Question 1

Unrealized gains and losses on trading securities are reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 2

Long-term investments include:

Accepted Answer

A)  Investments in bonds and shares that are not readily convertible to cash. 
B)  Investments in marketable shares that are intended to be converted into cash in the short-term. 
C)  Investments in marketable bonds that are intended to be converted into cash in the short-term. 
D)  Only investments readily convertible to cash. 
E)  Investments intended to be converted to cash within one year. 
A)  Investments in bonds and shares that are not readily convertible to cash. 
B)  Investments in marketable shares that are intended to be converted into cash in the short-term. 
C)  Investments in marketable bonds that are intended to be converted into cash in the short-term. 
D)  Only investments readily convertible to cash. 
E)  Investments intended to be converted to cash within one year.

Question 3

Net profit margin reflects the percent of net income in each dollar of net sales.

Accepted Answer

A) True 
 B)False

Question 4

A company should report its portfolio of held-for-trading securities at its fair value.

Accepted Answer

A) True 
 B)False

Question 5

On May 1, Franke Co. purchases 2,000 shares of Computech for $25,000. This investment is considered to be an available-for-sale securities. On July 31 (Franke's year-end), these shares had a market value of $28,000. Franke should record a credit to Gain on Investment for $3,000.

Accepted Answer

A) True 
 B)False

Question 6

Mian sells American gourmet foods to merchandisers in Singapore. Prepare the journal entries for Mian to record the following transactions. Include any year-end adjustments.

Accepted Answer

The answer of Mian sells American gourmet foods to merchandisers...

Question 7

Explain how transactions (both sales and purchases) in a foreign currency are recorded and reported.

Accepted Answer

When a selling company makes a credit sa

Question 8

All of the following statements regarding other comprehensive income are EXCEPT:

Accepted Answer

A)  Other comprehensive income includes unrealized gains and losses on available-for-sale securities. 
B)  Other comprehensive income is not considered when calculating comprehensive income. 
C)  Other comprehensive income is not the same as net income. 
D)  Comprehensive income is shown in the statement of comprehensive income. 
E)  Comprehensive income is the total of net income and other comprehensive income. 
A)  Other comprehensive income includes unrealized gains and losses on available-for-sale securities. 
B)  Other comprehensive income is not considered when calculating comprehensive income. 
C)  Other comprehensive income is not the same as net income. 
D)  Comprehensive income is shown in the statement of comprehensive income. 
E)  Comprehensive income is the total of net income and other comprehensive income.

Question 9

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 10

A company reported net sales of $900,000, net income of $100,000 and average total assets of $425,000. Calculate its return on total assets.

Accepted Answer

$100,000 /

Question 11

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it is earned.

Accepted Answer

A) True 
 B)False

Question 12

All companies desire a low return on total assets.

Accepted Answer

A) True 
 B)False

Question 13

____________________________ are equity securities that a company intends to actively manage and trade for a profit.

Accepted Answer

Held-for-t

Question 14

To prepare consolidated financial statements when a U. S. parent company has an international subsidiary, the international subsidiary's financial statements must be translated into U.S. dollars.

Accepted Answer

A) True 
 B)False

Question 15

Available-for-sale securities are:

Accepted Answer

A)  Recorded at cost and remain at cost over the life of the investment. 
B)  Reported at historical cost, adjusted for the amortized amount of any difference between cost and maturity value. 
C)  Reported at fair value on the balance sheet. 
D)  Intended to be held to maturity. 
E)  Always classified with Long-Term Liabilities. 
A)  Recorded at cost and remain at cost over the life of the investment. 
B)  Reported at historical cost, adjusted for the amortized amount of any difference between cost and maturity value. 
C)  Reported at fair value on the balance sheet. 
D)  Intended to be held to maturity. 
E)  Always classified with Long-Term Liabilities.

Question 16

A company had net income of $76,000 in Year 1 and $88,000 in Year 2. Its net sales were $640,000 in Year 1 and $611,000 in Year 2. Its average total assets in Year 1 were $670,000 and $712,000 in Year 2. Calculate the profit margin, total asset turnover and return on total assets for both years. Comment on the results.

Accepted Answer

The company increased its profit margin,

Question 17

A controlling investor is called the parent, and the investee company is called the subsidiary.

Accepted Answer

A) True 
 B)False

Question 18

If the exchange rate for Canadian and U.S. dollars is 0.82777 to 1, this implies that 3 Canadian dollars will buy ____ worth of U.S. dollars.

Accepted Answer

A)  $0.2759 
B)  $0.82777 
C)  $1.82777 
D)  $2.48 
E)  None of these. 
A)  $0.2759 
B)  $0.82777 
C)  $1.82777 
D)  $2.48 
E)  None of these.

Question 19

Explain how held-to-maturity debt securities are accounted for at acquisition and how to record the interest.

Accepted Answer

Held-to-maturity (HTM) debt securities a

Question 20

NSC Corporation has invested in 10% of the outstanding shares of VC Corporation. NSC intends to actively manage this investment for profit. This investment is classified as:

Accepted Answer

A)  an available-for-sale security. 
B)  a held-to-maturity security. 
C)  a held-for-trading security. 
D)  a significant influence security. 
E)  a controlling influence security. 
A)  an available-for-sale security. 
B)  a held-to-maturity security. 
C)  a held-for-trading security. 
D)  a significant influence security. 
E)  a controlling influence security.

Exam 15: Investments and International Operations

Unrealized gains and losses on trading securities are reported on the income statement.

Long-term investments include:

Net profit margin reflects the percent of net income in each dollar of net sales.

A company should report its portfolio of held-for-trading securities at its fair value.

On May 1, Franke Co. purchases 2,000 shares of Computech for $25,000. This investment is considered to be an available-for-sale securities. On July 31 (Franke's year-end), these shares had a market value of $28,000. Franke should record a credit to Gain on Investment for $3,000.

Mian sells American gourmet foods to merchandisers in Singapore. Prepare the journal entries for Mian to record the following transactions. Include any year-end adjustments.

Explain how transactions (both sales and purchases) in a foreign currency are recorded and reported.

All of the following statements regarding other comprehensive income are EXCEPT:

Long-term investments are reported in the:

A company reported net sales of $900,000, net income of $100,000 and average total assets of $425,000. Calculate its return on total assets.

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it is earned.

All companies desire a low return on total assets.

____________________________ are equity securities that a company intends to actively manage and trade for a profit.

To prepare consolidated financial statements when a U. S. parent company has an international subsidiary, the international subsidiary's financial statements must be translated into U.S. dollars.

Available-for-sale securities are:

A controlling investor is called the parent, and the investee company is called the subsidiary.

If the exchange rate for Canadian and U.S. dollars is 0.82777 to 1, this implies that 3 Canadian dollars will buy ____ worth of U.S. dollars.

Explain how held-to-maturity debt securities are accounted for at acquisition and how to record the interest.

NSC Corporation has invested in 10% of the outstanding shares of VC Corporation. NSC intends to actively manage this investment for profit. This investment is classified as:

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

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

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

Filters