Question 1

Marshall Company sold supplies in the amount of €25,000 (euros)to a French company when the exchange rate was $1.21 per euro.At the time of payment,the exchange rate decreased to $0.82.Marshall must record a:

Accepted Answer

A) gain of $9,750. 
B) gain of $20,500. 
C) loss of $9,750. 
D) loss of $20,500. 
E) neither a gain nor loss.

Question 2

On March 15,Alan Company purchased 10,000 shares of Cameo Corp.stock for $35,000.The investment is classified as available-for-sale securities.On June 30,the stock had a fair value of $34,000.Alan should do which of the following?

Accepted Answer

A) Record a decrease to the Fair value Adjustment-AFS account. 
B) Record an increase to the Unrealized Loss-Equity account. 
C) Report a decrease in the Gain on Sale of Investment income statement account. 
D) Report an increase in the asset section of the balance sheet. 
E) Record an increase to the Unrealized Gain-Income account.

Question 3

Investments in trading securities:

Accepted Answer

A) Include only equity securities. 
B) Are reported as current assets. 
C) Include only debt securities. 
D) Are reported at their cost,no matter what their market value. 
E) Are long-term investments.

Question 4

A company reported net income of $225,000,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 $225,000,net...

Question 5

The currency in which a company presents its financial statements is known as the:

Accepted Answer

A) Multinational currency. 
B) Price-level-adjusted currency. 
C) Specific currency. 
D) Reporting currency. 
E) Historical cost currency.

Question 6

Bharrat Corporation purchased 40% of Ferris Corporation for $100,000 on January 1.On October 17 of the same year,Ferris Corporation declared total cash dividends of $12,000.At year-end,Ferris Corporation reported net income of $60,000.The balance in the Bharrat Corporation's Long-Term Investment-Ferris account at December 31 should be:

Accepted Answer

A) $80,800. 
B) $100,000. 
C) $95,200. 
D) $119,200. 
E) $124,000.

Question 7

Roe Corporation owns 2,000 shares of WRJ Corporation stock.WRJ Corporation has 25,000 shares of stock outstanding.WRJ 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,$8,000;credit Long-Term Investments,$8,000. 
B) Debt Long-Term Investment,$8,000;credit Cash,$8,000. 
C) Debit Cash,$8,000;credit Dividend Revenue,$8,000. 
D) Debit Unrealized Gain-Equity,$8,000;credit Cash,$8,000. 
E) Debit Cash,$8,000;credit Unrealized Gain-Equity,$8,000.

Question 8

Investments in equity securities where the investor has a significant,but not controlling influence,are accounted for using the _______________ method.

Accepted Answer

The answer of Investments in equity securities where the investor...

Question 9

The controlling investor is called the:

Accepted Answer

A) Owner. 
B) Subsidiary. 
C) Parent. 
D) Investee. 
E) Senior entity.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

A company that is a controlling investor in another company is known as the __________.

Accepted Answer

The answer of A company that is a controlling investor...

Question 12

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

Accepted Answer

The answer of FreshFoods,Inc.sells American gourmet foods to merchandisers in...

Question 13

An investor presumed to have significant influence owns as least 20% but not more than 50% of another company's voting stock.

Accepted Answer

A) True 
 B)False

Question 14

The price of one currency stated in terms of another currency is called a foreign exchange rate.

Accepted Answer

A) True 
 B)False

Question 15

Short-term investments are intended to be converted into cash within the longer of one year or the current operating cycle of the business,and are readily convertible to cash.

Accepted Answer

A) True 
 B)False

Question 16

McVeigh Corp.owns 40% of Gondor Company's common stock.McVeigh received $41,200 in cash dividends from Gondor.The entry to record this transaction should include a:

Accepted Answer

A) Debit to Dividends for $103,000. 
B) Credit to Long-Term Investments for $41,200. 
C) Debit to Dividend Revenue for $41,200. 
D) Credit to Long-Term Investments for $103,000. 
E) Credit to Cash for $41,200.

Question 17

A company had net income of $2,660,000,net sales of $25,000,000,and average total assets of $8,000,000.Its return on total assets equals:

Accepted Answer

A) 3.01%. 
B) 10.64%. 
C) 32.00%. 
D) 33.25%. 
E) 300.75%.

Question 18

On January 4,Year 1,Barber Company purchased 5,000 shares of Convell Company for $59,500 plus a broker's fee of $1,000.Convell Company has a total of 25,000 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell.During each of the next two years,Convell declared and paid cash dividends of $0.85 per share,and its net income was $72,000 and $67,000 for Year 1 and Year 2,respectively.What is the book value of Barber's investment in Convell at the end of Year 2?

Accepted Answer

A) $60,500. 
B) $79,800. 
C) $52,000. 
D) $88,300. 
E) $87,300.

Question 19

Canberry Corporation had net income of $80,000,beginning total assets of $640,000 and ending total assets of $580,000.Its return on total assets is:

Accepted Answer

A) 13.1% 
B) 12.5% 
C) 13.8% 
D) 800% 
E) 725%

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 sale...

Exam 15: Investments and International Operations

Marshall Company sold supplies in the amount of €25,000 (euros) to a French company when the exchange rate was $1.21 per euro.At the time of payment,the exchange rate decreased to $0.82.Marshall must record a:

On March 15,Alan Company purchased 10,000 shares of Cameo Corp.stock for $35,000.The investment is classified as available-for-sale securities.On June 30,the stock had a fair value of $34,000.Alan should do which of the following?

Investments in trading securities:

A company reported net income of $225,000,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.

The currency in which a company presents its financial statements is known as the:

Roe Corporation owns 2,000 shares of WRJ Corporation stock.WRJ Corporation has 25,000 shares of stock outstanding.WRJ paid $4 per share in cash dividends to its stockholders.The entry to record the receipt of these dividends is:

Investments in equity securities where the investor has a significant,but not controlling influence,are accounted for using the _______________ method.

The controlling investor is called the:

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

A company that is a controlling investor in another company is known as the __________.

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

An investor presumed to have significant influence owns as least 20% but not more than 50% of another company's voting stock.

The price of one currency stated in terms of another currency is called a foreign exchange rate.

Short-term investments are intended to be converted into cash within the longer of one year or the current operating cycle of the business,and are readily convertible to cash.

McVeigh Corp.owns 40% of Gondor Company's common stock.McVeigh received $41,200 in cash dividends from Gondor.The entry to record this transaction should include a:

A company had net income of $2,660,000,net sales of $25,000,000,and average total assets of $8,000,000.Its return on total assets equals:

Canberry Corporation had net income of $80,000,beginning total assets of $640,000 and ending total assets of $580,000.Its return on total assets is:

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 _____________.