Question 1

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

Accepted Answer

cost metho

Question 2

________________________ refers to all changes in equity for a period except for those due to investments and distributions to owners.

Accepted Answer

Comprehens

Question 3

____________________________ are debt and equity securities that a company intends to actively manage and trade for a profit.

Accepted Answer

The answer of ____________________________ are debt and equity securities that...

Question 4

Consolidated financial statements show the financial position,results of operations,and cash flows of all entities under the parent's control.

Accepted Answer

A) True 
 B)False

Question 5

The cost method of accounting is used for long-term investments in equity securities with significant influence.

Accepted Answer

A) True 
 B)False

Question 6

A company had net income of $450,000 in Year 1 and $620,000 in Year 2.The company had average total assets of $2,500,000 in Year 1 and $3,000,000 in Year 2.Calculate the return on total assets for Year 1and Year 2.Comment on the results,did the company's performance improve?

Accepted Answer

(a)Year 1: $450,000 / $2,500,000 = 18.0%

Question 7

A company holds $40,000 of 7% bonds as a held-to-maturity security.Assuming all prior interest entries have been accounted for,the bondholder's journal entry to record receipt of the semiannual interest payment includes a debit to Cash for $2,800 and a credit to Interest Revenue for $2,800.

Accepted Answer

A) True 
 B)False

Question 8

All of the following statements regarding other comprehensive income are true except:

Accepted Answer

A) Other comprehensive income includes unrealized gains and losses on available-for-sale securities. 
B) Other comprehensive income is not considered when calculating comprehensive income. 
C) Other comprehensive income includes foreign currency adjustments. 
D) Other comprehensive income includes pension adjustments. 
E) Accumulated other comprehensive income is defined as the cumulative impact of other comprehensive income. 
A) Other comprehensive income includes unrealized gains and losses on available-for-sale securities. 
B) Other comprehensive income is not considered when calculating comprehensive income. 
C) Other comprehensive income includes foreign currency adjustments. 
D) Other comprehensive income includes pension adjustments. 
E) Accumulated other comprehensive income is defined as the cumulative impact of other comprehensive income.

Question 9

An investor purchased $50,000 of bonds and holds them to maturity.The investor's journal entry to record the proceeds should include a debit to Cash for $50,000 and a credit to Long-Term Investments for $50,000.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

On November 12,Kera,Inc.,a U.S.Company,sold merchandise on credit to Kakura of Japan at a price of 1,500,000 yen.The exchange rate was $0.00837 on the date of sale.On December 31,when Kera prepared its financial statements,the exchange rate was $0.00843.Kakura paid in full on January 12,when the exchange rate was $0.00861.On January 12,Kera should prepare the following journal entry:

Accepted Answer

A) Debit Cash $12,915; credit Accounts Receivable-Kakura $12,555; credit Foreign Exchange Gain $360. 
B) Debit Cash $12,555; debit Foreign Exchange Loss $360; credit Accounts Receivable-Kakura $12,915. 
C) Debit Cash $12,915; credit Accounts Receivable-Kakura $12,645; credit Foreign Exchange Gain $90. 
D) Debit Cash $12,645; debit Foreign Exchange Loss $90; credit Accounts Receivable-Kakura $12,915. 
E) Debit Cash $12,915; credit Accounts Receivable-Kakura $12,645; credit Foreign Exchange Gain $270. 
A) Debit Cash $12,915; credit Accounts Receivable-Kakura $12,555; credit Foreign Exchange Gain $360. 
B) Debit Cash $12,555; debit Foreign Exchange Loss $360; credit Accounts Receivable-Kakura $12,915. 
C) Debit Cash $12,915; credit Accounts Receivable-Kakura $12,645; credit Foreign Exchange Gain $90. 
D) Debit Cash $12,645; debit Foreign Exchange Loss $90; credit Accounts Receivable-Kakura $12,915. 
E) Debit Cash $12,915; credit Accounts Receivable-Kakura $12,645; credit Foreign Exchange Gain $270.

Question 12

When using the equity method for investments in equity securities,the investor records the receipt of cash dividends as revenue.

Accepted Answer

A) True 
 B)False

Question 13

Everrine Corporation owns 30% of JRW Corporation.Everrine Corporation received $9,000 in cash dividends from JRW Corporation.The entry to record receipt of these dividends is:

Accepted Answer

A) Debit Cash, $9,000; credit Long-Term Investments, $9,000. 
B) Debt Long-Term Investment, $9,000; credit Cash, $9000. 
C) Debit Cash, $9,000; credit Interest Revenue, $9,000. 
D) Debit Unrealized Gain-Equity, $9,000; credit Cash, $9,000. 
E) Debit Cash, $9,000; credit Dividend Revenue, $9,000. 
A) Debit Cash, $9,000; credit Long-Term Investments, $9,000. 
B) Debt Long-Term Investment, $9,000; credit Cash, $9000. 
C) Debit Cash, $9,000; credit Interest Revenue, $9,000. 
D) Debit Unrealized Gain-Equity, $9,000; credit Cash, $9,000. 
E) Debit Cash, $9,000; credit Dividend Revenue, $9,000.

Question 14

At acquisition,debt securities are:

Accepted Answer

A) Recorded at their cost, plus total interest that will be paid over the life of the security. 
B) Recorded at the amount of interest that will be paid over the life of the security. 
C) Recorded at cost. 
D) Not recorded, because no interest is due yet. 
E) Recorded at cost plus the amount of dividend income to be received. 
A) Recorded at their cost, plus total interest that will be paid over the life of the security. 
B) Recorded at the amount of interest that will be paid over the life of the security. 
C) Recorded at cost. 
D) Not recorded, because no interest is due yet. 
E) Recorded at cost plus the amount of dividend income to be received.

Question 15

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 total asset turnover equals 4.7%.

Accepted Answer

A) True 
 B)False

Question 16

Trading securities are always reported as current assets.

Accepted Answer

A) True 
 B)False

Question 17

Hamilton Company owns 51,000 of Hennie Company's 100,000 outstanding shares of common stock.Hennie Company pays $25,000 in total cash dividends to its shareholders.Hamilton's entry to record this transaction should include a:

Accepted Answer

A) Debit to Dividend Revenue for $12,750. 
B) Debit to Interest Revenue for $12,750 
C) Credit to Long-Term investments for $12,750. 
D) Credit to Long-Term Investments for $25,000. 
E) Credit to Dividend Revenue for $25,000. 
A) Debit to Dividend Revenue for $12,750. 
B) Debit to Interest Revenue for $12,750 
C) Credit to Long-Term investments for $12,750. 
D) Credit to Long-Term Investments for $25,000. 
E) Credit to Dividend Revenue for $25,000.

Question 18

Identify the classifications for non-influential investments in securities.What are the accounting basics for non-influential investments in securities,including acquisition,dividends earned,and disposition?

Accepted Answer

Non-influential investments in securitie

Question 19

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 if $29.50 per share.The amount that Seacroft should report in the asset section of its year-end December 31 balance sheet for its investment in Kebo is:

Accepted Answer

A) $200,110. 
B) $103,250. 
C) $2,245. 
D) $3,195. 
E) $5,440. 
A) $200,110. 
B) $103,250. 
C) $2,245. 
D) $3,195. 
E) $5,440.

Question 20

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment,which method would the investor normally use to account for this investment?

Accepted Answer

A) Equity method. 
B) Fair value method. 
C) Historical cost method. 
D) Cost with amortization method. 
E) Effective method. 
A) Equity method. 
B) Fair value method. 
C) Historical cost method. 
D) Cost with amortization method. 
E) Effective method.

Exam 15: Investments and International Operations

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

________________________ refers to all changes in equity for a period except for those due to investments and distributions to owners.

____________________________ are debt and equity securities that a company intends to actively manage and trade for a profit.

Consolidated financial statements show the financial position,results of operations,and cash flows of all entities under the parent's control.

The cost method of accounting is used for long-term investments in equity securities with significant influence.

A company had net income of $450,000 in Year 1 and $620,000 in Year 2.The company had average total assets of $2,500,000 in Year 1 and $3,000,000 in Year 2.Calculate the return on total assets for Year 1and Year 2.Comment on the results,did the company's performance improve?

A company holds $40,000 of 7% bonds as a held-to-maturity security.Assuming all prior interest entries have been accounted for,the bondholder's journal entry to record receipt of the semiannual interest payment includes a debit to Cash for $2,800 and a credit to Interest Revenue for $2,800.

All of the following statements regarding other comprehensive income are true except:

An investor purchased $50,000 of bonds and holds them to maturity.The investor's journal entry to record the proceeds should include a debit to Cash for $50,000 and a credit to Long-Term Investments for $50,000.

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

When using the equity method for investments in equity securities,the investor records the receipt of cash dividends as revenue.

Everrine Corporation owns 30% of JRW Corporation.Everrine Corporation received $9,000 in cash dividends from JRW Corporation.The entry to record receipt of these dividends is:

At acquisition,debt securities are:

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 total asset turnover equals 4.7%.

Trading securities are always reported as current assets.

Hamilton Company owns 51,000 of Hennie Company's 100,000 outstanding shares of common stock.Hennie Company pays $25,000 in total cash dividends to its shareholders.Hamilton's entry to record this transaction should include a:

Identify the classifications for non-influential investments in securities.What are the accounting basics for non-influential investments in securities,including acquisition,dividends earned,and disposition?

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment,which method would the investor normally use to account for this investment?

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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