Exam 15: Investments

Middlebrook Financial Services,Inc.invested $24,000 to acquire 3,750 shares of Mitt Investments,Inc.on March 15,2013.This investment represents less than 20% of the investee's voting stock.On May 7,2017,Middlebrook Financial Services,Inc.sells 2,500 shares for $17,250.Which of the following will be the correct journal entry for the May 1,2017 transaction? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Free

(Multiple Choice)

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(74)

Question 1

Correct Answer:

Verified

List and discuss two common reasons why companies invest in debt or equity securities.

Free

(Essay)

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Question 2

Correct Answer:

Verified

1.The company may have short-term,excess cash that it doesn't need for normal operations.The company wants to make use of this excess cash,so it invests in debt or equity securities to generate investment income,which includes interest earned from debt investments,dividends earned from stock investments,and/or increases in the market value of the security.
2.The company may invest in debt or equity securities of other companies to pursue a certain business strategy.This may enhance a business relationship.An example is investing in the business of a vendor.This investment may strengthen the relationship and improve the company's business.

When applying the rules of the equity method,the Long-term Investments account is credited for the receipt of a cash dividend because ________.

Free

(Multiple Choice)

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Question 3

Correct Answer:

Verified

________ are categorized as either current assets or long-term assets on the balance sheet,depending on the maturity date.

(Multiple Choice)

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Question 4

U.S.government securities are ________.

(Multiple Choice)

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Question 5

Regarding accounting entries for debt securities,which of the following is true?

(Multiple Choice)

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Question 6

Which of the following is true of comprehensive income?

(Multiple Choice)

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Question 7

When a company receives a dividend payment on available-for-sale investments,the ________.

(Multiple Choice)

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Question 8

Maize Corporation pays $514,000 for 100,000 shares to acquire 44% common stock of Teal Investments,Inc.on January 5,2017.Maize Corporation sells 19,000 shares for $52,000 on January 6,2017.Which of the following is the correct journal entry for the transaction on January 6,2017? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

(Multiple Choice)

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(67)

Question 9

Which of the following is classified as a short-term investment?

(Multiple Choice)

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Question 10

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

(True/False)

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Question 11

Realized gains or losses occur when a company adjusts an asset to fair value but has not yet disposed of the asset.

(True/False)

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Question 12

Beige Corporation pays $500,000 to acquire 40% of the equity securities of Olive Technologies,Inc.on May 5,2017.This investment will be classified as a(n)________.

(Multiple Choice)

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(82)

Question 13

Which of the following securities typically pays interest?

(Multiple Choice)

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Question 14

Unrealized gains or losses on available-for-sale investments occur when a company adjusts the investment to ________.

(Multiple Choice)

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Question 15

The unrealized holding gains and losses on available-for-sale investments are recorded as an adjustment to the Unrealized Holding Gain-Available-for-Sale account or Unrealized Holding Loss-Available-for-Sale account.

(True/False)

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(65)

Question 16

Which of the following is true of consolidated statements?

(Multiple Choice)

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Question 17

Significant interest investments are reported as ________ on the balance sheet.

(Multiple Choice)

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Question 18

Gray Financial Services,Inc.invested $24,000 to acquire 7,250 shares of Mitt Investments,Inc.on March 15,2013.This investment represents less than 20% of the investee's voting stock.On May 7,2017,Gray Financial Services,Inc.sells 2,250 shares for $13,250.When the journal entry to record the sale is made,________.

(Multiple Choice)

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Question 19

List and briefly describe the method used to account for investments in equity securities with 50% or more ownership.

(Essay)

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(70)

Question 20

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Exam 15: Investments

List and discuss two common reasons why companies invest in debt or equity securities.

When applying the rules of the equity method,the Long-term Investments account is credited for the receipt of a cash dividend because ________.

________ are categorized as either current assets or long-term assets on the balance sheet,depending on the maturity date.

U.S.government securities are ________.

Regarding accounting entries for debt securities,which of the following is true?

Which of the following is true of comprehensive income?

When a company receives a dividend payment on available-for-sale investments,the ________.

Which of the following is classified as a short-term investment?

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

Realized gains or losses occur when a company adjusts an asset to fair value but has not yet disposed of the asset.

Beige Corporation pays $500,000 to acquire 40% of the equity securities of Olive Technologies,Inc.on May 5,2017.This investment will be classified as a(n)________.

Which of the following securities typically pays interest?

Unrealized gains or losses on available-for-sale investments occur when a company adjusts the investment to ________.

The unrealized holding gains and losses on available-for-sale investments are recorded as an adjustment to the Unrealized Holding Gain-Available-for-Sale account or Unrealized Holding Loss-Available-for-Sale account.

Which of the following is true of consolidated statements?

Significant interest investments are reported as ________ on the balance sheet.

List and briefly describe the method used to account for investments in equity securities with 50% or more ownership.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

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Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll

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Long-Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

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Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

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