Filters
Question type
Study Flashcards

Short-term investments in bonds are accounted for using the fair value through profit or loss model.

Correct Answer

verifed

verified

The ability of an investor to affect the operating and financial activities of another company, even though the investor does not control the company, is known as


A) significant influence.
B) control.
C) a combination.
D) influence and control.

Correct Answer

verifed

verified

"Other comprehensive income" does not include


A) revaluations of property, plant and equipment.
B) certain translation gains and losses on foreign currency.
C) realized gains and losses on trading investments.
D) unrealized gains and losses for trading investments.

Correct Answer

verifed

verified

On September 15, 2022, Alonso Ltd.sells 150 common shares of Bandi Corp., which were being held as a trading investment.The shares were acquired six months ago at $75 a share.Alonso sells the shares for $60 a share.The entry to record the sale is On September 15, 2022, Alonso Ltd.sells 150 common shares of Bandi Corp., which were being held as a trading investment.The shares were acquired six months ago at $75 a share.Alonso sells the shares for $60 a share.The entry to record the sale is

Correct Answer

verifed

verified

All the following investments are generally shown at fair value except


A) short-term debt investments.
B) trading investments.
C) bond investments intended to be held to maturity.
D) shares purchased with the intention of achieving a capital gain on sale.

Correct Answer

verifed

verified

An advantage of using the fair value through other comprehensive income is that


A) the effect on other comprehensive income is reported in the statement of income.
B) unrealized gains and losses are not used to evaluate management.
C) unrealized losses must be reported on the statement of income, but unrealized gains are reported in other comprehensive income.
D) unrealized gains must be reported on the statement of income, but unrealized losses are reported in other comprehensive income.

Correct Answer

verifed

verified

Non-strategic investments that are held for the purpose of earning capital gains are called Trading Investments.

Correct Answer

verifed

verified

Dividends received on investments are accounted for in the same way under the fair value through profit or loss model cost and the equity method.

Correct Answer

verifed

verified

Under the equity method of accounting for investments in common shares, when a dividend is received from the investee,


A) the Dividend Income account is credited.
B) the Investment account is increased.
C) the Investment account is decreased.
D) no entry is necessary.

Correct Answer

verifed

verified

The degree of influence determines how a strategic investment is classified.

Correct Answer

verifed

verified

If there is a bond premium on a long-term bond investment, the carrying amount of the investment is reduced by the amount of the amortization.

Correct Answer

verifed

verified

Hankers Corporation buys 1,500 shares of Viggo Ltd.'s common shares as a trading investment.The shares are purchased for $45 a share.At year end the shares are trading at $48.The adjusting entry at year end is . Hankers Corporation buys 1,500 shares of Viggo Ltd.'s common shares as a trading investment.The shares are purchased for $45 a share.At year end the shares are trading at $48.The adjusting entry at year end is .

Correct Answer

verifed

verified

Laski Corp.holds two trading investments and has decided to use the fair value through profit or loss model.At year end, one has an unrealized gain of $2,000 and the other has an unrealized loss of $4,500.The trading investments would be reported at fair value and Laski Corp.would report a net unrealized loss of


A) $2,500 in the statement of income.
B) $4,500 in the statement of income.
C) $2,500 in the statement of comprehensive income.
D) $4,500 in the statement of comprehensive income.

Correct Answer

verifed

verified

When an investee can be significantly influenced, it is known as a(n)


A) subsidiary.
B) associate.
C) trading investment.
D) parent.

Correct Answer

verifed

verified

When investing excess cash for short periods of time,


A) corporations generally invest in equity securities.
B) corporations generally invest in debt securities that have both high liquidity and high risk.
C) corporations generally invest in debt securities that have high risk and low liquidity.
D) corporations generally invest in debt securities that have low risk and high liquidity.

Correct Answer

verifed

verified

Other comprehensive income (loss)


A) has no impact on shareholders' equity.
B) increases (decreases) accumulated other comprehensive income.
C) increases (decreases) retained earnings.
D) increases (decreases) net income.

Correct Answer

verifed

verified

If an investment in an associate is sold at a gain, the gain


A) is reported as operating income.
B) is reported under a special section, "Discontinued Investments," on the statement of income.
C) is reported in the Other Income and Gains section on the statement of income.
D) contributes to gross profit on the statement of income.

Correct Answer

verifed

verified

At acquisition, non-strategic investments are recorded at purchase cost.

Correct Answer

verifed

verified

No unrealized gains and losses are recorded when using the amortized cost model.

Correct Answer

verifed

verified

Unless there is evidence to the contrary, an investor owning at least 20% of the shares of an investee is assumed to have significant influence.

Correct Answer

verifed

verified

Showing 21 - 40 of 117

Related Exams

Exam 1

The Purpose and Use of Financial Statements

105 Questions

Exam 2

A Further Look at Financial Statements

129 Questions

Exam 3

The Accounting Information System

145 Questions

Exam 4

Accrual Accounting Concepts

134 Questions

Exam 5

Merchandising Operations

159 Questions

Exam 6

Reporting and Analyzing Inventory

103 Questions

Exam 7

Internal Control and Cash

95 Questions

Exam 8

Reporting and Analyzing Receivables

114 Questions

Exam 9

Reporting and Analyzing Long-Lived Assets

154 Questions

Exam 10

Reporting and Analyzing Liabilities

92 Questions

Exam 11

Reporting and Analyzing Shareholders Equity

140 Questions

Exam 13

Statement of Cash Flows

123 Questions

Exam 14

Performance Measurement

127 Questions

Show Answer