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Foreign exchange rates fluctuate due to many factors including changing political and economic conditions.

A) True
B) False

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On January 2,Froxel Company purchased 10,000 shares of Sandia Corp.Common Stock at $19 per share plus a $3,000 commission.This represents 30% of Sandia Corp.'s outstanding stock.On August 6,Sandia Corp.declared and paid cash dividends of $1.75 per share and on December 31 it reported net income of $150,000.Prepare the necessary entries Froxel Company must make to account for these transactions and events.

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None...

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Consolidated financial statements:


A) Show the results of operations,cash flows and the financial position of all entities under a parent's control
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 the investments account on the balance sheet
E) Do not include a balance sheet

F) D) and E)
G) B) and E)

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

A) True
B) False

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If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment,which method would the investor normally use to account for this investment?


A) Equity method
B) Market value method
C) Historical cost method
D) Straight-line method
E) Effective method

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

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A controlling influence over the investee is based on the investor owning voting stock exceeding:


A) 10%
B) 20%
C) 30%
D) 40%
E) 50%

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

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A company had investments in long-term available-for-sale securities.At the end of the current year the company's portfolio had a $731,000 cost and $730,000 market value. What is the current year's adjustment to market value given the following account balances at the end of the prior year? A company had investments in long-term available-for-sale securities.At the end of the current year the company's portfolio had a $731,000 cost and $730,000 market value. What is the current year's adjustment to market value given the following account balances at the end of the prior year? A) \begin{array}{|c|l|l|} \hline \text { Market Adjustment - Available-for-Sale............... } & 1,000 & \\ \hline \text { Unrealized Gain Equity...................................... } & & 1,000 \\ \hline \end{array} B) \begin{array}{|c|l|l|} \hline \text { Market Adjustment - Available-for-Sale............... } & 6,000 & \\ \hline \text { Unrealized Gain Equity....................................... } & & 6,000 \\ \hline \end{array} C) \begin{array}{|l|l|l|} \hline \text { Unrealized Gain Equity........................................................... } & 1,000 & \\ \hline \text { Market Adjustment - Available-for-Sale..... } && 1,000 \\ \hline \end{array} D) \begin{array}{|l|c|c|} \hline \begin{array}{l} \text { Unrealized Gain (Loss) - } \\ \text { Equity............................. } \end{array} & 6,000 & \\ \hline \text { Market Adjustment - Available-for-Sale. } & & 6,000 \\ \hline \end{array} E) \begin{array}{|c|l|l|} \hline \text { Unrealized Gain (Loss) - Equity ................................................... } & 4,000 & \\ \hline \text { Market Adjustment - Available-for-Sale.... } && 4,000 \\ \hline \end{array}


A)
 Market Adjustment - Available-for-Sale............... 1,000 Unrealized Gain Equity...................................... 1,000\begin{array}{|c|l|l|}\hline \text { Market Adjustment - Available-for-Sale............... } & 1,000 & \\\hline \text { Unrealized Gain Equity...................................... } & & 1,000 \\\hline\end{array}

B)
 Market Adjustment - Available-for-Sale............... 6,000 Unrealized Gain Equity....................................... 6,000\begin{array}{|c|l|l|}\hline \text { Market Adjustment - Available-for-Sale............... } & 6,000 & \\\hline \text { Unrealized Gain Equity....................................... } & & 6,000 \\\hline\end{array}

C)
 Unrealized Gain Equity........................................................... 1,000 Market Adjustment - Available-for-Sale..... 1,000\begin{array}{|l|l|l|}\hline \text { Unrealized Gain Equity........................................................... } & 1,000 & \\\hline \text { Market Adjustment - Available-for-Sale..... } && 1,000 \\\hline\end{array}

D)
 Unrealized Gain (Loss)  -  Equity............................. 6,000 Market Adjustment - Available-for-Sale. 6,000\begin{array}{|l|c|c|}\hline \begin{array}{l}\text { Unrealized Gain (Loss) - } \\\text { Equity............................. }\end{array} & 6,000 & \\\hline \text { Market Adjustment - Available-for-Sale. } & & 6,000 \\\hline\end{array}

E)
 Unrealized Gain (Loss)  - Equity ................................................... 4,000 Market Adjustment - Available-for-Sale.... 4,000\begin{array}{|c|l|l|}\hline \text { Unrealized Gain (Loss) - Equity ................................................... } & 4,000 & \\\hline \text { Market Adjustment - Available-for-Sale.... } && 4,000 \\\hline\end{array}

F) All of the above
G) A) and B)

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Haladam Company had the following transactions relating to investments in trading securities during the year.Prepare the required general journal entries for these transactions. May 4 Haladam purchased 600 shares of Cob Company stock at $120 \$ 120 per share plus a $750 \$ 750 brokerage fee. July 1 Haladam received a \$2.50 per share cash dividend on the Cob Company stock. Sept. 15 Sold 300 shares of the Cob Company stock for $125 \$ 125 per share, less a $450 \$ 450 brokerage fee. Dec. 31 The market value of the Cob Company stock (the only investment that Haladam owns) is \$124 per share. The balance of the Market Adjustment - Trading a zero balance prior to adjustment.

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If the exchange rate for Canadian and U.S.dollars is 0.7382 to 1,this implies that 2 Canadian dollars will buy 1.48 worth of U.S.dollars.

A) True
B) False

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At acquisition,debt securities are:


A) Recorded at their cost,plus total interest that will be paid over the life of the security
B) Recorded at the amount of interest that will be paid over the life of the security
C) Recorded at cost
D) Not recorded,because no interest is due yet
E) Recorded at the amount of dividend income to be received

F) A) and D)
G) A) and C)

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If a long-term investment in an equity security gives the investor significant influence over the investee,the investment is classified as available-for-sale.

A) True
B) False

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A U.S.Company's credit sale to an international customer to be paid in a foreign currency requires using the same exchange rate for the date of sale and the cash payment date.

A) True
B) False

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On January 4,2008,Larsen Company purchased 5,000 shares of Warner Company for $59,500 plus a broker's fee of $1,000.Warner Company has a total of 25,000 shares of common stock outstanding and it is presumed the Larsen Company will have a significant influence over Warner.During each of the next two years,Warner declared and paid cash dividends of $0.85 per share.Its net income was $72,000 and $67,000 for 2008 and 2009,respectively.The January 12,2010 entry to record the sale of 3,000 shares of Warner Company stock for $39,000 cash should be:


A)
 Cash ………………………………39,000 Loss on Sale of Investments ……………2,400 Long-Term Investments ……………41,400\begin{array} { | c | l | l | } \hline \text { Cash } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 39,000 & \\\hline \text { Loss on Sale of Investments } \ldots \ldots \ldots \ldots \ldots & 2,400 & \\\hline \text { Long-Term Investments } \ldots \ldots \ldots \ldots \ldots & & 41,400 \\\hline\end{array}
B)
 Cash. 39,000 Loss on Sale of Investments. 8,800 Long-Term Investments. 47,880\begin{array}{|l|c|c|}\hline \text { Cash. } & 39,000 & \\\hline \text { Loss on Sale of Investments. } & 8,800 & \\\hline \text { Long-Term Investments. } & & 47,880 \\\hline\end{array}

C)
 Cash.................................................. 39,000 Loss on Sale of Investments.................. 60 Long-Term Investments.................. 38,940\begin{array}{|c|c|c|}\hline \text { Cash.................................................. } & 39,000 & \\\hline \text { Loss on Sale of Investments.................. } & 60 & \\\hline \text { Long-Term Investments.................. } & & 38,940 \\\hline\end{array}

D)
 Cash............................................... 39,000 Gain on Sale of Investments.... 8,750 Long-Term Investments..... 30,250\begin{array}{|r|c|c|}\hline \text { Cash............................................... } & 39,000 & \\\hline \text { Gain on Sale of Investments.... } & & 8,750 \\\hline \text { Long-Term Investments..... } &&30,250\\\hline\end{array}

E)
 Cash. 39,000 Loss on Sale of Investments. 21,500 Long-Term Investments. 60,500\begin{array}{|l|c|c|}\hline \text { Cash. } & 39,000 & \\\hline \text { Loss on Sale of Investments. } & 21,500 & \\\hline \text { Long-Term Investments. } & & 60,500 \\\hline\end{array}

F) A) and D)
G) A) and E)

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On May 1,Franke Co.purchases 2,000 shares of Computech stock for $25,000.This investment is considered to be an available-for-sale investment.On July 31 (Franke's year-end),the stock had a market value of $28,000.Franke should record a credit to Unrealized Gain-Equity for $3,000.

A) True
B) False

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Any cash dividends received from equity securities are recorded as Dividend Expense.

A) True
B) False

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Trading securities are securities that are purchased by trading other securities rather than by paying cash.

A) True
B) False

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Bond sinking funds are examples of short-term investments.

A) True
B) False

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The following information is available from the financial statements of Cosmotropolis 200920102011 Total assets, December 31 $341,585$395,412$922,357 Net income 35,55049,51268,149\begin{array}{lrrr}&2009&2010&2011\\\text { Total assets, December 31 } & \$ 341,585 & \$ 395,412 & \$ 922,357 \\ \text { Net income } & 35,550 & 49,512 & 68,149 \\\end{array} What is Cosmotropolis' return on total assets for 2010?

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Long-term investments:


A) Are current assets
B) Include funds earmarked for a special purpose such as bond sinking funds
C) Must be readily convertible to cash
D) Are expected to be converted into cash within one year
E) Include only equity securities

F) D) and E)
G) B) and D)

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The price of one currency stated in terms of another currency is referred to as the:


A) Historical exchange rate
B) Foreign exchange rate
C) Consolidated exchange rate
D) General exchange rate
E) Multinational exchange rate

F) C) and D)
G) A) and E)

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Showing 81 - 100 of 179

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