ACC 291 Week 3 Chapter 12 Practice Quiz 1
ACC 291 Week 3 Chapter 12 Practice Quiz 1,ACC 291 UOP Homework,ACC 291 UOP Tutorials,ACC 291 Course Tutorial,ACC 291 UOP Homework Help,ACC 291 UOP Assignment
Which of the following is not a primary reason why corporations invest in debt and equity securities?
They have excess cash.
They wish to move into a new line of business.
They are required to by law.
They wish to gain control of a competitor.
Debt investments are initially recorded at:
cost plus accrued interest.
None of the above.
Hanes Company sells debt investments costing $26,000 for $28,000, plus accrued interest that has been recorded. In journalizing the sale, credits are to:
Stock Investments and Bond Interest Receivable.
No correct answer given.
Debt Investments, Gain on Sale of Debt Investments, and Bond Interest Receivable.
Debt Investments and Loss on Sale of Debt Investments.
Pryor Company receives net proceeds of $42,000 on the sale of stock investments that cost $39,500. This transaction will result in reporting in the income statement a:
gain of $2,500 under “Operating revenues.”
loss of $2,500 under “Other expenses and losses.”
loss of $2,500 under “Operating expenses.”
gain of $2,500 under “Other revenues and gains.”
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:
20% or more of the investee's common stock.
more than 50% of the investee's common stock.
less than 20% of the investee's common stock.
between 20% and 50% of the investee's common stock.
Assume that Horicon Corp acquired 25% of the common stock of Sheboygan Corp. on January 1, 2011, for $300,000. During 2011 Sheboygan Corp. reported net income of $160,000 and paid total dividends of $60,000. If Horicon uses the equity method to account for its investment, the balance in the investment account on December 31, 2011, will be:
Using the information in question 6, what entry would Horicon make to record the receipt of the dividend from Sheboygan?
Debit Cash and credit Dividend Revenue.
Debit Dividends and credit Revenue from Investment in Sheboygan Corp.
Debit Cash and credit Revenue from Investment in Sheboygan Corp.
Debit Cash and credit Stock Investments.
You have a controlling interest if:
you own more than 50% of a company's stock.
you are the president of the company.
you own more than 20% of a company's stock.
you use the equity method.
Which of the following statements is not true? Consolidated financial statements are useful to:
determine the profitability of specific subsidiaries.
determine the full extent of total obligations of enterprises under common control.
determine the total profitability of enterprises under common control.
determine the breadth of a parent company's operations.
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 statements should show:
a reduction of an asset of $5,000 in the current assets section and an unrealized loss of $5,000 in “Other expenses and losses.”
a reduction of an asset of $5,000 in the current assets section and a realized loss of $5,000 in “Other expenses and losses.”
a reduction of an asset of $5,000 and a realized loss of $5,000.
a reduction of an asset of $5,000 and an unrealized loss of $5,000 in the stockholders' equity section.
At December 31, 2011, the fair value of available-for-sale securities is $41,300 and the cost is $39,800. At January 1, 2011, there was a credit balance of $900 in the Market Adjustment—Available-for-Sale account. The required adjusting entry would be:
Debit Market Adjustment—Available-for-Sale for $2,400 and credit Unrealized Gain or Loss—Equity for $2,400.
Debit Market Adjustment—Available-for-Sale for $1,500 and credit Unrealized Gain or Loss—Equity for $1,500.
Debit Unrealized Gain or Loss—Equity for $2,400 and credit Market Adjustment—Available-for-Sale for $2,400.
Debit Market Adjustment—Available-for-Sale for $600 and credit Unrealized Gain or Loss—Equity for $600.
In the balance sheet, a debit balance in Unrealized Gain or Loss—Equity is reported as a:
increase to stockholders equity.
loss in the retained earnings statement.
loss in the income statement.
decrease to stockholders' equity.
Short-term debt investments must be readily marketable and be expected to be sold within:
the next year or operating cycle, whichever is longer.
the operating cycle.
3 months from the date of purchase.
the next year or operating cycle, whichever is shorter.
Pate Company pays $175,000 for 100% of Sinko's common stock when Sinko's stockholders' equity consists of Common Stock $100,000 and Retained Earnings $60,000. In the worksheet for the consolidated balance sheet, the eliminations will include a:
debit to Retained Earnings $75,000.
debit to Excess of Cost over Book Value of Subsidiary $15,000.
credit to Investment in Sinko Common Stock $160,000.
credit to Excess of Book Value over Cost of Subsidiary $15,000.
Which of the following statements about intercompany eliminations is true?
They are not journalized or posted by any of the subsidiaries.
They do not affect the ledger accounts of any of the subsidiaries.
Intercompany eliminations are made solely on the worksheet to arrive at correct consolidated data.
All of these statements are true.
Which one of the following statements about consolidated income statements is false?
A worksheet facilitates the preparation of the statement.
All revenue and expense transactions between parent and subsidiary companies are eliminated.
The consolidated income statement shows the results of operations of affiliated companies as a single economic unit.
When a subsidiary is wholly owned, the form and content of the statement will differ from the income statement of the individual corporation.