1) A short-term investment is
not:
A) referred to as a temporary investment
B) referred to as a marketable security
C) a current asset
D) intended to be converted to cash in more than one year
2) The receipt of a cash dividend arising from an investment (5% ownership) held by a company requires a:
A) credit to Cash
B) debit to Retained Earnings
C) credit to Retained Earnings
D) credit to Dividend Revenue
3) The receipt of a stock dividend arising from a investment held by a company will require a credit to:
A) the retained earnings account
B) the dividend revenue account
C) the common shares account
D) no account
4) The gain or loss on the sale of an investment classified as a long term investment is measured by comparing the amount received from the sale of investment with the:
A) cost of the investment
B) market value of the investment
C) amortized cost of the investment
D) lower-of-cost-or-market value of the investment
5) The Gain/Loss on Investment account may appear on which financial statement?
A) the balance sheet under the "liabilities" section
B) the balance sheet as part of the shareholders' equity
C) the balance sheet under the "assets" section as a contra asset
D) the income statement under the "other income/expense" section
6) An investment in common shares acquired during 2010 at a cost of $45,000 has a market value on December 31, 2010, of $45,725. The year-end adjusting entry requires a:
A) credit to Allowance to Adjust Investment to Market for $725
B) debit to Unrealized Gain on Investment for $725
C) debit to Long-Term Investment for $725
D) no entry required
7) The receipt of a stock dividend from an investment will require a:
A) credit to Dividend Revenue
B) credit to Retained Earnings
C) debit to Long-Term Investment
D) recalculation of the cost basis per share of stock owned by the investor
8) The journal entry to record the sale of an investment includes a loss on sale of investment for $500. The income statement will reflect:
A) nothing, since the entry impacts only asset accounts
B) other income/loss of $500
C) an extraordinary loss of $500
D) a decrease in net sales of $500
9) Investments with a cost of $12,000 have a current market value of $11,612. The adjusting entry will require a:
A) credit to Investments for $388
B) debit to Investments for $388
C) credit to Loss on Investment for $388
D) no entry required
10) Investments with a cost of $22,000 have a current market value of $22,600. The adjusting entry will require a:
A) credit to Investments for $600
B) debit to Investments for $22,600
C) credit to Gain on Investment for $600
D) credit to other comprehensive income for $600