Question : 46. Temporary investments A. are reported as current assetsB. include cash equivalentsC. do not include : 1226750

 

46. Temporary investments 
A. are reported as current assets
B. include cash equivalents
C. do not include equity securities
D. all of the above

 

47. Which of the following is not a reason to invest excess cash in temporary investments? 
A. earn interest revenue
B. influence the operations of another company
C. receive dividends
D. realize gains from the increase in market value of the securities

 

48. Investment is certificates of deposit and other securities that do not change in value are reported in the balance sheet as: 
A. equity investments
B. available-for-sale securities
C. cash and cash equivalents
D. held to maturity securities

 

49. Long-term investments are held for all of the listed reasons below except  
A. the interest or dividend income
B. long-term gain potential
C. influence over another business entity
D. meet current cash needs

 

50. Temporary investments are  
A. recorded at cost but reported at fair market value
B. recorded at cost and reported at cost
C. recorded at cost but reported at lower of cost or fair market value
D. recorded at fair market value and reported at fair market value

 

51. On June 1, $40,000 of treasury bonds were purchased between interest dates.  The broker commission was $600.  The bonds pay interest at 12%, which is paid semiannually on January 1 and July 1.  What is the total cost to be debited to the Investment – Treasury Bonds account? 
A. $40,000
B. $40,600
C. $42,000
D. $42,600

 

52. On June 1, $40,000 of treasury bonds were purchased between interest dates.  The broker commission was $600.  The bonds pay interest at 12%, which is paid semiannually on January 1 and July 1.  How much interest revenue will be recorded on July 1? 
A. $400
B. $406
C. $2,000
D. $2,400

 

53. Interest revenue on bonds is reported  
A. as an addition to the Investment in Bonds account
B. as part of Comprehensive Income but not as part of Net Income.
C. as part of other income
D. as part of operating income

 

54. Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest.  The bond interest rate is 8% and interest is paid semi-annually.  The journal entry to record the purchase would be: 
A. Debit: Investment in Bonds $101,500; Credit: Cash $101,500
B. Debit: Investment in Bonds $100,000; Credit: Interest Revenue $1,500 and Cash $98,500
C. Debit: Investment in Bonds $100,000 and Interest Receivable $1,500; Credit: Cash $101,500
D. Investment in Bonds $100,000; Credit: Cash $100,000

 

55. Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest.  The bond interest rate is 8% and interest is paid semi-annually.  The journal entry to record the receipt of interest on the next interest payment date would be: 
A. Debit: Cash $4,000; Credit: Interest Revenue $4,000
B. Debit: Cash $4,000; Credit: Interest Receivable $4,000
C. Debit: Cash $4,000; Credit: Interest Receivable $1,500 and Interest Revenue $2,500
D. Debit: Cash $2,500; Credit: Interest Revenue $2,500

 

 

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