Question 1

Held-to-maturity securities are ____________ securities a company intends and is able to hold until maturity.

Accepted Answer

The answer of Held-to-maturity securities are ____________ securities a company...

Question 2

A U.S.company makes a sale to a foreign customer payable in 30 days in the customer's currency.The sale would be recorded by the U.S.company on the date:

Accepted Answer

A) Of sale using a projected estimate of the U.S.dollar value at payment date. 
B) Of sale using a 30-day average U.S.dollar value. 
C) Of sale using the current dollar value. 
D) Of sale using the foreign currency value. 
E) When payment is received. 
A) Of sale using a projected estimate of the U.S.dollar value at payment date. 
B) Of sale using a 30-day average U.S.dollar value. 
C) Of sale using the current dollar value. 
D) Of sale using the foreign currency value. 
E) When payment is received.

Question 3

On October 31,Mayfair Co.received cash dividends of $0.15 per share from its investment in Carter Corp.'s common stock.Mayfair owned 1,200 shares of Carter Corp.'s stock on October 31.The investment is considered available-for-sale.Prepare the investor's journal entry to record the receipt of the cash dividends.

Accepted Answer

The answer of On October 31,Mayfair Co.received cash dividends of...

Question 4

Investments in debt and equity securities that the company actively manages and trades for profit are referred to as short-term investments in:

Accepted Answer

A) Available-for-sale securities. 
B) Held-to-maturity securities. 
C) Trading securities. 
D) Realizable securities. 
E) Liquid securities. 
A) Available-for-sale securities. 
B) Held-to-maturity securities. 
C) Trading securities. 
D) Realizable securities. 
E) Liquid securities.

Question 5

An investor presumed to have significant influence owns as least 20% but not more than 50% of another company's voting stock.

Accepted Answer

A) True 
 B)False

Question 6

Long-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

Unrealized gains and losses on trading securities are reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 8

Explain how available-for-sale debt and equity securities are accounted for at and after acquisition and how they are reported in financial statements.

Accepted Answer

Available-for-sale debt and equity secur

Question 9

On March 15,Carter Company purchased 10,000 shares of Tonya Corp.stock for $35,000.The investment is classified as available-for-sale securities.On June 30,the stock had a fair value of $38,000.Carter should do all of the following except:

Accepted Answer

A) Record an increase to the Fair value Adjustment-AFS account. 
B) Record an increase to the Unrealized Gain - Equity account. 
C) Report the increase in the equity section of the balance sheet. 
D) Report the increase in the asset section of the balance sheet. 
E) Record an increase to the Unrealized Gain - Income account. 
A) Record an increase to the Fair value Adjustment-AFS account. 
B) Record an increase to the Unrealized Gain - Equity account. 
C) Report the increase in the equity section of the balance sheet. 
D) Report the increase in the asset section of the balance sheet. 
E) Record an increase to the Unrealized Gain - Income account.

Question 10

Select the correct statement from the following:

Accepted Answer

A) Profit margin reflects a company's ability to produce net sales from total assets. 
B) Total asset turnover reflects the percent of net income in each dollar of net sales. 
C) Return on total assets can be separated into gross margin ratio and price-earnings ratio. 
D) High returns on total assets are desirable. 
E) Return on total assets analysis is beneficial in evaluating a company but is not useful for competitor analysis. 
A) Profit margin reflects a company's ability to produce net sales from total assets. 
B) Total asset turnover reflects the percent of net income in each dollar of net sales. 
C) Return on total assets can be separated into gross margin ratio and price-earnings ratio. 
D) High returns on total assets are desirable. 
E) Return on total assets analysis is beneficial in evaluating a company but is not useful for competitor analysis.

Question 11

Short-term investments are intended to be converted into cash within the longer of one year or the current operating cycle of the business,and are readily convertible to cash.

Accepted Answer

A) True 
 B)False

Question 12

Vans purchased 40,000 shares of Skechs common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

Accepted Answer

A) Debit to Long-Term Investments for $92,800. 
B) Debit to Long-Term Investments for $232,000. 
C) Credit to Long-Term Investments for $92,800. 
D) Debit to Long-Term Investments-HTM for $232,000. 
E) Debit to Short-Term Investment-AFS for $232,000. 
A) Debit to Long-Term Investments for $92,800. 
B) Debit to Long-Term Investments for $232,000. 
C) Credit to Long-Term Investments for $92,800. 
D) Debit to Long-Term Investments-HTM for $232,000. 
E) Debit to Short-Term Investment-AFS for $232,000.

Question 13

On January 2,Froxel Company purchased 10,000 shares of Sandia Corp.common stock at $19 per share plus a $3,000 commission.This represents 30% of Sandia Corp.'s outstanding stock.On August 6,Sandia Corp.declared and paid cash dividends of $1.75 per share,and on December 31 it reported net income of $150,000.Prepare the necessary entries for Froxel to account for these transactions and events.

Accepted Answer

The answer of On January 2,Froxel Company purchased 10,000 shares...

Question 14

Foreign exchange rates fluctuate due to changes in:

Accepted Answer

A) Political conditions. 
B) Economic conditions. 
C) Supply and demand for currencies. 
D) Expectations of future events. 
E) All of the choices are reasons for rate fluctuations. 
A) Political conditions. 
B) Economic conditions. 
C) Supply and demand for currencies. 
D) Expectations of future events. 
E) All of the choices are reasons for rate fluctuations.

Question 15

On January 1,2011,Freder Corporation purchased 7,500 shares of SportTech as a long-term investment for a total of $235,000.The 7,500 shares represent 30% of the outstanding (25,000)shares of SportTech.Prepare the journal entries for Freder to record the following transactions and events:

Accepted Answer

The answer of On January 1,2011,Freder Corporation purchased 7,500 shares...

Question 16

Explain how to record the sale of trading securities.

Accepted Answer

When trading securities are sold,the dif

Question 17

A company reported net income for Year 1 of $98,000 and $106,000 for Year 2.It also reported net sales of $735,000 in Year 1 and $798,000 in Year 2.The company's average total assets in Year 1 were $1,850,000 and $1,720,000 in Year 2.Calculate the company's profit margin,total asset turnover and return on total assets for Year 1and Year 2.Comment on the results.

Accepted Answer

@#IMG-DLM& The company did not increase its profit

Question 18

Eaton Company had the following long-term available-for-sale securities in its portfolio at December 31,Year 1.Eaton had several long-term investment transactions during the next year.After analyzing the effects of each transaction,(1)determine the amount Eaton should report on its December 31,Year 1 balance sheet for its long-term investments in available-for-sale securities,(2)determine the amount Eaton should report on its December 31,Year 2 balance sheet for its long-term investments in available-for-sale securities,(3)prepare the necessary adjusting entry to record the fair value adjustment at December 31,Year 2.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& @#IMG-DLM& Year 1: $1,307,300 - $1,284,000 = $23

Question 19

Columbia Corp.held 1,500 of Vianco common stock with a cost of $74,387.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $55,275.Prepare the journal entry to record this sale.

Accepted Answer

The answer of Columbia Corp.held 1,500 of Vianco common stock...

Question 20

Schoodic Company had the following long-term available-for-sale securities in its portfolio at December 31 for each of the years listed.The year-end cost and fair values for its portfolio follow.Beginning with Year 1,prepare the appropriate journal entry to record each year-end market adjustment for these securities.

Accepted Answer

@#IMG-DLM& Year 1: $394,500 - $389,900 = $4,600 lo

Exam 15: Investments and International Operations

Held-to-maturity securities are ____________ securities a company intends and is able to hold until maturity.

A U.S.company makes a sale to a foreign customer payable in 30 days in the customer's currency.The sale would be recorded by the U.S.company on the date:

Investments in debt and equity securities that the company actively manages and trades for profit are referred to as short-term investments in:

An investor presumed to have significant influence owns as least 20% but not more than 50% of another company's voting stock.

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

Unrealized gains and losses on trading securities are reported on the income statement.

Explain how available-for-sale debt and equity securities are accounted for at and after acquisition and how they are reported in financial statements.

On March 15,Carter Company purchased 10,000 shares of Tonya Corp.stock for $35,000.The investment is classified as available-for-sale securities.On June 30,the stock had a fair value of $38,000.Carter should do all of the following except:

Select the correct statement from the following:

Short-term investments are intended to be converted into cash within the longer of one year or the current operating cycle of the business,and are readily convertible to cash.

Vans purchased 40,000 shares of Skechs common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

Foreign exchange rates fluctuate due to changes in:

On January 1,2011,Freder Corporation purchased 7,500 shares of SportTech as a long-term investment for a total of $235,000.The 7,500 shares represent 30% of the outstanding (25,000)shares of SportTech.Prepare the journal entries for Freder to record the following transactions and events:

Explain how to record the sale of trading securities.

Columbia Corp.held 1,500 of Vianco common stock with a cost of $74,387.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $55,275.Prepare the journal entry to record this sale.

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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