Question 1 (1 point)

How should you document investments in debt securities that are purchased between dates of interest payment?

a	Accrued interest is debited to interest receivable.
b	Accrued interest is debited to interest income.
c	Accrued interest is debited to interest expense.
d	Securities account should include accrued interest.

multiple_choice682841842Question 2 (1 point)

On November 1, 2015, Journeyman, LLC purchased 900 of the $1,000 face value, 9% bonds of Celebration Incorporated, for $948,000, including accrued interest of $13,500. The bonds mature on January 1, 2017, and interest is paid on March 1 and September 1. If Journeyman uses the straight-line method of amortization and the bonds are classified as available-for-sale, how should the net carrying value of the bonds be shown on Journeymans December 31, 2015 balance sheet?

a	$943,670
b	$921,190
c	$933,120
d	$935,110

multiple_choice682841854Question 3 (1 point)

On December 31, 2015, Safety Company acquired a 60% interest in Mile-High Corporation for $1,260,000. During 2016, Mile-Highs net income was $800,000 and it paid cash dividends of $200,000. On December 31, 2016, what should the balance be in the investment account?

a	$1,260,000
b	$1,740,000
c	$1,620,000
d	$1,860,000

multiple_choice682841838Question 4 (1 point)

Why do unrealized holding losses and gains occur?

a	Companies record a change in fair value of the securities held, even if they are not sold.
b	Companies hold securities until maturity.
c	Companies hold securities through the end of the reporting period.
d	Companies actively trade securities.

multiple_choice682841858Question 5 (1 point)

Select the incorrect statement about trading securities.

a	Discount and premiums are not amortized.
b	Unrealized holding gains and losses are reported as a component of net income.
c	Trading securities are held with the intent to sell them soon.
d	All of these statements are correct.

multiple_choice682841822Question 6 (1 point)

Select the statement that is true about the impact of classifying investment securities based upon managements intent.

a	Management's ability and judgment of intent may lack comparability.
b	Management's judgment may lack relevance.
c	Gain trading can result in insufficient reliability.
d	Gain trading can result in insufficient gains.

multiple_choice682841826Question 7 (1 point)

How are investments that are usually held for a short time and sold with the expectation of a profit on the short-term differences in price classified?

a	Trading securities
b	Available-for-sale securities
c	Marketable securities
d	Held-to-maturity securities

multiple_choice682841828Question 8 (1 point)

Select the best method of accounting for investments in situations in which the investor has significant influence over the investee.

a	Market method or lower of cost
b	Equity method
c	Consolidation
d	Cost method

multiple_choice682841856Question 9 (1 point)

Which of the following represents a correct valuation for an investment?

a	Held-to-maturity at fair value
b	Available-for-sale at amortized cost
c	Held-to-maturity at amortized cost
d	All of these statements are correct

multiple_choice682841830Question 10 (1 point)

Select the best method of accounting for investments in situations in which the investor controls the investee.

a	Equity method
b	Consolidation
c	Market method or lower of cost
d	Cost method