Question 1

Trading securities are reported on the balance sheet at cost.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would be considered an "Other Comprehensive Income" item?

Accepted Answer

A)  net income. 
B)  extraordinary loss related to flood. 
C)  gain on disposal of discontinued operations. 
D)  unrealized loss on available-for-sale securities. 
A)  net income. 
B)  extraordinary loss related to flood. 
C)  gain on disposal of discontinued operations. 
D)  unrealized loss on available-for-sale securities.

Question 3

The income statement for Dodson Corporation reported net income of $22,400 for the year ended December 31, 2012 before considering the following:
During the year the company purchased available-for-sale securities. At year end, the fair value of the investment portfolio was $2,100 more than cost.
The balance of retained earnings was $83,000 on December 31, 2011. Dobson Corporation paid $9,000 in cash dividends in 2012. Calculate the balance of retained earnings on December 31, 2012.

Accepted Answer

a.
 @#IMG-DLM& * Because these are avail

Question 4

Generally accepted accounting principles (GAAP) require the use of fair value accounting for all assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 5

Growth firms generally pay regular dividends to stockholders.

Accepted Answer

A) True 
 B)False

Question 6

To record a bond investment between interest payment periods, Investment in Bonds would be debited and Cash and Interest Revenue would be credited.

Accepted Answer

A) True 
 B)False

Question 7

What are the total proceeds from the February 1, 2015 sale?

Accepted Answer

A)  $52,400 
B)  $51,500 
C)  $50,000 
D)  $52,000 
A)  $52,400 
B)  $51,500 
C)  $50,000 
D)  $52,000

Question 8

Unrealized gains and losses on trading securities are not included in the calculation of net income.

Accepted Answer

A) True 
 B)False

Question 9

Jacks Corporation purchases $200,000 bonds plus accrued interest for 2 months of $2,000 from Kennedy Company on March 1. The bonds have an annual interest rate of 6% payable on June 30 and December 31. The entry to record the purchase of the bonds would include:

Accepted Answer

A)  Interest Receivable debit $2,000 
B)  Investment in Bonds debit $202,000. 
C)  Cash debit $200,000 
D)  Interest Revenue credit $2,000. 
A)  Interest Receivable debit $2,000 
B)  Investment in Bonds debit $202,000. 
C)  Cash debit $200,000 
D)  Interest Revenue credit $2,000.

Question 10

Prepare the journal entries for the following transactions for Morgan Co.

Accepted Answer

The answer of Prepare the journal entries for the following...

Question 11

Yankton Company began the year without an investment portfolio. During the year they purchased investments classified as available-for-sale securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. The Yankton Company's financial statements for the current year should show

Accepted Answer

A)  a loss of $2,000 on the income statement and available-for-sale securities of $13,000 on the balance sheet 
B)  no loss on the income statement and available-for-sale securities of $13,000 on the balance sheet 
C)  no loss on the income statement, available-for-sale securities of $11,000 and an unrealized loss of $2,000 as a stockholders' equity adjustment on the balance sheet 
D)  a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet 
A)  a loss of $2,000 on the income statement and available-for-sale securities of $13,000 on the balance sheet 
B)  no loss on the income statement and available-for-sale securities of $13,000 on the balance sheet 
C)  no loss on the income statement, available-for-sale securities of $11,000 and an unrealized loss of $2,000 as a stockholders' equity adjustment on the balance sheet 
D)  a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet

Question 12

Comprehensive income does  not affect net income or retained earnings.

Accepted Answer

A) True 
 B)False

Question 13

Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest. The bond interest rate is 8% and interest is paid semi-annually. The journal entry to record the receipt of interest on the next interest payment date would be:

Accepted Answer

A)  Debit: Cash $4,000; Credit: Interest Revenue $4,000 
B)  Debit: Cash $4,000; Credit: Interest Receivable $4,000 
C)  Debit: Cash $4,000; Credit: Interest Receivable $1,500 and Interest Revenue $2,500 
D)  Debit: Cash $2,500; Credit: Interest Revenue $2,500 
A)  Debit: Cash $4,000; Credit: Interest Revenue $4,000 
B)  Debit: Cash $4,000; Credit: Interest Receivable $4,000 
C)  Debit: Cash $4,000; Credit: Interest Receivable $1,500 and Interest Revenue $2,500 
D)  Debit: Cash $2,500; Credit: Interest Revenue $2,500

Question 14

On April 1, 2011, Albert Company purchased $50,000 of Tetter Company's 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Albert received its first semiannual interest. On February 1, 2012, Albert sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Albert will record on April 1, 2011 for the purchase of the bonds will include:

Accepted Answer

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

Question 15

Held-to-maturity securities maturing beyond a year are reported as noncurrent assets.

Accepted Answer

A) True 
 B)False

Question 16

The equity method of accounting for investments

Accepted Answer

A)  requires a year-end adjustment to revalue the stock to lower of cost or market 
B)  requires the investment to be reported at its original cost 
C)  requires the investment be increased by the reported net income of the investee 
D)  requires the investment be increased by the dividends paid by the investee 
A)  requires a year-end adjustment to revalue the stock to lower of cost or market 
B)  requires the investment to be reported at its original cost 
C)  requires the investment be increased by the reported net income of the investee 
D)  requires the investment be increased by the dividends paid by the investee

Question 17

Pepito Company purchased 40% of the outstanding stock of Reyes Company on January 1, 2012. Reyes reported net income of $75,000 and declared dividends of $15,000 during 2012. How much would Pepito adjust their investment in Reyes Company under the equity method?

Accepted Answer

The answer of Pepito Company purchased 40% of the outstanding...

Question 18

The account Valuation Allowance for Trading Securities is found on the:

Accepted Answer

A)  Income statement as Other Revenue (Expenses) 
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 (Expenses) 
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 19

The cost method of accounting for stock

Accepted Answer

A)  recognizes dividends as income 
B)  is only appropriate as part of a consolidation 
C)  requires the investment be increased by the reported net income of the investee 
D)  requires the investment be decreased by the reported net income of the investee 
A)  recognizes dividends as income 
B)  is only appropriate as part of a consolidation 
C)  requires the investment be increased by the reported net income of the investee 
D)  requires the investment be decreased by the reported net income of the investee

Question 20

The journal entry Stanton will record on June 30, 2014, will include:

Accepted Answer

A)  a credit to Interest Revenue for $2,400. 
B)  a debit to Cash for $3,600. 
C)  a credit to Cash for $2,400. 
D)  a credit to Interest Receivable for $1,200. 
A)  a credit to Interest Revenue for $2,400. 
B)  a debit to Cash for $3,600. 
C)  a credit to Cash for $2,400. 
D)  a credit to Interest Receivable for $1,200.

Exam 13: Investments and Fair Value Accounting

Trading securities are reported on the balance sheet at cost.

Which of the following would be considered an "Other Comprehensive Income" item?

Generally accepted accounting principles (GAAP) require the use of fair value accounting for all assets and liabilities.

Growth firms generally pay regular dividends to stockholders.

To record a bond investment between interest payment periods, Investment in Bonds would be debited and Cash and Interest Revenue would be credited.

What are the total proceeds from the February 1, 2015 sale?

Unrealized gains and losses on trading securities are not included in the calculation of net income.

Jacks Corporation purchases $200,000 bonds plus accrued interest for 2 months of $2,000 from Kennedy Company on March 1. The bonds have an annual interest rate of 6% payable on June 30 and December 31. The entry to record the purchase of the bonds would include:

Prepare the journal entries for the following transactions for Morgan Co.

Comprehensive income does not affect net income or retained earnings.

Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest. The bond interest rate is 8% and interest is paid semi-annually. The journal entry to record the receipt of interest on the next interest payment date would be:

Held-to-maturity securities maturing beyond a year are reported as noncurrent assets.

The equity method of accounting for investments

Pepito Company purchased 40% of the outstanding stock of Reyes Company on January 1, 2012. Reyes reported net income of $75,000 and declared dividends of $15,000 during 2012. How much would Pepito adjust their investment in Reyes Company under the equity method?

The account Valuation Allowance for Trading Securities is found on the:

The cost method of accounting for stock

The journal entry Stanton will record on June 30, 2014, will include:

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

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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