Question :
61. Long-term investments include:
A. Investments in bonds and stocks that not readily : 1225353
61. Long-term investments include:
A. Investments in bonds and stocks that are not readily convertible to cash.
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.
62. NSC Corporation has invested in 10% of the outstanding stock of VC Corporation. NSC 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.
63. 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.
64. Debt securities:
A. Can be short-term investments.
B. Can be long-term investments.
C. Can have a cost higher than the maturity value of the debt security.
D. Can have a cost lower than the maturity value of the debt security.
E. All of these.
65. At acquisition, debt securities are:
A. Recorded at their cost, plus total interest that will be paid over the life of the security.
B. Recorded at the amount of interest that will be paid 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.
66. 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.
67. A company owns 9% bonds with 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.
68. Everrine Corporation owns 3,000 shares of JRW Corporation. JRW Corporation has 25,000 shares of stock outstanding. JRW paid $4 per share in cash dividends to its stockholders. The entry to record the receipt of these dividends is:
A. Debit Cash, $12,000; credit Long-Term Investments, $12,000.
B. Debt Long-Term Investment, $12,000; credit Cash, $12,000.
C. Debit Cash, $12,000; credit Dividend Revenue, $12,000.
D. Debit Unrealized Gain-Equity, $12,000; credit Cash, $12,000.
E. Debit Cash, $12,000; credit Unrealized Gain-Equity, $12,000.
69. A company purchased $60,000 of 5% bonds on May 1 at par value. The bonds pay interest on February 1 and August 1. The amount of interest accrued on December 31 (the company’s year-end) would be:
A. $250.
B. $500.
C. $1,250.
D. $2,500.
E. $3,000.
70. A company paid $37,800 plus a broker’s fee of $525 to acquire 8% bonds with a $40,000 maturity value. The company intends to hold the bonds to maturity. The cash proceeds the company will receive when the bonds mature equal:
A. $37,800.
B. $38,325.
C. $40,000.
D. $40,525.
E. $43,200.
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