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Exam 27: Investments and International Operations

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Question 61

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Consolidated financial statements show the financial position,results of operations,and cash flows of all entities under the parent's control.

A) True
B) False

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Question 62

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Match the following definitions with the appropriate term

Premises

Responses

An information system principle requiring that an accounting information system aid managers in controlling and monitoring business activities.

Accounting information system

A list of each customer from the accounts receivable ledger with their balances and the total.

Business segment

The special journal that is used to record all payments of cash.

Cash receipts journal

The people, records, methods, and equipment that collect and process data from transactions and events, organize them in useful forms, and communicate results to decision makers.

Control principle

Links among computers giving different users and different computers access to common databases and programs.

Relevance principle

A part of a company that can be separately identified by the products or services that it provides or by the geographic market that it serves.

Enterprise resource planning

The component of an accounting system that interprets, transforms, and summarizes information for use in analysis and reporting.

Cash disbursements journal

Programs that manage a company's vital operations which range from order-taking to manufacturing to accounting.

Computer network

The special journal used to record all receipts of cash.

Information processor

An information system principle requiring that an accounting system report useful, understandable, timely, and pertinent information for decision making.

Schedule of accounts receivable

Premises

An information system principle requiring that an accounting information system aid managers in controlling and monitoring business activities.

A list of each customer from the accounts receivable ledger with their balances and the total.

The special journal that is used to record all payments of cash.

The people, records, methods, and equipment that collect and process data from transactions and events, organize them in useful forms, and communicate results to decision makers.

Links among computers giving different users and different computers access to common databases and programs.

A part of a company that can be separately identified by the products or services that it provides or by the geographic market that it serves.

The component of an accounting system that interprets, transforms, and summarizes information for use in analysis and reporting.

Programs that manage a company's vital operations which range from order-taking to manufacturing to accounting.

The special journal used to record all receipts of cash.

An information system principle requiring that an accounting system report useful, understandable, timely, and pertinent information for decision making.

Responses

Accounting information system

Business segment

Cash receipts journal

Control principle

Relevance principle

Enterprise resource planning

Cash disbursements journal

Computer network

Information processor

Schedule of accounts receivable

Show Answer

Correct Answer

Premises

Responses

An information system principle requiring that an accounting information system aid managers in controlling and monitoring business activities.

A list of each customer from the accounts receivable ledger with their balances and the total.

The special journal that is used to record all payments of cash.

The people, records, methods, and equipment that collect and process data from transactions and events, organize them in useful forms, and communicate results to decision makers.

Links among computers giving different users and different computers access to common databases and programs.

A part of a company that can be separately identified by the products or services that it provides or by the geographic market that it serves.

The component of an accounting system that interprets, transforms, and summarizes information for use in analysis and reporting.

Programs that manage a company's vital operations which range from order-taking to manufacturing to accounting.

The special journal used to record all receipts of cash.

An information system principle requiring that an accounting system report useful, understandable, timely, and pertinent information for decision making.

Premises

An information system principle requiring that an accounting information system aid managers in controlling and monitoring business activities.

A list of each customer from the accounts receivable ledger with their balances and the total.

The special journal that is used to record all payments of cash.

The people, records, methods, and equipment that collect and process data from transactions and events, organize them in useful forms, and communicate results to decision makers.

Links among computers giving different users and different computers access to common databases and programs.

A part of a company that can be separately identified by the products or services that it provides or by the geographic market that it serves.

The component of an accounting system that interprets, transforms, and summarizes information for use in analysis and reporting.

Programs that manage a company's vital operations which range from order-taking to manufacturing to accounting.

The special journal used to record all receipts of cash.

An information system principle requiring that an accounting system report useful, understandable, timely, and pertinent information for decision making.

Responses

Question 63

Short Answer

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Held-to-maturity securities are ____________ securities a company intends and is able to hold until maturity.

On May 15,Briar Company purchased 10,000 shares of Broder Corp.for $80,000.On September 30,the stock had a market value of $85,000.The $5,000 difference must be reported on the income statement as a $5,000 gain.

Match the following item with the appropriate accounting system components

On April 1 of the current year,a company paid $150,000 cash to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually each April 1 and October 1.The company intends to hold these bonds until they mature.Prepare the journal entry to record the purchase of the bond.

On April 1 of the current year,a company paid $150,000 to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually on October 1 and April 1.The company intends to hold the bonds until they mature.Prepare the journal entry to record the receipt of the semiannual interest payment on April 1 of the following year.

On April 1 of the current year,a company paid $150,000 to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually on October 1 and April 1.The company intends to hold the bonds until they mature.Prepare the journal entry to recognize accrued interest as of December 31 of the current year.

Net profit margin reflects the percent of net income in each dollar of net sales.

Long-term investments in debt securities not classified as held-to-maturity securities are classified as available-for-sale securities.

Long-term investments include investments in land or other assets not used in a company's operations.

A company reported net income for 2012 of $98,000 and $106,000 in 2013.It also reported net sales of $735,000 in 2012 and $798,000 in 2013.The company's average total assets in 2012 were $1,850,000 and $1,720,000 in 2013.Calculate this company's profit margin,total asset turnover,and return on total assets for 2012 and 2013.Comment on the results.

On June 18,Johnson Company (a U.S.company) sold merchandise to the Frater Company of Denmark for 60,000 Euros,with a payment due in 60 days.If the exchange rate was $1.14 per euro on the date of sale and $1.35 per euro on the date of payment,Johnson Company should recognize a foreign exchange gain or loss in the amount of:

Equity securities are:

Micron owns 30% of JVT stock.Micron received $6,500 in cash dividends from its investment in JVT.The entry to record receipt of these dividends would include a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.

Parris Corporation purchased 40% of Samitz Corporation for $100,000 on January 1.On November 17 of the same year,Samitz Corporation declared total cash dividends of $12,000.At year-end,Samitz Corporation reported net income of $60,000.The balance in the Parris Corporation's Long-Term Investment in Samitz Corporation at December 31 should be:

An increase in the price of the U.S.dollar against other currencies puts U.S.companies in a stronger competitive position internationally.

Long-term investments are reported in the:

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it accrues.

What are the accounting basics for debt securities,including recording their acquisition,interest earned and their disposal?