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
