Acc557 Week 9 Quiz

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Chapter 13 Question 1 | | Corporations invest in other companies for all of the following reasons except to | meet strategic goals. | | increase trading of the other companies' stock. | | generate earnings. | | house excess cash until needed. | A typical investment to house excess cash until needed is | stocks of companies in a related industry. | | low-risk, highly liquid securities. | | stock securities. | | debt securities. | Question 3 | | Pension funds and mutual funds regularly invest in debt and stock securities to | meet strategic goals. | | control the company in which they invest. | | generate earnings. | | house excess cash until needed. | Question 4 |…show more content…
| | no dividends can be expected. | Question 8 | | If the equity method is being used, cash dividends received | require no entry because investee net income has already been recorded at the proper proportion on the investor's books. | | are credited to the Stock Investments account. | | are credited to the Revenue from Investment in Stock account. | | are credited to Dividend Revenue. | Question 9 | | If one company owns more than 50% of the common stock of another company, | the company whose stock is owned must be liquidated. | | a partnership exists. | | the cost method should be used to account for the investment. | | a parent-subsidiary relationship exists. | Question 10 | | The contra-account, Market Adjustment, is also called a(n) | opposite account. | | valuation account. | | offset account. | | adjustment account. | Question 11 | | The balance in the Unrealized Loss—Equity account will | appear as a deduction in the stockholders' equity section. | | appear on the balance sheet as a contra asset. | | appear on the income statement under Other Expenses and Losses. | | not be shown on the financial statements until the securities are sold. | Question 12 | | If the cost of an available-for-sale security exceeds its fair value by $40,000, the entry to recognize the loss | will show a

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