Question 1

The price of one currency stated in terms of another currency is called a foreign exchange rate.

Accepted Answer

A) True 
 B)False

Question 2

Return on total assets can be separated into the profit margin ratio and total asset turnover.

Accepted Answer

A) True 
 B)False

Question 3

Any unrealized gain or loss for the portfolio of available-for-sale securities is reported on the income statement in the other gain or loss section.

Accepted Answer

A) True 
 B)False

Question 4

Profit margin is net sales divided by net income.

Accepted Answer

A) True 
 B)False

Question 5

All of the following statements regarding equity securities are true except:

Accepted Answer

A) Equity securities should be recorded at cost when acquired. 
B) Equity securities are valued at fair value if classified as trading securities. 
C) Equity securities are valued at fair value if classified as significant influence securities. 
D) Equity securities are valued at fair value if classified as available-for-sale securities. 
E) Equity securities classified as available-for-sale record the dividend revenue when received. 
A) Equity securities should be recorded at cost when acquired. 
B) Equity securities are valued at fair value if classified as trading securities. 
C) Equity securities are valued at fair value if classified as significant influence securities. 
D) Equity securities are valued at fair value if classified as available-for-sale securities. 
E) Equity securities classified as available-for-sale record the dividend revenue when received.

Question 6

Foreign exchange rates fluctuate due to changing _______________ and ___________ conditions.

Accepted Answer

answers c

Question 7

On May 1,Franke Co.purchases 2,000 shares of Computech stock for $25,000.This investment is considered to be an available-for-sale investment.On July 31 (Franke's year-end),the stock had a market value of $28,000.Franke should record a credit to Unrealized Gain-Equity for $3,000.

Accepted Answer

A) True 
 B)False

Question 8

Clark Corporation purchased 40% of IT Corporation for $125,000 on January 1.On May 20 of the same year,IT Corporation declared total cash dividends of $30,000.At year-end,IT Corporation reported net income of $150,000.The balance in Clark Corporation's Long-Term Investment-IT Corporation account as of December 31 should be:

Accepted Answer

A) $ 77,000. 
B) $125,000. 
C) $173,000. 
D) $197,000. 
E) $370,000. 
A) $ 77,000. 
B) $125,000. 
C) $173,000. 
D) $197,000. 
E) $370,000.

Question 9

A company reported net income of $275,000,net sales of $2,500,000,and average total assets of $2,100,000 for the current year.Calculate this company's profit margin,total asset turnover,and return on total assets.

Accepted Answer

The answer of A company reported net income of $275,000,net...

Question 10

On February 15,Seacroft buys 7,000 shares of Kebo common stock at $28.53 per share plus a brokerage fee of $400.The stock is classified as available-for-sale securities.On March 15,Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15.Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250.The journal entry to record the dividend on April 15 is:

Accepted Answer

A) Debit Cash $7,350; credit Dividend Revenue $7,350. 
B) Debit Cash $8,050; credit Dividend Revenue $8,050. 
C) Debit Cash $8,050; credit Interest Revenue $8,050. 
D) Debit Cash $7,350; credit Interest Revenue $7,350. 
E) Debit Cash $8,050; credit Gain on Sale of Investments $8,050. 
A) Debit Cash $7,350; credit Dividend Revenue $7,350. 
B) Debit Cash $8,050; credit Dividend Revenue $8,050. 
C) Debit Cash $8,050; credit Interest Revenue $8,050. 
D) Debit Cash $7,350; credit Interest Revenue $7,350. 
E) Debit Cash $8,050; credit Gain on Sale of Investments $8,050.

Question 11

A company purchased $60,000 of 5% bonds on May 1 at par value.The bonds pay interest on February 1 and August 1.The amount of interest accrued on December 31 (the company's year-end)would be:

Accepted Answer

A) $ 250. 
B) $ 500. 
C) $1,250. 
D) $2,500. 
E) $3,000. 
A) $ 250. 
B) $ 500. 
C) $1,250. 
D) $2,500. 
E) $3,000.

Question 12

When using the equity method,receipt of cash dividends increases the carrying (book)value of an investment in equity securities.

Accepted Answer

A) True 
 B)False

Question 13

Investments in equity securities where the investor has a significant,but not controlling influence,are accounted for using the _______________ method.

Accepted Answer

The answer of Investments in equity securities where the investor...

Question 14

__________________________ are investments in securities that are not readily convertible to cash,or are not intended to be converted to cash in the short-term.

Accepted Answer

Long-term

Question 15

Long-term investments can include funds earmarked for special purposes such as bond sinking funds.

Accepted Answer

A) True 
 B)False

Question 16

To prepare consolidated financial statements when a U.S.parent company has an international subsidiary,the international subsidiary's financial statements must be translated into U.S.dollars.

Accepted Answer

A) True 
 B)False

Question 17

On May 15,Briar Company purchased 10,000 shares of Broder Corp.for $80,000.The securities are considered available-for-sale securities.On September 30,the stock had a market value of $85,000.The $5,000 difference must be reported on the income statement as a $5,000 gain.

Accepted Answer

A) True 
 B)False

Question 18

Match between columns
                        Premises: A company that owns a more than 50% controlling interest in a subsidiary.
A corporation controlled by another company when the parent owns more than 50% of the subsidiary's voting stock.
Debt and equity securities that a company intends to actively manage and trade for profit.
Debt securities that a company intends and is able to hold until maturity.
Debt and equity securities not classified as trading or held-to-maturity.
Financial statements that show the financial position, results of operations, and cash flows of all entities under the parent's control, including those of any subsidiaries.
Investments in equity and debt securities that are not readily convertible to cash or are not intended to be converted to cash in the short term.
A measure of operating efficiency, computed as net income divided by average total assets.
An accounting method for long-term investments in equity when the investor has significant influence over the investee.
Change in market value that is not yet realized through an actual sale.

Accepted Answer

The Answer of Equity method and Available-for-sale securities and Trading is...

Question 19

Sanuk purchased on credit £20,000 worth of parts from a British company when the exchange rate was £1.66 per British pound.At the year-end balance sheet date the exchange rate increased to $1.69.Sanuk must record a gain of $600.

Accepted Answer

A) True 
 B)False

Question 20

Explain how investors report investments in equity securities when the investor has a controlling influence over an investee.

Accepted Answer

A foreign exchange rate is the price of

Exam 15: Investments and International Operations

The price of one currency stated in terms of another currency is called a foreign exchange rate.

Return on total assets can be separated into the profit margin ratio and total asset turnover.

Any unrealized gain or loss for the portfolio of available-for-sale securities is reported on the income statement in the other gain or loss section.

Profit margin is net sales divided by net income.

All of the following statements regarding equity securities are true except:

Foreign exchange rates fluctuate due to changing _______________ and ___________ conditions.

On May 1,Franke Co.purchases 2,000 shares of Computech stock for $25,000.This investment is considered to be an available-for-sale investment.On July 31 (Franke's year-end),the stock had a market value of $28,000.Franke should record a credit to Unrealized Gain-Equity for $3,000.

A company reported net income of $275,000,net sales of $2,500,000,and average total assets of $2,100,000 for the current year.Calculate this company's profit margin,total asset turnover,and return on total assets.

A company purchased $60,000 of 5% bonds on May 1 at par value.The bonds pay interest on February 1 and August 1.The amount of interest accrued on December 31 (the company's year-end)would be:

When using the equity method,receipt of cash dividends increases the carrying (book)value of an investment in equity securities.

Investments in equity securities where the investor has a significant,but not controlling influence,are accounted for using the _______________ method.

__________________________ are investments in securities that are not readily convertible to cash,or are not intended to be converted to cash in the short-term.

Long-term investments can include funds earmarked for special purposes such as bond sinking funds.

To prepare consolidated financial statements when a U.S.parent company has an international subsidiary,the international subsidiary's financial statements must be translated into U.S.dollars.

On May 15,Briar Company purchased 10,000 shares of Broder Corp.for $80,000.The securities are considered available-for-sale securities.On September 30,the stock had a market value of $85,000.The $5,000 difference must be reported on the income statement as a $5,000 gain.

Sanuk purchased on credit £20,000 worth of parts from a British company when the exchange rate was £1.66 per British pound.At the year-end balance sheet date the exchange rate increased to $1.69.Sanuk must record a gain of $600.

Explain how investors report investments in equity securities when the investor has a controlling influence over an investee.

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

Filters

Foreign exchange rates fluctuate due to changing _____ and _ conditions.