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Chapters 1-4 The Accounting Cycle
Chapters 5-8 Current Assets
Chapters 9-11 Long-Term Assets
Chapters 12-14 Liabilities/Equities
Chapters 15-16 Using Information
- Chapter 15: Financial Reporting and Concepts
- Chapter 16: Financial Analysis and the Statement of Cash Flows
Chapters 17-20 Managerial/Cost
Chapters 21-24 Budgeting/Decisions

Chapter 9 - Goals Achievement

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Chapter 9 – Goals Achievement

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Question 1 of 15

1. Question
The specific accounting treatment for a long-term investment depends on the type of security purchased, not the intent of the investment.
- true
- false
Correct

Incorrect
Question 2 of 15

2. Question
In evaluating the correct accounting choice (e.g., held-to-maturity, etc.) for a particular investment, which of the following is most apt to be regarded as the “default” choice?
- trading securities
- available-for-sale securities
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Question 3 of 15

3. Question
Changes in market value of available-for-sale securities will directly impact:
- stockholders' equity
- net income
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Question 4 of 15

4. Question
When accounting for available-for-sale securities, the amount of investee earnings has no direct effect on the investor’s Investment account.
- true
- false
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Question 5 of 15

5. Question
Dividends received on investments are reported as income.
- true
- false
Correct

Incorrect
Question 6 of 15

6. Question
Bond investments are initially entered into the accounts at cost; that is, the purchase price plus brokerage fees and other related acquisition costs.
- true
- false
Correct

Incorrect
Question 7 of 15

7. Question
A premium on an investment in bonds would likely result when the contract rate is “what” in relation to the going market rate?
- above
- below
Correct

Incorrect
Question 8 of 15

8. Question
The amortization of a discount on a bond investment causes interest income to be:
- reduced
- increased
Correct

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Question 9 of 15

9. Question
The excess of the cash received on a bond investment over the initial investment cost is recognized as:
- return of investment
- income
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Question 10 of 15

10. Question
The amortization method that results in a level amount of interest income each period was illustrated in this chapter. An alternative amortization method will be illustrated in subsequent chapters. The method shown is this chapter was the:
- straight-line method
- effective-interest method
Correct

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Question 11 of 15

11. Question
The equity method involves journal entries at the time the investee’s earnings are announced, as well as when:
- dividends are paid
- market value declines
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Question 12 of 15

12. Question
The equity method of accounting for an investment occurs when the investor has the ability to exercise significant influence over the investee, which is presumed to be the case when the investment level reaches:
- 10%
- 20%
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Question 13 of 15

13. Question
Under the equity method, the investor’s investment account goes up and down with the investees:
- equity
- cash
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Question 14 of 15

14. Question
When consolidating, which of the following accounts would be eliminated from the consolidated presentation:
- Goodwill
- Investment in Subsidiary
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Question 15 of 15

15. Question
Goodwill is the excess of the investment cost over “book value” or over “fair value” of the subsidiaries identifiable assets?
- book value
- fair value
Correct

Incorrect

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Chapters 1-4
Chapters 5-8
Chapters 9-11
Chapters 12-14
Chapters 15-16
- Chapter 15: Financial Reporting and Concepts
- Chapter 16: Financial Analysis and the Statement of Cash Flows
Chapters 17-20
Chapters 21-24
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