Securities are ________.

A.commonly traded on an exchange

B.assets traded between companies working in the same industry

C.intangible assets traded in the stock exchange

D.always considered to be long-term investments

Which of the following is an example of debt securities?

A.preferred stocks

B.real estate

C.common stocks

D.corporate bonds

A company may invest in debt or equity securities of other companies to ________.

A.further enhance a business relationship with a key vendor

B.invest borrowed money in an effort to improve the company's net income

C.to weaken the investing company's supply chain source

D.to allow the company to use investment income to increase its annual dividend

When a company pays cash for a long-term investment in bonds, ________.

A.equity remains unchanged

B.current assets increase

C.liabilities increase

D.total assets increase

On the maturity date of a bond investment, the journal entry includes ________.

• A.a debit to Cash and a credit to Long-term Investments Held-to-Maturity
• B.a debit to Long-term Investments Held-to-Maturity and a credit to Cash
• C.a debit to the Interest Revenue and a credit to Cash
• D.a debit to Cash and a credit to Interest Revenue

Regarding accounting entries for debt securities, which of the following is true?

• A.The receipt of interest revenue is recorded with a debit to Interest Revenue and a credit to Cash.
• B.Investments in debt securities are recorded at cost, including any brokerage fees paid.
• C.The receipt of interest revenue is recorded with a debit to Cash and a credit to Long-term SecuritiesHeld-to-Maturity.
• D.Debt securities disposed of at maturity are recorded with a debit to the Short-term or Long-term Investments account and a credit to Cash.

Which of the following is true of the comparison between equity securities and debt securities?

• A.Debt securities represent stock ownership in a company whereas equity securities represent a credit relationship with the company.
• B.Equity securities earn dividend revenue whereas debt securities earn interest revenue.
• C.Neither debt securities nor equity securities mature at a stated date.
• D.Both debt securities and equity securities pay interest.

Which of the following accounting methods is used to account for controlling interest investments?

• A.equity method
• B.acquisition method
• C.consolidation method
• D.discounted cash flow method

Under the equity method, dividend revenue is treated as ________.

• A.a debit to revenue from investments
• B.dividend revenue
• C.a return of capital
• D.a credit to current assets

Which of the following is true of trading investments?

• A.They are held for more than two years.
• B.They are generally recorded as long-term investments.
• C.They must be adjusted and reported at fair value at the end of each accounting period.
• D.They are always reported on the balance sheet at their historical cost.