Question 1

When a corporation owns less than 20% of the stock of another company,dividends received are not treated as income.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is not a reason a company may purchase another company's stock?

Accepted Answer

A) earning a return on excess cash 
B) sustain the other company's stock price 
C) gaining control of another company's operations 
D) developing or maintaining business relationships 
A) earning a return on excess cash 
B) sustain the other company's stock price 
C) gaining control of another company's operations 
D) developing or maintaining business relationships

Question 3

A company uses cash to pay all of the following except

Accepted Answer

A) all of the options are uses of cash 
B) interest to creditors 
C) current expenses 
D) dividends to stockholders 
A) all of the options are uses of cash 
B) interest to creditors 
C) current expenses 
D) dividends to stockholders

Question 4

On September 1,Parsons Company purchased $84,000,10 year,7% government bonds at 100 plus accrued interest.The semi-annual interest payment dates are June 30 and December 31.Interest calculations are done by the month.
a- Journalize the entry to record the bond purchase.
b- Journalize the receipt of interest on December 31 of the first year.
c- Journalize the sale of the bonds on February 1 of the second year for $82,000 plus accrued interest.

Accepted Answer

None

Question 5

Alan Company purchased $400,000 of ABC Co.5% bonds at 100 plus accrued interest of $4,500.Alan later sold $250,000 of bonds at 97.The journal entry for the purchase would include a

Accepted Answer

A) credit to Interest Receivable for $4,500 
B) credit to Interest Revenue for $4,500 
C) debit to Interest Receivable for $4,500 
D) debit to Interest Revenue for $4,500 
A) credit to Interest Receivable for $4,500 
B) credit to Interest Revenue for $4,500 
C) debit to Interest Receivable for $4,500 
D) debit to Interest Revenue for $4,500

Question 6

a. What is comprehensive income? 
b. How is it calculated? 
c. What are some examples of items included in other comprehensive income? 
d. Where is comprehensive income reported?

Accepted Answer

a. Comprehensive income is all changes i

Question 7

On June 1,$40,000 of treasury bonds were purchased between interest dates.The broker commission was $600.The bonds pay interest at 12%,which is paid semiannually on January 1 and July 1.How much interest revenue will be recorded on July 1?

Accepted Answer

A) $400 
B) $406 
C) $2,000 
D) $2,400 
A) $400 
B) $406 
C) $2,000 
D) $2,400

Question 8

The account Unrealized Gain Loss on Trading Investments should be included in the

Accepted Answer

A) income statement as other revenue expense 
B) balance sheet as an adjustment to the asset account 
C) balance sheet as an adjustment to stockholders' equity 
D) statement of retained earnings 
A) income statement as other revenue expense 
B) balance sheet as an adjustment to the asset account 
C) balance sheet as an adjustment to stockholders' equity 
D) statement of retained earnings

Question 9

Journalize the entries to record the following selected equity investment transactions completed by Perry Company during the current year.Perry accounts for this investment using the cost method.

Accepted Answer

The answer of Journalize the entries to record the following...

Question 10

Ordinarily,a corporation owning a significant portion of the voting stock of another corporation accounts for the investment using the equity method.

Accepted Answer

A) True 
 B)False

Question 11

On July 5,Winter Company had a market price of $58 per share of common stock.For the prior year,Winter Co.had paid an annual dividend of $3.48 per share.What is the dividend yield for Winter Company?

Accepted Answer

A) 6.0% 
B) 0.6% 
C) 16.67% 
D) 1.67% 
A) 6.0% 
B) 0.6% 
C) 16.67% 
D) 1.67%

Question 12

Following is data for the available-for-sale securities held by Lindy Company as of December 31:
 $\begin{array}{|l|r|r|r|r|r|}
\hline \text { Name } & {\begin{array}{c}
\text { Number of } \
\text { Shares }
\end{array}} & \begin{array}{c}
\text { Cost } \
\text { per Share }
\end{array} & \begin{array}{c}
\text { Fair Value } \
\text { per Share }
\end{array} & \text { Total Cost } & \begin{array}{c}
\text { Total } \
\text { Fair Value }
\end{array} \
\hline \text { Laurie, Inc. } & 1,200 & \$ 15.00 & \$ 15.40 & & \
\hline \text { Scott Corp. } & 800 & 8.00 & 8.25 & & \
\hline \text { Stephanie Company } & 700 & 14.40 & 13.50 & & \
\hline \text { Timmer Company } & 900 & 12.35 & 10.77 & & \
\hline \text { Total } & & & & &\
\hline
\end{array}$ 
a. Complete the table above to find the total cost and fair value for the company's available­for­sale securities portfolio.
b. Calculate and record the required December 31 adjustment.
c. Explain how the adjustment from step 2 is reported on Lindy's financial statements.

Accepted Answer

a.
  c The unrealized loss will be shown

Question 13

Armando Company owns 17,000 of the 70,000 shares of common stock outstanding of Tito Company and exercises a significant influence over its operating and financial policies.The investment should be accounted for by the

Accepted Answer

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

Question 14

Blanton Corporation purchased 15% of the outstanding shares of common stock of Worton Corporation as a long-term investment.Subsequently,Worton Corporation reported net income and declared and paid cash dividends.What journal entry would Blanton Corporation use to record the dividends it receives?

Accepted Answer

A) debit Investment in Worton Corporation; credit Cash 
B) debit Cash; credit Dividend Revenue 
C) debit Investment in Worton Corporation; credit Income of Worton Corporation 
D) debit Cash; credit Investment in Worton Corporation 
A) debit Investment in Worton Corporation; credit Cash 
B) debit Cash; credit Dividend Revenue 
C) debit Investment in Worton Corporation; credit Income of Worton Corporation 
D) debit Cash; credit Investment in Worton Corporation

Question 15

In general,consolidated financial statements should be prepared

Accepted Answer

A) when a corporation owns more than 20% and less than 40% of the common stock of another company 
B) when a corporation owns more than 50% of the common stock of another company 
C) only when a corporation owns 100% of the common stock of another company 
D) whenever the market value of the stock investment is significantly lower than its cost 
A) when a corporation owns more than 20% and less than 40% of the common stock of another company 
B) when a corporation owns more than 50% of the common stock of another company 
C) only when a corporation owns 100% of the common stock of another company 
D) whenever the market value of the stock investment is significantly lower than its cost

Question 16

Comprehensive income is all changes in stockholders' equity during the period except those resulting from dividends and stockholders' investments.

Accepted Answer

A) True 
 B)False

Question 17

Held-to-maturity securities

Accepted Answer

A) are reported at their fair market value on the balance sheet date 
B) include both stocks and bonds 
C) are primarily purchased to earn interest revenue 
D) all are correct 
A) are reported at their fair market value on the balance sheet date 
B) include both stocks and bonds 
C) are primarily purchased to earn interest revenue 
D) all are correct

Question 18

For accounting purposes,the method used to account for investments in common stock is determined by

Accepted Answer

A) the amount paid for the stock by the investor 
B) whether the acquisition of the stock by the investor was "friendly" or "hostile" 
C) the extent of an investor's influence over the operating and financial affairs of the investee 
D) whether the stock has paid dividends in past years 
A) the amount paid for the stock by the investor 
B) whether the acquisition of the stock by the investor was "friendly" or "hostile" 
C) the extent of an investor's influence over the operating and financial affairs of the investee 
D) whether the stock has paid dividends in past years

Question 19

Held-to-maturity securities

Accepted Answer

A) are reported at fair market value 
B) include stocks as well as bonds 
C) may be reported as current or noncurrent assets 
D) all of these 
A) are reported at fair market value 
B) include stocks as well as bonds 
C) may be reported as current or noncurrent assets 
D) all of these

Question 20

When the cost method is used to account for an investment,the carrying value of the investment is affected by

Accepted Answer

A) the dividend distributions of the investee 
B) the periodic net income of the investee 
C) the earnings and dividend distributions of the investee 
D) neither the earnings nor the dividends of the investee 
A) the dividend distributions of the investee 
B) the periodic net income of the investee 
C) the earnings and dividend distributions of the investee 
D) neither the earnings nor the dividends of the investee

When a corporation owns less than 20% of the stock of another company,dividends received are not treated as income.

Which of the following statements is not a reason a company may purchase another company's stock?

A company uses cash to pay all of the following except

Alan Company purchased $400,000 of ABC Co.5% bonds at 100 plus accrued interest of $4,500.Alan later sold $250,000 of bonds at 97.The journal entry for the purchase would include a

a. What is comprehensive income? b. How is it calculated? c. What are some examples of items included in other comprehensive income? d. Where is comprehensive income reported?

On June 1,$40,000 of treasury bonds were purchased between interest dates.The broker commission was $600.The bonds pay interest at 12%,which is paid semiannually on January 1 and July 1.How much interest revenue will be recorded on July 1?

The account Unrealized Gain Loss on Trading Investments should be included in the

Journalize the entries to record the following selected equity investment transactions completed by Perry Company during the current year.Perry accounts for this investment using the cost method.

Ordinarily,a corporation owning a significant portion of the voting stock of another corporation accounts for the investment using the equity method.

On July 5,Winter Company had a market price of $58 per share of common stock.For the prior year,Winter Co.had paid an annual dividend of $3.48 per share.What is the dividend yield for Winter Company?

Armando Company owns 17,000 of the 70,000 shares of common stock outstanding of Tito Company and exercises a significant influence over its operating and financial policies.The investment should be accounted for by the

Blanton Corporation purchased 15% of the outstanding shares of common stock of Worton Corporation as a long-term investment.Subsequently,Worton Corporation reported net income and declared and paid cash dividends.What journal entry would Blanton Corporation use to record the dividends it receives?

In general,consolidated financial statements should be prepared

Comprehensive income is all changes in stockholders' equity during the period except those resulting from dividends and stockholders' investments.

Held-to-maturity securities

For accounting purposes,the method used to account for investments in common stock is determined by

Held-to-maturity securities

When the cost method is used to account for an investment,the carrying value of the investment is affected by

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

When a corporation owns less than 20% of the stock of another company,dividends received are not treated as income.

Which of the following statements is not a reason a company may purchase another company's stock?

A company uses cash to pay all of the following except

Alan Company purchased $400,000 of ABC Co.5% bonds at 100 plus accrued interest of $4,500.Alan later sold $250,000 of bonds at 97.The journal entry for the purchase would include a

a. What is comprehensive income? b. How is it calculated? c. What are some examples of items included in other comprehensive income? d. Where is comprehensive income reported?

On June 1,$40,000 of treasury bonds were purchased between interest dates.The broker commission was $600.The bonds pay interest at 12%,which is paid semiannually on January 1 and July 1.How much interest revenue will be recorded on July 1?

The account Unrealized Gain Loss on Trading Investments should be included in the

Journalize the entries to record the following selected equity investment transactions completed by Perry Company during the current year.Perry accounts for this investment using the cost method.

Ordinarily,a corporation owning a significant portion of the voting stock of another corporation accounts for the investment using the equity method.

On July 5,Winter Company had a market price of $58 per share of common stock.For the prior year,Winter Co.had paid an annual dividend of $3.48 per share.What is the dividend yield for Winter Company?

Armando Company owns 17,000 of the 70,000 shares of common stock outstanding of Tito Company and exercises a significant influence over its operating and financial policies.The investment should be accounted for by the

Blanton Corporation purchased 15% of the outstanding shares of common stock of Worton Corporation as a long-term investment.Subsequently,Worton Corporation reported net income and declared and paid cash dividends.What journal entry would Blanton Corporation use to record the dividends it receives?

In general,consolidated financial statements should be prepared

Comprehensive income is all changes in stockholders' equity during the period except those resulting from dividends and stockholders' investments.

Held-to-maturity securities

For accounting purposes,the method used to account for investments in common stock is determined by

Held-to-maturity securities

When the cost method is used to account for an investment,the carrying value of the investment is affected by

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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