Question 1

Madison Corporation purchased 40% of Jay Corporation for $125,000 on January 1.On June 20 of the same year,Jay Corporation declared total cash dividends of $30,000.At year-end,Jay Corporation reported net income of $150,000.The balance in Madison's Equity Method Investments-Jay Corporation account as of December 31 should be:

Accepted Answer

A)  $77,000.
B)  $125,000.
C)  $173,000.
D)  $197,000.
E)  $370,000.F) B) and C)
G) A) and D)

Question 2

A decrease in the fair value of a security that has not yet been realized through an actual sale of the security is called a(n) :

Accepted Answer

A)  Contingent loss.
B)  Realizable loss.
C)  Unrealized loss.
D)  Capitalized loss.
E)  Market loss.F) B) and D)
G) A) and B)

Question 3

On May 1,Jorge Co.purchases notes of Radiotech for $25,000.This investment is considered to be an available-for-sale debt investment.This is the company's first and only investment in available-for-sale debt securities.On July 31 (Jorge's year-end),the notes had a fair value of $28,000.Jorge should record a credit to Unrealized Gain-Equity for $3,000.

Accepted Answer

A) True 
 B)False

Question 4

MotorCity,Inc.purchased 40,000 shares of Shaw common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

Accepted Answer

A)  Debit to Debt Investments for $232,000.
B)  Debit to Equity Method Investments for $232,000.
C)  Credit to Equity Method Investments for $232,000.
D)  Debit to Long-Term Investments-HTM for $232,000.
E)  Debit to Short-Term Investment-AFS for $232,000.F) B) and D)
G) A) and E)

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

cost metho...

Question 7

Identify the classifications for debt investments in securities.What are the accounting basics for debt investments,including acquisition,interest earned,and disposition?

Accepted Answer

Debt investments can be classified as: (...

Question 8

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.F) A) and C)
G) A) and E)

Question 9

Silver Era Co.exports Southwestern artwork to Japan.Prepare journal entries for the following transactions.

Accepted Answer

The answer of Silver Era Co.exports Southwestern artwork to Japan.Prepare...

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Explain the difference between short-term and long-term investments.Cite examples of each.

Accepted Answer

Short-term investments are securities ex...

Question 12

Trading (debt) securities are:

Accepted Answer

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

Question 13

Any cash dividends received from stock investments with insignificant influence are recorded as Dividend Expense.

Accepted Answer

A) True 
 B)False

Question 14

________ securities reflect a creditor relationship while ________ securities reflect an owner relationship.

Accepted Answer

Debt; equi...

Question 15

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.F) B) and C)
G) A) and B)

Question 16

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) A) and B)
G) A) and E)

Question 17

Return on total assets is computed by dividing ________ by ________.

Accepted Answer

net income; average ...

Question 18

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.F) B) and D)
G) C) and E)

Question 19

Match between columns
                        Premises: Debt securities that a company intends and is able to hold until maturity.
Debt securities not classified as trading or held-to-maturity.
Debt securities that a company intends to actively manage and trade for profit.
A corporation controlled by another company when the controlling company owns more than 50% of the investee's voting stock.
An accounting method for long-term investments in equity when the investor has significant influence over the investee.
A company that owns more than 50% controlling interest in a subsidiary.
Investments in equity and debt securities that are not readily convertible to cash or are not intended to be converted to cash in the short term.
Change in fair value that is not yet realized through an actual sale.
A measure of financial performance,computed as net income divided by average total assets.
Financial statements that show the financial statements of all entities under the parent's control,including all subsidiaries.

Accepted Answer

The Answer of Return on total assets and Long-term investments is...

Question 20

Consolidated financial statements:

Accepted Answer

A)  Show the financial statements of all entities under the parent's control,including all subsidiaries.
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 line items for investments in the subsidiaries on the balance sheet.
E)  Do not include a balance sheet.F) D) and E)
G) A) and D)

Exam 26: Investments

Return on total assets is computed by dividing by .

Correct Answer
verified
net income; average ...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified
cost metho...
View Answer

Identify the classifications for debt investments in securities.What are the accounting basics for debt investments,including acquisition,interest earned,and disposition?

Correct Answer
verified
Debt investments can be classified as: (...
View Answer

Correct Answer
verified

Silver Era Co.exports Southwestern artwork to Japan.Prepare journal entries for the following transactions.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Consolidated financial statements:

Correct Answer
verified

Trading (debt) securities are:

Correct Answer
verified

A decrease in the fair value of a security that has not yet been realized through an actual sale of the security is called a(n) :

Correct Answer
verified

Any cash dividends received from stock investments with insignificant influence are recorded as Dividend Expense.

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

Long-term investments are reported in the:

Correct Answer
verified

securities reflect a creditor relationship while securities reflect an owner relationship.

Correct Answer
verified
Debt; equi...
View Answer

MotorCity,Inc.purchased 40,000 shares of Shaw common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

Correct Answer
verified

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

Correct Answer
verified

Match the following terms with the appropriate definitions.

Explain the difference between short-term and long-term investments.Cite examples of each.

Correct Answer
verified
Short-term investments are securities ex...
View Answer

Exam 26: Investments

Return on total assets is computed by dividing ________ by ________.

Correct Answerverifiednet income; average ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedcost metho...View AnswerShow Answer

Identify the classifications for debt investments in securities.What are the accounting basics for debt investments,including acquisition,interest earned,and disposition?

Correct AnswerverifiedDebt investments can be classified as: (...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Silver Era Co.exports Southwestern artwork to Japan.Prepare journal entries for the following transactions.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Consolidated financial statements:

Correct AnswerverifiedShow Answer

Trading (debt) securities are:

Correct AnswerverifiedShow Answer

A decrease in the fair value of a security that has not yet been realized through an actual sale of the security is called a(n) :

Correct AnswerverifiedShow Answer

Any cash dividends received from stock investments with insignificant influence are recorded as Dividend Expense.

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

Long-term investments are reported in the:

Correct AnswerverifiedShow Answer

________ securities reflect a creditor relationship while ________ securities reflect an owner relationship.

Correct AnswerverifiedDebt; equi...View AnswerShow Answer

MotorCity,Inc.purchased 40,000 shares of Shaw common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Match the following terms with the appropriate definitions.

Explain the difference between short-term and long-term investments.Cite examples of each.

Correct AnswerverifiedShort-term investments are securities ex...View AnswerShow Answer

Return on total assets is computed by dividing by .

Correct Answer
verified
net income; average ...
View Answer

Correct Answer
verified

Correct Answer
verified
cost metho...
View Answer

Correct Answer
verified
Debt investments can be classified as: (...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

securities reflect a creditor relationship while securities reflect an owner relationship.

Correct Answer
verified
Debt; equi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Short-term investments are securities ex...
View Answer