Question 1

Foreign currency translation adjustment is an example of an item that would be included in other comprehensive income.

Accepted Answer

A) True 
 B)False

Question 2

On May 1,Cedar Inc.purchases $150,000 of 10-year,Knox Corporation 8% bonds dated March 1 at 100 plus accrued interest.What entry would Cedar record when receiving its semiannual interest on March 1?

Accepted Answer

The answer of On May 1,Cedar Inc.purchases $150,000 of 10-year,Knox...

Question 3

Any gains or losses on the sale of bonds normally would be reported in the Other Income Loss section of the income statement.

Accepted Answer

A) True 
 B)False

Question 4

If one company owns more than 50% of the common stock of another company

Accepted Answer

A) a partnership exists 
B) a parent-subsidiary relationship exists 
C) the company whose stock is owned must be liquidated 
D) the cost method should be used to account for the investment 
A) a partnership exists 
B) a parent-subsidiary relationship exists 
C) the company whose stock is owned must be liquidated 
D) the cost method should be used to account for the investment

Question 5

If the proceeds from the sale of bond investments exceed the carrying amount of the bonds,a gain is realized.

Accepted Answer

A) True 
 B)False

Question 6

The cumulative effects of other comprehensive income items may be reported separately from retained earnings and paid-in capital,on the balance sheet,as accumulated other comprehensive income.

Accepted Answer

A) True 
 B)False

Question 7

On April 1,Alliance Company purchased $50,000 of Tetter Company's 12% bonds at 100 plus accrued interest of $2,000.On June 30,Alliance received its first semiannual interest.On February 1,Alliance sold $40,000 of the bonds at 103 plus accrued interest.The journal entry Alliance will record on April 1 for the purchase of the bonds will include a

Accepted Answer

A) credit to Interest Payable for $2,000 
B) debit to Investments-Tetter Company Bonds for $52,000 
C) debit for Cash of $50,000 
D) debit to Investments-Tetter Company Bonds for $50,000 
A) credit to Interest Payable for $2,000 
B) debit to Investments-Tetter Company Bonds for $52,000 
C) debit for Cash of $50,000 
D) debit to Investments-Tetter Company Bonds for $50,000

Question 8

The method of accounting for investments in equity securities in which the investor records its share of periodic net income of the investee is the

Accepted Answer

A) cost method 
B) market method 
C) income method 
D) equity method 
A) cost method 
B) market method 
C) income method 
D) equity method

Question 9

Temporary investments such as in trading securities are

Accepted Answer

A) recorded at cost but reported at fair market value 
B) recorded at cost and reported at cost 
C) recorded at cost but reported at lower of cost or fair market value 
D) recorded at fair market value and reported at fair market value 
A) recorded at cost but reported at fair market value 
B) recorded at cost and reported at cost 
C) recorded at cost but reported at lower of cost or fair market value 
D) recorded at fair market value and reported at fair market value

Question 10

When shares of stock held as an investment are sold,the difference between the proceeds and the carrying amount of the investment is recorded as an

Accepted Answer

A) prior period adjustment 
B) operating income and losses 
C) paid-in capital addition 
D) gain or loss 
A) prior period adjustment 
B) operating income and losses 
C) paid-in capital addition 
D) gain or loss

Question 11

Which of the following items would not affect the investor's income for the period?

Accepted Answer

A) interest received on a temporary investment in bonds 
B) dividends received on a long-term investment in stock where the investor owns 10% of the investee's stock 
C) dividends received on a long-term investment in stock where the investor owns 30% of the investee's stock 
D) interest received on a long-term investment in bonds 
A) interest received on a temporary investment in bonds 
B) dividends received on a long-term investment in stock where the investor owns 10% of the investee's stock 
C) dividends received on a long-term investment in stock where the investor owns 30% of the investee's stock 
D) interest received on a long-term investment in bonds

Question 12

The income statement for Hudson Company reported net income of $345,000 for the year ended December 31 before considering the following:

◉During the year the company purchased trading securities.
◉At year end, the fair value of the investment portfolio was $23,000 less than cost. 
◉The balance of Retained Earnings was $823,000 on January 1.
◉Hudson Company paid $43,000 in cash dividends during the year.

Calculate the balance of Retained Earnings on December 31.

Accepted Answer

*Because these are trading sec

Question 13

Any difference between the fair market values of the securities and their cost is a realized gain or loss.

Accepted Answer

A) True 
 B)False

Question 14

When bonds held as long-term investments are purchased at a price other than the face value,the premium or discount should be amortized over the remaining life of the bonds.

Accepted Answer

A) True 
 B)False

Question 15

Financial statements include assets listed at

Accepted Answer

A) all of these 
B) their fair value 
C) their historical cost 
D) their market value 
A) all of these 
B) their fair value 
C) their historical cost 
D) their market value

Question 16

Companies may report comprehensive income on each of the statements below except

Accepted Answer

A) income statement 
B) separate statement of comprehensive income 
C) statement of cash flows 
D) retained earnings statement 
A) income statement 
B) separate statement of comprehensive income 
C) statement of cash flows 
D) retained earnings statement

Question 17

Held-to-maturity securities are reported on the balance sheet at fair market value.

Accepted Answer

A) True 
 B)False

Question 18

As with other assets,the cost of a bond investment includes all costs related to the purchase.

Accepted Answer

A) True 
 B)False

Question 19

Financial statements in which financial data for two or more companies are combined as a single entity are called

Accepted Answer

A) conventional statements 
B) consolidated statements 
C) audited statements 
D) constitutional statements 
A) conventional statements 
B) consolidated statements 
C) audited statements 
D) constitutional statements

Question 20

Which of the following is not a part of comprehensive income?

Accepted Answer

A) foreign currency items 
B) cash flows from stock investments 
C) unrealized gains and losses on available-for-sale securities 
D) pension liability adjustments 
A) foreign currency items 
B) cash flows from stock investments 
C) unrealized gains and losses on available-for-sale securities 
D) pension liability adjustments

Foreign currency translation adjustment is an example of an item that would be included in other comprehensive income.

On May 1,Cedar Inc.purchases $150,000 of 10-year,Knox Corporation 8% bonds dated March 1 at 100 plus accrued interest.What entry would Cedar record when receiving its semiannual interest on March 1?

Any gains or losses on the sale of bonds normally would be reported in the Other Income Loss section of the income statement.

If one company owns more than 50% of the common stock of another company

If the proceeds from the sale of bond investments exceed the carrying amount of the bonds,a gain is realized.

The cumulative effects of other comprehensive income items may be reported separately from retained earnings and paid-in capital,on the balance sheet,as accumulated other comprehensive income.

The method of accounting for investments in equity securities in which the investor records its share of periodic net income of the investee is the

Temporary investments such as in trading securities are

When shares of stock held as an investment are sold,the difference between the proceeds and the carrying amount of the investment is recorded as an

Which of the following items would not affect the investor's income for the period?

Any difference between the fair market values of the securities and their cost is a realized gain or loss.

When bonds held as long-term investments are purchased at a price other than the face value,the premium or discount should be amortized over the remaining life of the bonds.

Financial statements include assets listed at

Companies may report comprehensive income on each of the statements below except

Held-to-maturity securities are reported on the balance sheet at fair market value.

As with other assets,the cost of a bond investment includes all costs related to the purchase.

Financial statements in which financial data for two or more companies are combined as a single entity are called

Which of the following is not a part of comprehensive income?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley,internal Control,and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Long-Term Liabilities: Bonds and Notes

Statement of Cash Flows

Financial Statement Analysis

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Exam 13: Investments and Fair Value Accounting

Foreign currency translation adjustment is an example of an item that would be included in other comprehensive income.

On May 1,Cedar Inc.purchases $150,000 of 10-year,Knox Corporation 8% bonds dated March 1 at 100 plus accrued interest.What entry would Cedar record when receiving its semiannual interest on March 1?

Any gains or losses on the sale of bonds normally would be reported in the Other Income Loss section of the income statement.

If one company owns more than 50% of the common stock of another company

If the proceeds from the sale of bond investments exceed the carrying amount of the bonds,a gain is realized.

The cumulative effects of other comprehensive income items may be reported separately from retained earnings and paid-in capital,on the balance sheet,as accumulated other comprehensive income.

The method of accounting for investments in equity securities in which the investor records its share of periodic net income of the investee is the

Temporary investments such as in trading securities are

When shares of stock held as an investment are sold,the difference between the proceeds and the carrying amount of the investment is recorded as an

Which of the following items would not affect the investor's income for the period?

Any difference between the fair market values of the securities and their cost is a realized gain or loss.

When bonds held as long-term investments are purchased at a price other than the face value,the premium or discount should be amortized over the remaining life of the bonds.

Financial statements include assets listed at

Companies may report comprehensive income on each of the statements below except

Held-to-maturity securities are reported on the balance sheet at fair market value.

As with other assets,the cost of a bond investment includes all costs related to the purchase.

Financial statements in which financial data for two or more companies are combined as a single entity are called

Which of the following is not a part of comprehensive income?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley,internal Control,and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Long-Term Liabilities: Bonds and Notes

Statement of Cash Flows

Financial Statement Analysis

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