Investments
 
  1. Question: Debit investments are initially recorded at:

    A
    cost.

    B
    cost plus accrued interest.

    C
    fair value.

    D
    None

    Note: Not available
    1. Report
  2. Question: Hanes Company sells debt investments costing $26,000 for $28,000, plus accured interest that has been recorded. In journalizing the sale, credits are to:

    A
    Debt Investment and Loss on Sales of Debet Investments.

    B
    Debt Investment, Gain on Sales of Debt Investment and Bond Inerest Receivable.

    C
    Stock Investment and Bond Interest Receivable.

    D
    No correct answer given.

    Note: Not available
    1. Report
  3. Question: Pryor Company receives net proceeds of $42,000 on the sale of stock investments that cost of $39,000. This transaction will result in reporting in the income statement a:

    A
    loss of $2,500 under "other expenses and losses".

    B
    loss of $2,500 under "operation expenses".

    C
    gain of $2,500 under "other revenues and gains".

    D
    gain of $2,500 under "operating revenues".

    Note: Not available
    1. Report
  4. Question: The equity method of accounting for long-term investments in stock should be used when the investor has significant influence over an investee and owns:

    A
    between 20% and 50% of the investee's common stock.

    B
    20% or more of the investee's common stock.

    C
    more than 50% of the investee's common stock.

    D
    less than 20% of the investee's common stock.

    Note: Not available
    1. Report
  5. Question: At the end of the first year of operations, the total cost of the trading securities portfolio is $120,000. Total fair value is $115,000. The financial statement should show :

    A
    a reduction of an asset of $5,000 and a realized loss of $5000.

    B
    a reduction of an asset of $5000 and an unrealized loss of $5000 in the stockholder equity section.

    C
    a reduction of an asset of $5000 in the current assets section and a unrealized loss of $5000 in "other expense and losses".

    D
    a reduction of an asset of $5000 in the current assets section and a realized loss of $5000 in "other expenses and losses".

    Note: Not available
    1. Report
  6. Question: Which of the following statements is not true? Consolidated financial statements are useful to:

    A
    determine the profitability of specific subsidiaries.

    B
    determine the total profitability of enterprises under common control.

    C
    determine the breadth of a parent company's operations.

    D
    determine the full extend of total obligations of enterprise under common control.

    Note: Not available
    1. Report
  7. Question: In the balance sheet, Unrealized Loss - Equity is reported as a:

    A
    contra asset account.

    B
    contra stockholders' equity account.

    C
    loss in the income statement.

    D
    loss in the retained earnings statement.

    Note: Not available
    1. Report
  8. Question: Short term debit investments must be readily marketable and be expected to be sold within:

    A
    3 month from the date of purchase.

    B
    the next year or operation cycle, whichever is shorter.

    C
    the next year or operating cycle, whichever is longer.

    D
    the operating cycle.

    Note: Not available
    1. Report
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