Question 1

Six months ago,a company purchased an investment in stock for $70,000.The investment is classified as available-for-sale securities.The current fair value of the stock is $68,500.The company should record a:

Accepted Answer

A)  Debit to Unrealized Loss-Equity for $1,500.
B)  Credit to Unrealized Gain-Equity for $1,500.
C)  Debit to Investment Revenue for $1,500.
D)  No entry is required.
E)  Credit to Investment Revenue for $1,500.F) B) and E)
G) B) and D)

Question 2

On January 3,Kostansas Corporation purchased 5,000 shares of Morton,Inc.for $40 per share plus $700 in broker commissions.These shares represent a 40% ownership in Morton,Inc.Prepare the journal entry Kostansas Corporation should record for the receipt of cash dividends of $2 per share from Morton on July 10.

Accepted Answer

The answer of On January 3,Kostansas Corporation purchased 5,000 shares...

Question 3

Landers,Inc. ,held 1,500 of Shipman Company common stock with a cost of $36,900.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $42,100.Prepare Lander's journal entry to record this sale.

Accepted Answer

The answer of Landers,Inc. ,held 1,500 of Shipman Company common...

Question 4

Segmental Manufacturing owns 35% of Glesson Corp.stock.Glesson pays a total of $47,000 in cash dividends for the period.Segmental's entry to record the dividend transaction would include a:

Accepted Answer

A)  Credit to Long-Term Investments for $16,450.
B)  Debit to Long-Term Investments for $16,450.
C)  Debit to Cash for $47,000.
D)  Credit to Cash for $16,450.
E)  Credit to Investment Revenue for $47,000.F) B) and C)
G) A) and E)

Question 5

A company has net income of $250,000,net sales of $2,000,000,and average total assets of $1,500,000.Its return on total assets equals:

Accepted Answer

A)  12.5%.
B)  13.3%.
C)  16.7%.
D)  75.0%.
E)  600.0%.F) A) and E)
G) B) and D)

Question 6

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

Accepted Answer

cost metho...

Question 7

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Accepted Answer

A)  5.71%
B)  8.66%
C)  12.34%
D)  13.61%
E)  19.32%F) All of the above
G) C) and D)

Question 8

A company reported net income for Year 1 of $98,000 and $106,000 for Year 2.It also reported net sales of $835,000 in Year 1 and $918,000 in Year 2.The company's average total assets in Year 1 were $1,850,000 and $1,720,000 in Year 2.Calculate the company's profit margin,total asset turnover and return on total assets for Year 1and Year 2.Comment on the results.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The company did not increase its profit...

Question 9

Long-term investments include:

Accepted Answer

A)  Investments in bonds and stocks that are not readily convertible to cash or not intended to be converted to cash in the short term.
B)  Investments in marketable stocks 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.F) A) and B)
G) A) and E)

Question 10

Multinational corporations can be U.S.companies with operations in other countries.

Accepted Answer

A) True 
 B)False

Question 11

Arkansana Inc.imports inventory from Costa Rica.Prepare the journal entries for Arkansana to record the following transactions.Include any year-end adjustments.

Accepted Answer

The answer of Arkansana Inc.imports inventory from Costa Rica.Prepare the...

Question 12

All of the following statements regarding accounting for trading securities under U.S.GAAP are true except:

Accepted Answer

A)  The entire portfolio of trading securities is reported at fair value.
B)  An unrealized gain or loss from a change in fair value is reported on the income statement.
C)  A realized gain or loss is recorded when the securities are sold and reported on the income statement.
D)  When the period-end fair value adjustment for the portfolio of trading securities is computed,it includes the cost and fair value of any securities sold.
E)  Any prior period fair value adjustment to the portfolio is not used to compute the gain or loss from sale of individual transactions.F) C) and E)
G) B) and C)

Question 13

All of the following are true about debt securities except:

Accepted Answer

A)  They can be short-term investments.
B)  They can be long-term investments.
C)  They can have a cost higher than the maturity value.
D)  They can have a cost lower than the maturity value.
E)  The reflect an owner relationship.F) All of the above
G) C) and E)

Question 14

Cloverton Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is:

Accepted Answer

A)  3%
B)  200%
C)  6%
D)  17%
E)  1.5%F) B) and E)
G) B) and D)

Question 15

Available-for-sale securities are actively managed like trading securities because the company intends to trade them for profit in the short term.

Accepted Answer

A) True 
 B)False

Question 16

When one company owns more than 50% of another company's voting stock and has control over the investee company,the investee is called the _______________________.

Accepted Answer

The answer of When one company owns more than 50%...

Question 17

Strickland Corporation has invested in 10% of the outstanding stock of Nez Corporation.Strickland 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 trading security.
D)  a significant influence security.
E)  a controlling influence security.F) All of the above
G) A) and B)

Question 18

Accounting for long-term investments in equity securities with controlling influence uses the:

Accepted Answer

A)  Controlling method.
B)  Equity method with consolidation.
C)  Investor method.
D)  Investment method.
E)  Consolidated method.F) A) and E)
G) B) and E)

Question 19

Investments can be classified as all but which of the following?

Accepted Answer

A)  Intangible investments.
B)  Held-to-maturity debt securities.
C)  Available-for-sale debt securities.
D)  Available-for-sale equity securities.
E)  Trading securities.F) C) and E)
G) C) and D)

Question 20

On July 31,Potter Co.purchased 2,000 shares of GigaTech stock for $16,000.The investment is classified as available-for-sale securities.On October 31,which is Potter's year-end,the stock had a fair value of $20,000.Potter should record a:

Accepted Answer

A)  Credit to Unrealized Gain-Equity for $4,000.
B)  Credit to Market Adjustment-Available-for-Sale for $4,000.
C)  Credit to Investment Revenue for $4,000.
D)  Debit to Unrealized Loss-Equity for $4,000.
E)  Debit to Unrealized Gain-Equity for $4,000.F) B) and C)
G) C) and D)

Exam 15: Investments and International Operations

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Correct Answer
verified

Strickland Corporation has invested in 10% of the outstanding stock of Nez Corporation.Strickland intends to actively manage this investment for profit.This investment is classified as:

Correct Answer
verified

Accounting for long-term investments in equity securities with controlling influence uses the:

Correct Answer
verified

Landers,Inc. ,held 1,500 of Shipman Company common stock with a cost of $36,900.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $42,100.Prepare Lander's journal entry to record this sale.

Correct Answer
verified

Cloverton Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is:

Correct Answer
verified

Six months ago,a company purchased an investment in stock for $70,000.The investment is classified as available-for-sale securities.The current fair value of the stock is $68,500.The company should record a:

Correct Answer
verified

Multinational corporations can be U.S.companies with operations in other countries.

Correct Answer
verified

Arkansana Inc.imports inventory from Costa Rica.Prepare the journal entries for Arkansana to record the following transactions.Include any year-end adjustments.

Correct Answer
verified

Segmental Manufacturing owns 35% of Glesson Corp.stock.Glesson pays a total of $47,000 in cash dividends for the period.Segmental's entry to record the dividend transaction would include a:

Correct Answer
verified

A company has net income of $250,000,net sales of $2,000,000,and average total assets of $1,500,000.Its return on total assets equals:

Correct Answer
verified

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

Correct Answer
verified
cost metho...
View Answer

All of the following statements regarding accounting for trading securities under U.S.GAAP are true except:

Correct Answer
verified

When one company owns more than 50% of another company's voting stock and has control over the investee company,the investee is called the _______________________.

Correct Answer
verified

Available-for-sale securities are actively managed like trading securities because the company intends to trade them for profit in the short term.

Correct Answer
verified

On July 31,Potter Co.purchased 2,000 shares of GigaTech stock for $16,000.The investment is classified as available-for-sale securities.On October 31,which is Potter's year-end,the stock had a fair value of $20,000.Potter should record a:

Correct Answer
verified

Long-term investments include:

Correct Answer
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Correct Answer
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The company did not increase its profit...
View Answer

Correct Answer
verified

All of the following are true about debt securities except:

Correct Answer
verified

Investments can be classified as all but which of the following?

Correct Answer
verified

Exam 15: Investments and International Operations

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Correct AnswerverifiedShow Answer

Strickland Corporation has invested in 10% of the outstanding stock of Nez Corporation.Strickland intends to actively manage this investment for profit.This investment is classified as:

Correct AnswerverifiedShow Answer

Accounting for long-term investments in equity securities with controlling influence uses the:

Correct AnswerverifiedShow Answer

Landers,Inc. ,held 1,500 of Shipman Company common stock with a cost of $36,900.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $42,100.Prepare Lander's journal entry to record this sale.

Correct AnswerverifiedShow Answer

Cloverton Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is:

Correct AnswerverifiedShow Answer

Six months ago,a company purchased an investment in stock for $70,000.The investment is classified as available-for-sale securities.The current fair value of the stock is $68,500.The company should record a:

Correct AnswerverifiedShow Answer

Multinational corporations can be U.S.companies with operations in other countries.

Correct AnswerverifiedShow Answer

Arkansana Inc.imports inventory from Costa Rica.Prepare the journal entries for Arkansana to record the following transactions.Include any year-end adjustments.

Correct AnswerverifiedShow Answer

Segmental Manufacturing owns 35% of Glesson Corp.stock.Glesson pays a total of $47,000 in cash dividends for the period.Segmental's entry to record the dividend transaction would include a:

Correct AnswerverifiedShow Answer

A company has net income of $250,000,net sales of $2,000,000,and average total assets of $1,500,000.Its return on total assets equals:

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedcost metho...View AnswerShow Answer

All of the following statements regarding accounting for trading securities under U.S.GAAP are true except:

Correct AnswerverifiedShow Answer

When one company owns more than 50% of another company's voting stock and has control over the investee company,the investee is called the _______________________.

Correct AnswerverifiedShow Answer

Available-for-sale securities are actively managed like trading securities because the company intends to trade them for profit in the short term.

Correct AnswerverifiedShow Answer

On July 31,Potter Co.purchased 2,000 shares of GigaTech stock for $16,000.The investment is classified as available-for-sale securities.On October 31,which is Potter's year-end,the stock had a fair value of $20,000.Potter should record a:

Correct AnswerverifiedShow Answer

Long-term investments include:

Correct AnswerverifiedShow Answer

Correct Answerverified The company did not increase its profit...View AnswerShow Answer

Correct AnswerverifiedShow Answer

All of the following are true about debt securities except:

Correct AnswerverifiedShow Answer

Investments can be classified as all but which of the following?

Correct AnswerverifiedShow Answer

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cost metho...
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The company did not increase its profit...
View Answer

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