Exam 15: Investments

Aurum Services acquired 100,000 shares of Gamma Metals on January 1, 2015. Gamma declares a cash dividend of $0.25 per share on February 15, 2015 and pays the cash dividend on March 2, 2015. With the current investment, Aurum Services holds 8% of Gamma. Which of the following will be the correct journal entry for the day when the dividend payment is made (March 2, 2015)?

Under the equity method:

Companies make a year-end adjustment to trading investments to bring the account to historical value.

The owner of a bond or stock of a corporation is referred to as the investor.

Which of the following is true of the comparison between equity securities and debt securities?

Unrealized holding gains or losses on trading investments are reported in the ________ section of the income statement.

Unrealized gains or losses on available-for-sale securities occur when a company:

Which of the following is an example of debt securities?

Which of the following is true of debt securities?

A company that is controlled by another corporation is called a parent company.

Consolidated statements combine the balance sheets, income statements, and cash flow statements of the parent company with those of its controlling interest affiliates.

The unrealized holding gains and losses on available-for-sale investments are reported on the income statement.

Long-term investments are all investments that are not short-term.

Depending on the maturity date, the held-to-maturity investment will be reported as a current asset or a long-term asset on the balance sheet.

Equity securities are represented by a certificate, such as a stock certificate, and are commonly traded in the stock market.