20A2 - Accounting Principles 2 - Investments

Quiz
•
Business
•
University
•
Hard
Lecturer Class
Used 12+ times
FREE Resource
5 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is not a true statement about the accounting for long-term debt investments?
The investment is initially recorded at cost.
The cost includes any brokerage fees.
The accounting for long-term debt investments is similar to the accounting for short-term debt investments.
The cost includes any accrued interest.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
If a short-term debt investment is sold, the Investment account is:
credited for the book value of the bonds at the sale date.
credited for the cost of the bonds at the sale date.
credited for the fair value of the bonds at the sale date.
debited for the cost of the bonds at the sale date.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
If one company owns more than 50% of the common stock of another company,
the cost method should be used to account for the investment.
a partnership exists.
a parent-subsidiary relationship exists.
the company whose stock is owned must be liquidated.
4.
FILL IN THE BLANK QUESTION
1 min • 1 pt
Consolidated financial statements are prepared when a company owns more than ............... of the common stock of another company.
5.
FILL IN THE BLANK QUESTION
1 min • 1 pt
If the equity method is being used, the Revenue from Investment in Stock account is credited when ........... is reported by the investee.
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