Question :
71. Which of the following would most likely be classified as : 1245739
71. Which of the following would most likely be classified as Marketable Securities in the Current Assets section of the balance sheet?
A. United States Treasury Notes that the firm expects to hold for less than one year
B. investments in securities for the purpose of exerting significant influence over the investee’s dividend payout police
C. investments in securities for the purpose of exerting significant influence over the investee’s licensing of a patent
D. investments in securities for the purpose of exerting control over the investee’s day-to-day operations
E. none of the above
72. U.S. GAAP requires firms holding securities available-for-sale to value the securities on the balance sheet after acquisition at
A. an amount based on acquisition cost.
B. market value, with changes in market value of securities held at the end of the accounting period reported each period in income.
C. market value, with changes in market value of securities held at the end of the accounting period not affecting reported income until the firm sells, or otherwise disposes of, the securities.
D. market value, with changes in market value of securities held at the end of the accounting period reported each period in retained earnings.
E. present value of future cash flows, with changes in market value of securities held at the end of the accounting period reported each period in retained earnings.
73. U.S. GAAP requires firms holding debt and equity securities, as well as derivatives, as trading securities to value the securities on the balance sheet after acquisition at
A. an amount based on acquisition cost.
B. market value, with changes in market value of securities held at the end of the accounting period reported each period in income.
C. market value, with changes in market value of securities held at the end of the accounting period not affecting reported income until the firm sells, or otherwise disposes of, the securities.
D. present value of future cash flows, with changes in present value of future cash flows of securities held at the end of the accounting period reported each period in income.
E. present value of future cash flows, with changes in present value of future cash flows of securities held at the end of the accounting period not affecting reported income until the firm sells, or otherwise disposes of, the securities.
74. U.S. GAAP requires firms holding debt and equity securities as securities available-for-sale to treat unrealized holding gains or losses each period as
A. an increase or decrease in Accumulated Other Comprehensive Income (a separate shareholder equity account).
B. as an increase or decrease in reported Net Income for the period.
C. as an increase or decrease in reported Retained Earnings for the period.
D. a separate footnote disclosure to the financial statements.
E. none of the above
75. U.S. GAAP requires firms holding minority, passive investments in debt and equity securities as securities available-for-sale that the firm intends to sell within one year to report them as
A. Investments in Securities in the Current asset section of the balance sheet.
B. Investments in Securities in the Long-term asset section of the balance sheet.
C. Marketable Securities in the Current asset section of the balance sheet.
D. Marketable Securities in the Long-term asset section of the balance sheet.
E. none of the above
76. U.S. GAAP requires firms holdingtrading securities to report unrealized holding gains and losses on the investments
A. in the income statement.
B. as an adjustment to the Capital stock section of the balance sheet.
C. in the footnotes to the financial statements.
D. as an adjustment to the Treasury stock section of the balance sheet.
E. none of the above
77. U.S. GAAP classifies securities that are neither debt securities held to maturity or trading securities as
A. securities available-for-sale.
B. securities held for short term profit potential.
C. securities held for speculation.
D. securities held for speculation.
E. derivative securities.
78. A financial instrument that obtains its value from some other financial item is known as a(n)
A. clone.
B. mutual fund.
C. derivative.
D. stock exchange.
E. underlying.
79. Which of the following is/are not true?
A. A derivative is a financial instrument whose value changes in response to changes in an underlying observable variable, such as a stock price, an interest rate, a currency exchange rate, or a commodity price.
B. Unlike equity securities, which have no definite settlement date, firms settle a derivative at a date that the terms of the instrument specify.
C. A derivative requires an investment that is small, relative to the investment in a contract that is similarly exposed to changes in market factors, or requires no investment at all.
D. Firms use derivative instruments to hedge the risks that arise from changes in interest rates, foreign exchange rates, and commodity prices.
E. The general idea behind hedging is that changes in the fair value of the derivative instrument map the changes in the fair value of an asset or liability or changes in future cash flows, thereby multiplying the effects of those changes.
80. Which of the following is/are elements of a derivative?
A. A derivative has one or more underlyings. An underlying is an observable variable such as a specified interest rate, or commodity price, or foreign exchange rate.
B. A derivative has one or more notional amounts. A notional amount is a number of currency units, bushels, shares, or other units specified in the contract.
C. A derivative sometimes requires no initial investment.
D. Derivatives typically require, or permit, net settlement, which means that when the counterparties settle the derivative contract, one of the contracting parties pays the other the fair value of the contract.
E. all of the above
