Question : 31) The balance in the Unrealized Gains and Losses Available-for-sale : 1230245

 

 

31) The balance in the Unrealized Gains and Losses on Available-for-sale Securities account appear in which financial statement?

A) The balance sheet as a contra asset account.

B) The income statement under Other Expenses and Losses.

C) The balance sheet, as part of the stockholders’ equity section.

D) Not shown on the financial statements until the securities are sold.

 

32) The Unrealized Gain or the Unrealized Loss Account appears:

A) in Other expense.

B) in Other comprehensive income.

C) in Other comprehensive income and Accumulated other comprehensive income.

D) in Other revenue.

 

33) When accounting for available-for-sale securities, which of the following is used to compute net income?

A) Unrealized gains

B) Realized gains

C) Both unrealized gains and realized gains

D) Neither realized gains nor unrealized gains

 

34) Receiving a stock dividend from an available-for-sale investment requires the following journal entry:

A) a debit to Cash and a credit to Dividend Revenue.

B) a debit to Cash and a credit to Unrealized Gain on Investments.

C) a debit to Unrealized Gain on Investment and a credit to Dividend Revenue.

D) no journal entry. Investor makes a memorandum entry in the accounting records.

35) Receiving a cash dividend from an available-for-sale investment requires the following journal entry:

A) a debit to Cash and a credit to Dividend Revenue.

B) a debit to Cash and a credit to Unrealized Gain on Investments.

C) a debit to Unrealized Gain on Investment and a credit to Dividend Revenue.

D) no journal entry. Investor makes a memorandum entry in the accounting records.

 

36) Receiving a cash dividend affects what part of the balance sheet?

A) Increases assets and increases paid-in-capital

B) Increases assets and decreases stockholders’ equity

C) Increases assets and increases retained earnings

D) Has no effect on assets or total equity

 

37) Receiving a stock dividend affects what part of the balance sheet?

A) Increases assets and increases paid-in-capital

B) Increases assets and decreases stockholders’ equity

C) Increases assets and increases retained earnings

D) Has no effect on assets or total equity

 

38) As a result of a stock dividend:

A) the investor’s total cost in the investment increases.

B) the investor’s cost per share decreases.

C) a journal entry is needed to record the receipt of the stock dividend

D) dividend revenue increases.

39) The gain or loss on the sale of an investment classified as “available-for-sale” is calculated by comparing the cost of the investment with the:

A) lower-of-cost-or-market value of the investment.

B) amount received from the sale of the investment.

C) market value of the investment.

D) amortized cost of the investment.

 

40) Able Company receives a stock dividend of 50 shares from Cole Company. Able previously owned 750 shares of Cole stock that had a cost basis of $4,800. The cost basis per share of Cole stock is:

A) $6.40.

B) $6.00.

C) $6.85.

D) $96.

 

 

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