Question 1

Define the return on total assets and explain how it is used to measure a company's financial performance.

Accepted Answer

The return on total assets is calculated

Question 2

Golden Age Co. exports Native American artwork to Japan. Prepare journal entries for the following transactions.

Accepted Answer

The answer of Golden Age Co. exports Native American artwork...

Question 3

Long-term investments include investments in land or other assets not used in a company's operations.

Accepted Answer

A) True 
 B)False

Question 4

A company paid $37,800 plus a broker's fee of $525 to acquire 8% bonds with a $40,000 maturity value. The company intends to hold the bonds to maturity. The cash proceeds the company will receive when the bonds mature equal:

Accepted Answer

A)  $37,800. 
B)  $38,325. 
C)  $40,000. 
D)  $40,525. 
E)  $43,200. 
A)  $37,800. 
B)  $38,325. 
C)  $40,000. 
D)  $40,525. 
E)  $43,200.

Question 5

Explain how held-to-maturity debt securities are accounted for at and after acquisition and how they are reported in the financial statements.

Accepted Answer

Held-to-maturity (HTM) debt securities a

Question 6

Investments in trading securities are always classified as ______________ and are reported as _______________ on the balance sheet.

Accepted Answer

short-term

Question 7

All of the following statements regarding accounting for noninfluential securities under U.S. GAAP and IFRS are True except:

Accepted Answer

A)  Trading securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income. 
B)  Trading securities are accounted for using fair values with unrealized gains and losses reported in net income. 
C)  Available-for-sale securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income. 
D)  Held-to-maturity securities are accounted for using amortized cost. 
E)  Both systems examine held-to-maturity securities for impairment. 
A)  Trading securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income. 
B)  Trading securities are accounted for using fair values with unrealized gains and losses reported in net income. 
C)  Available-for-sale securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income. 
D)  Held-to-maturity securities are accounted for using amortized cost. 
E)  Both systems examine held-to-maturity securities for impairment.

Question 8

If a long-term investment in an equity security gives the investor significant influence over the investee, the investment is classified as available-for-sale.

Accepted Answer

A) True 
 B)False

Question 9

Consolidated financial statements:

Accepted Answer

A)  Show the results of operations, cash flows, and the financial position of all entities under a parent's control. 
B)  Show the results of operations, cash flows, and the financial position of the parent only. 
C)  Show the results of operations, cash flows, and the financial position of the subsidiary only. 
D)  Include the investments account on the balance sheet. 
E)  Do not include a balance sheet. 
A)  Show the results of operations, cash flows, and the financial position of all entities under a parent's control. 
B)  Show the results of operations, cash flows, and the financial position of the parent only. 
C)  Show the results of operations, cash flows, and the financial position of the subsidiary only. 
D)  Include the investments account on the balance sheet. 
E)  Do not include a balance sheet.

Question 10

Short-term investments in held-to-maturity debt securities are accounted for using the:

Accepted Answer

A)  Fair value method with fair value adjustment to income. 
B)  Fair value method with fair value adjustment to equity. 
C)  Cost method with amortization. 
D)  Cost method without amortization. 
E)  Equity method. 
A)  Fair value method with fair value adjustment to income. 
B)  Fair value method with fair value adjustment to equity. 
C)  Cost method with amortization. 
D)  Cost method without amortization. 
E)  Equity method.

Question 11

Consolidated statements are prepared as if a company is organized as one entity, with the amounts allocated for subsidiaries reported in the investment accounts.

Accepted Answer

A) True 
 B)False

Question 12

Everrine Corporation owns 3,000 shares of JRW Corporation. JRW Corporation has 25,000 shares of stock outstanding. JRW paid $4 per share in cash dividends to its stockholders. The entry to record the receipt of these dividends is:

Accepted Answer

A)  Debit Cash, $12,000; credit Long-Term Investments, $12,000. 
B)  Debt Long-Term Investment, $12,000; credit Cash, $12,000. 
C)  Debit Cash, $12,000; credit Dividend Revenue, $12,000. 
D)  Debit Unrealized Gain-Equity, $12,000; credit Cash, $12,000. 
E)  Debit Cash, $12,000; credit Unrealized Gain-Equity, $12,000. 
A)  Debit Cash, $12,000; credit Long-Term Investments, $12,000. 
B)  Debt Long-Term Investment, $12,000; credit Cash, $12,000. 
C)  Debit Cash, $12,000; credit Dividend Revenue, $12,000. 
D)  Debit Unrealized Gain-Equity, $12,000; credit Cash, $12,000. 
E)  Debit Cash, $12,000; credit Unrealized Gain-Equity, $12,000.

Question 13

On May 1 of the current year, a company paid $200,000 to purchase 8%, 10-year bonds with a par value of $200,000; interest is paid semiannually on March 1 and September 1. The company intends to hold the bonds until they mature. Prepare the journal entries to record
1) the bond purchase,
(2) the receipt of the first semiannual interest payment on September 1 of the current year,
(3) the accrual of interest for year-end December 31, and
(4) the receipt of the second semiannual payment on May 1.

Accepted Answer

The answer of On May 1 of the current year,...

Question 14

A company reported net income of $275,000, net sales of $2,500,000, and average total assets of $2,100,000 for the current year. Calculate this company's profit margin, total asset turnover, and return on total assets.

Accepted Answer

The answer of A company reported net income of $275,000,...

Question 15

Long-term investments are reported in the:

Accepted Answer

A)  Current asset section of the balance sheet. 
B)  Intangible asset section of the balance sheet. 
C)  Non-current section of the balance sheet called long-term investments. 
D)  Plant assets section of the balance sheet. 
E)  Equity section of the balance sheet. 
A)  Current asset section of the balance sheet. 
B)  Intangible asset section of the balance sheet. 
C)  Non-current section of the balance sheet called long-term investments. 
D)  Plant assets section of the balance sheet. 
E)  Equity section of the balance sheet.

Question 16

Equity securities reflect a creditor relationship such as investments in notes, bonds, and certificates of deposit.

Accepted Answer

A) True 
 B)False

Question 17

An investor purchased $50,000 of bonds and holds them to maturity. The investor's journal entry to record the proceeds should include a debit to Cash for $50,000 and a credit to Long-Term Investments for $50,000.

Accepted Answer

A) True 
 B)False

Question 18

Kramer Corporation had the following long-term investment transactions.   Prepare the journal entries Kramer Corporation should record for these transactions and events.

Accepted Answer

The answer of Kramer Corporation had the following long-term investment...

Question 19

The cost method of accounting is used for long-term investments in equity securities with significant influence.

Accepted Answer

A) True 
 B)False

Question 20

If a U.S. company makes a credit sale to a foreign company, the sales price must be translated into dollars as of the date of ____________

Accepted Answer

The answer of If a U.S. company makes a credit...

Exam 15: Investments and International Operations

Define the return on total assets and explain how it is used to measure a company's financial performance.

Golden Age Co. exports Native American artwork to Japan. Prepare journal entries for the following transactions.

Long-term investments include investments in land or other assets not used in a company's operations.

A company paid $37,800 plus a broker's fee of $525 to acquire 8% bonds with a $40,000 maturity value. The company intends to hold the bonds to maturity. The cash proceeds the company will receive when the bonds mature equal:

Explain how held-to-maturity debt securities are accounted for at and after acquisition and how they are reported in the financial statements.

Investments in trading securities are always classified as ______________ and are reported as _______________ on the balance sheet.

All of the following statements regarding accounting for noninfluential securities under U.S. GAAP and IFRS are True except:

If a long-term investment in an equity security gives the investor significant influence over the investee, the investment is classified as available-for-sale.

Consolidated financial statements:

Short-term investments in held-to-maturity debt securities are accounted for using the:

Consolidated statements are prepared as if a company is organized as one entity, with the amounts allocated for subsidiaries reported in the investment accounts.

Everrine Corporation owns 3,000 shares of JRW Corporation. JRW Corporation has 25,000 shares of stock outstanding. JRW paid $4 per share in cash dividends to its stockholders. The entry to record the receipt of these dividends is:

A company reported net income of $275,000, net sales of $2,500,000, and average total assets of $2,100,000 for the current year. Calculate this company's profit margin, total asset turnover, and return on total assets.

Long-term investments are reported in the:

Equity securities reflect a creditor relationship such as investments in notes, bonds, and certificates of deposit.

An investor purchased $50,000 of bonds and holds them to maturity. The investor's journal entry to record the proceeds should include a debit to Cash for $50,000 and a credit to Long-Term Investments for $50,000.

Kramer Corporation had the following long-term investment transactions. Prepare the journal entries Kramer Corporation should record for these transactions and events.

The cost method of accounting is used for long-term investments in equity securities with significant influence.

If a U.S. company makes a credit sale to a foreign company, the sales price must be translated into dollars as of the date of ____________

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

Filters

Investments in trading securities are always classified as and are reported as _ on the balance sheet.