ACC 557 Week 9 Quiz - Strayer NEW

All possible questions with answers</strong>
<h2></h2>
<h2>TRUE-FALSE STATEMENTS</h2>
<ol>
<li>Corporations purchase investments in debt or stock securities generally for one of two reasons.</li>
</ol>
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Ans:LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics

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<ol start="2">
<li>A reason some companies purchase investments is because they generate a significant portion of their earnings from investment income.</li>
</ol>
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Ans:LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics

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<ol start="3">
<li>The accounting for short-term debt investments and for long-term debt investments is similar.</li>
</ol>
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Ans:LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

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<ol start="4">
<li>When debt investments, are sold, the gain or loss is the difference between the net proceeds from the sale and the fair value of the bonds.</li>
</ol>
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Ans:LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

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<ol start="5">
<li>Debt investments are investments in government and corporation bonds.</li>
</ol>
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Ans:LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Risk Analysis, AICPA PC: Problem Solving, IMA: Business Economics

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<ol start="6">
<li>In accordance with the cost principle, brokerage fees should be added to the cost of an investment.</li>
</ol>
&nbsp;

Ans:LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

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<ol start="7">
<li>In accordance with the cost principle, the cost of debt investments includes brokerage fees and accrued interest.</li>
</ol>
&nbsp;

Ans:LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

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<ol start="8">
<li>In accounting for stock investments of less than 20%, the equity method is used.</li>
</ol>
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Ans:LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Business Economics

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<ol start="9">
<li>Dividends received on stock investments of less than 20% should be credited to the Stock Investments account.</li>
</ol>
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Ans:LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Business Economics

&nbsp;
<ol>
<li>If an investor owns between 20% and 50% of an investee's common stock, it is presumed that the investor has significant influence on the investee.</li>
</ol>
&nbsp;

Ans:LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Business Economics

&nbsp;
<ol>
<li>The Stock Investments account is debited at acquisition under both the equity method and cost method of accounting for investments in common stock.</li>
</ol>
&nbsp;

Ans:LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA
<ol start="2">
<li>Under the equity method, the investment in common stock is initially recorded at cost, and the Stock Investments account is adjusted annually.</li>
</ol>
&nbsp;

Ans:LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

&nbsp;
<ol start="3">
<li>Under the equity method, the receipt of dividends from the investee company results in an increase in the Stock Investments account.</li>
</ol>
&nbsp;

Ans:LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

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<ol start="4">
<li>Consolidated financial statements are appropriate when an investor controls an investee by ownership of more than 50% of the investee's common stock.</li>
</ol>
&nbsp;

Ans:LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Communications, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol start="5">
<li>Consolidated financial statements are prepared in place of the financial statements for the parent and subsidiary companies.</li>
</ol>
&nbsp;

Ans:LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Communications, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol start="6">
<li>Consolidated financial statements should be prepared only when a subsidiary company has a controlling interest in the parent company.</li>
</ol>
&nbsp;

Ans:LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Communications, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol start="7">
<li>The valuation of non-trading securities is similar to the procedures followed for trading securities, except that changes in fair value are not recognized in current income.</li>
</ol>
&nbsp;

Ans:LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Communications, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol start="8">
<li>An unrealized gain or loss on trading securities is reported as a separate component of stockholders' equity.</li>
</ol>
&nbsp;

Ans:LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Communications, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol start="9">
<li>For non-trading securities, the unrealized gain or loss account is carried forward to future periods.</li>
</ol>
&nbsp;

Ans:LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Communications, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol>
<li>A decline in the fair value of a trading security is recorded by debiting an unrealized loss account and crediting the Fair value Adjustment account.</li>
</ol>
&nbsp;

Ans:LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Communications, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol>
<li>If the fair value of a non-trading security exceeds its cost, the security should be written up to fair value and a realized gain should be recognized.</li>
</ol>
&nbsp;

Ans:LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Communications, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol start="2">
<li>The Fair Value Adjustment account can only have a credit balance or a zero balance.</li>
</ol>
&nbsp;

Ans:LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Communications, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol start="3">
<li>To be classified as a short-term investment, the investment must be readily marketable and intended to be converted into cash within the next year or operating cycle.</li>
</ol>
&nbsp;

Ans:LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

&nbsp;
<ol start="4">
<li>An investment is readily marketable if it is management's intent to sell the investment.</li>
</ol>
&nbsp;

Ans:LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol start="5">
<li>Stocks traded on the New York Stock Exchange are considered readily marketable.</li>
</ol>
&nbsp;

Ans:LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

&nbsp;
<ol start="6">
<li>When a parent company acquires a wholly owned subsidiary for an amount in excess of the book value of the net assets acquired, the excess is always allocated to good will.</li>
</ol>
&nbsp;

Ans:LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: Problem Solving, IMA: Business Economics

&nbsp;
<ol start="7">
<li>A consolidated income statement will reflect only revenue and expense transactions between the consolidated entity and parties outside the affiliated group.</li>
</ol>
&nbsp;

Ans:LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: Problem Solving, IMA: Business Economics

&nbsp;
<ol start="8">
<li>The process of excluding intercompany transactions in preparing consolidated statements is referred to as intercompany eliminations.</li>
</ol>
&nbsp;

Ans:LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: Problem Solving, IMA: Business Economics

&nbsp;
<ol start="9">
<li>One of the reasons a corporation may purchase investments is that it has excess cash.</li>
</ol>
&nbsp;

Ans:LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: Problem Solving, IMA: Business Economics

&nbsp;
<ol>
<li>When recording bond interest, Interest Receivable is reported as a long-term asset in the balance sheet.</li>
</ol>
&nbsp;

Ans:LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: FSA

&nbsp;
<ol>
<li>Under the cost method, the investment is recorded at cost and revenue is recognized only when cash dividends are received.</li>
</ol>
&nbsp;

Ans:LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

&nbsp;
<ol start="2">
<li>Consolidated financial statements present a condensed version of the financial statements so investors will not experience information overload.</li>
</ol>
&nbsp;

Ans:LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Communications, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: Communication, IMA: Reporting

&nbsp;
<ol start="3">
<li>Non-trading securities are securities bought and held primarily for sale in the near term to generate income on short-term price differences.</li>
</ol>
&nbsp;

Ans:LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Business Economics

&nbsp;
<ol start="4">
<li>"Intent to convert" does not include an investment used as a resource that will be used whenever the need for cash arises.</li>
</ol>
&nbsp;

Ans:LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

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&nbsp;
<h2>MULTIPLE CHOICE QUESTIONS</h2>
<ol start="5">
<li>Corporations invest excess cash for short periods of time in each of the following <em>except</em></li>
<li>equity securities.</li>
<li>highly liquid securities.</li>
<li>low-risk securities.</li>
<li>government securities.</li>
</ol>
&nbsp;

Ans:LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

&nbsp;
<ol start="6">
<li>Corporations invest in other companies for all of the following reasons <em>except</em> to</li>
<li>house excess cash until needed.</li>
<li>generate earnings.</li>
<li>meet strategic goals.</li>
<li>increase trading of the other companies’ stock.</li>
</ol>
&nbsp;

Ans:LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics

&nbsp;
<ol start="7">
<li>A typical investment to house excess cash until needed is</li>
<li>stocks of companies in a related industry.</li>
<li>debt securities.</li>
<li>low-risk, highly liquid securities.</li>
<li>stock securities.</li>
</ol>
&nbsp;

Ans:LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Business Economics

&nbsp;
<ol start="8">
<li>A company may purchase a noncontrolling interest in another firm in a related industry</li>
<li>to house excess cash until needed.</li>
<li>to generate earnings.</li>
<li>for strategic reasons.</li>
<li>for speculative reasons.</li>
Continued.....................
ALL Possible Questions With Answers


  • Item #: ACC557W9Q

ACC 557 Week 9 Quiz - Strayer NEW

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