Question 1

A company has net income of $130,500.Its net sales were $1,740,000 and its average total assets were $2,750,000.Its profit margin equals 7.5%.

Accepted Answer

A) True 
 B)False

Question 2

On February 15,Seacroft buys 7,000 shares of Kebo common 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 fair value of the remaining shares is $29.50 per share.The amount that Seacroft should report in the equity section of its year-end December 31 balance sheet for its investment in Kebo is:

Accepted Answer

A) $10,295. 
B) $8,050. 
C) $2,245. 
D) $3,195. 
E) $6,390. 
A) $10,295. 
B) $8,050. 
C) $2,245. 
D) $3,195. 
E) $6,390.

Question 3

Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value.Interest payments are made semiannually.All of the following regarding accounting for the securities are true except:

Accepted Answer

A) The debt securities should be recorded at the cost $300,000. 
B) The securities will have a maturity value of $300,000. 
C) The semiannual interest payment amount is $12,000. 
D) The semiannual interest payment amount is $24,000. 
E) Interest Revenue should be credited when an interest payment is received. 
A) The debt securities should be recorded at the cost $300,000. 
B) The securities will have a maturity value of $300,000. 
C) The semiannual interest payment amount is $12,000. 
D) The semiannual interest payment amount is $24,000. 
E) Interest Revenue should be credited when an interest payment is received.

Question 4

Consolidated financial statements:

Accepted Answer

A) Show the results of operations, cash flows, and the financial position of all entities under a parent's control. 
B) Show the results of operations, cash flows, and the financial position of the parent only. 
C) Show the results of operations, cash flows, and the financial position of the subsidiary only. 
D) Include the investments account on the balance sheet. 
E) Do not include a balance sheet. 
A) Show the results of operations, cash flows, and the financial position of all entities under a parent's control. 
B) Show the results of operations, cash flows, and the financial position of the parent only. 
C) Show the results of operations, cash flows, and the financial position of the subsidiary only. 
D) Include the investments account on the balance sheet. 
E) Do not include a balance sheet.

Question 5

When a credit sale is denominated in a foreign currency,the foreign exchange rate used to record the sale is the current exchange rate:

Accepted Answer

A) Thirty days from the date of sale. 
B) At the end of the seller's fiscal year. 
C) At the end of the buyer's fiscal year. 
D) On the date final payment is made. 
E) On the date of the sale. 
A) Thirty days from the date of sale. 
B) At the end of the seller's fiscal year. 
C) At the end of the buyer's fiscal year. 
D) On the date final payment is made. 
E) On the date of the sale.

Question 6

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Accepted Answer

A) 5.71% 
B) 8.66% 
C) 12.34% 
D) 13.61% 
E) 19.32% 
A) 5.71% 
B) 8.66% 
C) 12.34% 
D) 13.61% 
E) 19.32%

Question 7

An investing company that owns _________ of another (investee)company's voting stock (but not more than 50%)is presumed to have a significant influence over the investee.

Accepted Answer

The answer of An investing company that owns _________ of...

Question 8

Net profit margin reflects the percent of net income in each dollar of net sales.

Accepted Answer

A) True 
 B)False

Question 9

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it is earned.

Accepted Answer

A) True 
 B)False

Question 10

Savan Co.purchased 14,000 shares of Briton Corporation's 40,000 shares of common stock on January 1.This represented 35% of Briton's outstanding shares and gave Savan Co.significant influence over Briton's management and operations.On October 11,Briton declared and paid cash dividends of $30,000.On December 31,Briton reported net income of $125,000 for the year.Prepare the journal entries Savan Co.should record to account for the dividends received and the earnings reported by Briton Corporation.

Accepted Answer

The answer of Savan Co.purchased 14,000 shares of Briton Corporation's...

Question 11

All companies desire a low return on total assets.

Accepted Answer

A) True 
 B)False

Question 12

At the end of the accounting period,the owners of debt securities:

Accepted Answer

A) Must report the dividend income accrued on the debt securities. 
B) Must retire the debt. 
C) Must record a gain or loss on the interest income earned. 
D) Must record a gain or loss on the dividend income earned. 
E) Must record any interest earned on the debt securities. 
A) Must report the dividend income accrued on the debt securities. 
B) Must retire the debt. 
C) Must record a gain or loss on the interest income earned. 
D) Must record a gain or loss on the dividend income earned. 
E) Must record any interest earned on the debt securities.

Question 13

Marina,Inc.,held 1,500 of Navia common stock with a cost of $36,900.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $42,100.Prepare the journal entry to record this sale.

Accepted Answer

The answer of Marina,Inc.,held 1,500 of Navia common stock with...

Question 14

Long-term investments can include:

Accepted Answer

A) Held-to-maturity debt securities. 
B) Available-for-sale debt securities. 
C) Available-for-sale equity securities. 
D) Equity securities giving an investor significant influence over an investee. 
E) All of the choices can be classified as long-term investments. 
A) Held-to-maturity debt securities. 
B) Available-for-sale debt securities. 
C) Available-for-sale equity securities. 
D) Equity securities giving an investor significant influence over an investee. 
E) All of the choices can be classified as long-term investments.

Question 15

A company had net income of $76,000 in Year 1 and $88,000 in Year 2.Its net sales were $640,000 in Year 1 and $611,000 in Year 2.Its average total assets in Year 1 were $670,000 and $712,000 in Year 2.Calculate the profit margin,total asset turnover and return on total assets for both years.Comment on the results.

Accepted Answer

@#IMG-DLM& The company increased its profit margin

Question 16

All of the following statements relating to accounting for international operations are true except:

Accepted Answer

A) Foreign exchange gains or losses can occur when accounting for international sales transactions. 
B) Gains and losses from foreign exchange transactions are accumulated in the Fair Value Adjustment Account and are reported on the balance sheet. 
C) Gains and losses from foreign exchange transactions are accumulated in the Foreign Exchange Gain (or Loss) account. 
D) The balance in the Foreign Exchange Gain (or Loss) account is reported on the income statement. 
E) Foreign exchange gains or losses can occur when accounting for international purchases transactions. 
A) Foreign exchange gains or losses can occur when accounting for international sales transactions. 
B) Gains and losses from foreign exchange transactions are accumulated in the Fair Value Adjustment Account and are reported on the balance sheet. 
C) Gains and losses from foreign exchange transactions are accumulated in the Foreign Exchange Gain (or Loss) account. 
D) The balance in the Foreign Exchange Gain (or Loss) account is reported on the income statement. 
E) Foreign exchange gains or losses can occur when accounting for international purchases transactions.

Question 17

Debt securities are recorded at cost when purchased,and interest revenue for investments in debt securities is recorded when earned.

Accepted Answer

A) True 
 B)False

Question 18

Debt securities:

Accepted Answer

A) Can be short-term investments. 
B) Can be long-term investments. 
C) Can have a cost higher than the maturity value of the debt security. 
D) Can have a cost lower than the maturity value of the debt security. 
E) All of the choices describe a debt security. 
A) Can be short-term investments. 
B) Can be long-term investments. 
C) Can have a cost higher than the maturity value of the debt security. 
D) Can have a cost lower than the maturity value of the debt security. 
E) All of the choices describe a debt security.

Question 19

Investments in held-to-maturity debt securities are always current assets.

Accepted Answer

A) True 
 B)False

Question 20

If a U.S.company's credit sale to an international customer allows payment to be made in a foreign currency,the transaction is recorded using the exchange rate on the date of sale.

Accepted Answer

A) True 
 B)False

Exam 15: Investments and International Operations

A company has net income of $130,500.Its net sales were $1,740,000 and its average total assets were $2,750,000.Its profit margin equals 7.5%.

Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value.Interest payments are made semiannually.All of the following regarding accounting for the securities are true except:

Consolidated financial statements:

When a credit sale is denominated in a foreign currency,the foreign exchange rate used to record the sale is the current exchange rate:

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

An investing company that owns _________ of another (investee)company's voting stock (but not more than 50%)is presumed to have a significant influence over the investee.

Net profit margin reflects the percent of net income in each dollar of net sales.

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it is earned.

All companies desire a low return on total assets.

At the end of the accounting period,the owners of debt securities:

Marina,Inc.,held 1,500 of Navia common stock with a cost of $36,900.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $42,100.Prepare the journal entry to record this sale.

Long-term investments can include:

All of the following statements relating to accounting for international operations are true except:

Debt securities are recorded at cost when purchased,and interest revenue for investments in debt securities is recorded when earned.

Debt securities:

Investments in held-to-maturity debt securities are always current assets.

If a U.S.company's credit sale to an international customer allows payment to be made in a foreign currency,the transaction is recorded using the exchange rate on the date of 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

Filters