bonds mature,the investor should prepare the following journal entry:

Accepted Answer

A) debit Long-Term Investments-HTM, $75,000; credit Cash, $75,000. 
B) debit Cash, $6,000; credit, Unrealized Gain-Equity, $6,000. 
C) debit Cash, $75,000; credit Long-Term Investments-HTM, $75,000. 
D) debit Unrealized Gain-Equity, $6,000; credit Cash, $6,000. 
E) debit Cash, $75,000; credit Long-Term Investments-Trading, $75,000. 
A) debit Long-Term Investments-HTM, $75,000; credit Cash, $75,000. 
B) debit Cash, $6,000; credit, Unrealized Gain-Equity, $6,000. 
C) debit Cash, $75,000; credit Long-Term Investments-HTM, $75,000. 
D) debit Unrealized Gain-Equity, $6,000; credit Cash, $6,000. 
E) debit Cash, $75,000; credit Long-Term Investments-Trading, $75,000.

Question 19

A company had net income of $45,000,net sales of $390,000,and average total assets of $250,000 for the current year.Calculate the company's profit margin,total asset turnover,and return on total assets.

Accepted Answer

The answer of A company had net income of $45,000,net...

Question 20

The price of one currency stated in terms of another currency is called a(n):

Accepted Answer

A) Foreign exchange rate. 
B) Currency transaction. 
C) Historical exchange rate. 
D) International conversion rate. 
E) Currency rate. 
A) Foreign exchange rate. 
B) Currency transaction. 
C) Historical exchange rate. 
D) International conversion rate. 
E) Currency rate.

Exam 15: Investments and International Operations

What are the accounting basics for debt securities,including recording their acquisition,interest earned,and their disposal?

Doherty Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is:

Explain the difference between short-term and long-term investments.Cite examples of each.

Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value on September 1.Interest payments are made semiannually on March 1 and September 1.The journal entry to accrue interest earned at year-end December 31 is:

Micron owns 30% of JVT stock.Micron received $6,500 in cash dividends from its investment in JVT.The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.

Short-term investments in held-to-maturity debt securities are accounted for using the:

If the exchange rate for Canadian and U.S.dollars is 0.7382 to 1,this implies that 2 Canadian dollars will buy 1.48 worth of U.S.dollars.

If a U.S.company makes a credit sale to a foreign company,the sales price must be translated into dollars as of the date of _____________.

If the exchange rate for Canadian and U.S.dollars is 0.82777 to 1,this implies that 3 Canadian dollars will buy ____ worth of U.S.dollars.

Long-term investments:

A company owns 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:

Kramer Corporation had the following long-term investment transactions. Prepare the journal entries Kramer Corporation should record for these transactions and events.

Debt securities are recorded at cost when purchased.

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

Long-term investments are reported in the:

An investor purchased at par value $75,000 of Cort's 8% bonds,that mature in three-years.The bonds pay interest semiannually on June 1 and December 1.The investor plans to hold the bonds until they mature.When the bonds mature,the investor should prepare the following journal entry:

A company had net income of $45,000,net sales of $390,000,and average total assets of $250,000 for the current year.Calculate the company's profit margin,total asset turnover,and return on total assets.

The price of one currency stated in terms of another currency is called a(n):

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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