Question : 61. Short-term investments: A. Are securities that management intends to convert to cash : 1256264

 

 

61. Short-term investments: 

A. Are securities that management intends to convert to cash within one year or an operating cycle, whichever is longer.

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.

 

 

 

62. Long-term investments are reported in the: 

A. Current asset section of the balance sheet.

B. Intangible asset section of the balance sheet.

C. Noncurrent asset section of the balance sheet.

D. Liability section of the balance sheet.

E. Equity section of the balance sheet.

 

 

 

 

63. Long-term investments include: 

A. Investments in bonds and stocks that are not marketable.

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.

 

 

 

 

64. 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 the amount of dividend income to be received.

 

 

 

65. 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 accrue interest earned on the debt securities.

 

 

66. Equity securities are: 

A. Recorded at cost to acquire them plus accrued interest.

B. Recorded at cost to acquire them plus dividends earned.

C. Recorded at cost to acquire them.

D. Not recorded until dividends are received.

E. Not recorded until interest is received.

 

 

 

67. A company owns $100,000 of 9% bonds 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. A company owns $400,000 of 7% bonds 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. $4,667

B. $7,000

C. $28,000

D. $14,000

E. $9,333

 

 

 

 

69. A company purchased $60,000 of 5% bonds on May 1. 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 upon the maturity of the bond is: 

A. $37,800

B. $38,325

C. $40,000

D. $40,525

E. $43,200

 

 

 

 

 

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