Question 1: Investments in trading securities:
a) include only equity securities.
b) are reported as current assets.
c) include only debt securities.
d) are reported at their cost, no matter what their market value.
Question 2: At the end of the accounting period, the owners of debt securities:
a) must report the dividend income accrued on the debt securities.
b) must retire the debt.
c) must record a gain or loss on the interest income earned.
d) must accrue interest earned on the debt securities.
Question 3: Equity securities are:
a) recorded at cost to acquire them plus accrued interest.
b) recorded at cost to acquire them plus dividends earned.
c) recorded at cost to acquire them.
d) not recorded until dividends are received.
Question 4: The controlling investor is called the:
a) owner.
b) subsidiary.
c) parent.
d) investee.
Question 5: The currency in which a company presents its financial statements is known as the:
a) multinational currency.
b) price-level-adjusted currency.
c) specific currency.
d) reporting currency.
Question 6: The price of one currency stated in terms of another currency is called a(n):
a) foreign exchange rate.
b) currency transaction.
c) historical exchange rate.
d) international conversion rate.
Question 7: Investments in debt and equity securities that the company actively manages and trades for profit are referred to as short-term investments in:
a) available-for-sale securities.
b) held-to-maturity securities.
c) trading securities.
d) realizable securities.
Question 8: At acquisition, debt securities are:
a) recorded at their cost, plus total interest that will be paid over the life of the security.
b) recorded at the amount of interest that will be paid over the life of the security.
c) recorded at cost.
d) not recorded, because no interest is due yet.
Question 9: Return on total assets measures a company's ability to:
a) produce net income from net sales.
b) produce sales from net assets.
c) produce net income from net assets.
d) increase its asset base from sales.
Question 10: A decrease in the fair market value of a security that has not yet been realized through an actual sale of the security is called a(n):
a) contingent loss.
b) realizable loss.
c) unrealized loss.
d) capitalized loss.