Question : Multiple Choice Questions 59. Long-term investments: A. Are current assets.B. Include funds earmarked for a : 1257524

Multiple Choice Questions
 

59. Long-term investments: 
A. Are current assets.
B. Include funds earmarked for a special purpose such as bond sinking funds.
C. Must be readily convertible to cash.
D. Are expected to be converted into cash within one year.
E. Include only equity securities.

60. Short-term investments: 
A. Are securities that management intends to convert to cash within the longer of one year or the current operating cycle, and are readily convertible to cash.
B. Include funds earmarked for a special purpose such as bond sinking funds.
C. Include stocks not intended to be converted into cash.
D. Include bonds not intended to be converted into cash.
E. Include sinking funds not intended to be converted into cash.

61. Long-term investments are reported in the: 
A. Current asset section of the balance sheet.
B. Intangible asset section of the balance sheet.
C. Non-current section of the balance sheet called long-term investments.
D. Plant assets section of the balance sheet.
E. Equity section of the balance sheet.

62. Long-term investments include: 
A. Investments in bonds and stocks that are not readily convertible to cash or not intended to be converted to cash in the short term.
B. Investments in marketable stocks that are intended to be converted into cash in the short-term.
C. Investments in marketable bonds that are intended to be converted into cash in the short-term.
D. Only investments readily convertible to cash.
E. Investments intended to be converted to cash within one year.

63. Strickland Corporation has invested in 10% of the outstanding stock of Nez Corporation. Strickland intends to actively manage this investment for profit. This investment is classified as: 
A. an available-for-sale security.
B. a held-to-maturity security.
C. a trading security.
D. a significant influence security.
E. a controlling influence security.

64. All of the following statements regarding equity securities are true except: 
A. Equity securities should be recorded at cost when acquired.
B. Equity securities are valued at fair value if classified as trading securities.
C. Equity securities are valued at fair value if classified as significant influence securities.
D. Equity securities are valued at fair value if classified as available-for-sale securities.
E. Equity securities classified as available-for-sale record the dividend revenue when received.

65. All of the following are true about debt securities except: 
A. They can be short-term investments.
B. They can be long-term investments.
C. They can have a cost higher than the maturity value.
D. They can have a cost lower than the maturity value.
E. The reflect an owner relationship. 

66. At acquisition, debt securities are: 
A. Recorded at their cost, plus total interest that will be received over the life of the security.
B. Recorded at the amount of interest that will be received over the life of the security.
C. Recorded at cost.
D. Not recorded, because no interest is due yet.
E. Recorded at cost plus the amount of dividend income to be received.

67. At the end of the accounting period, the owners of debt securities: 
A. Must report the dividend income accrued on the debt securities.
B. Must retire the debt.
C. Must record a gain or loss on the interest income earned.
D. Must record a gain or loss on the dividend income earned.
E. Must record any interest earned on the debt securities during the period.

68. A company has an investment in  9% bondswith a par value of $100,000 that pay interest on October 1 and April 1. The amount of interest accrued on December 31 (the company’s year-end) would be: 
A. $ 750.
B. $1,500.
C. $2,250.
D. $4,500.
E. $9,000.