Deck17

Question 1

Investments in “Available for Sale” securities are valued at market price under what method?

Answer 1

Fair Value Method

Question 2

On Available for Sale securities, “Unrealized” Changes(Gain/Loss) are recorded where?

Answer 2

Owner’s Equity

Question 3

For an investor’s Security to be considered “Held to Maturity” it must have

Answer 3

1. Positive Intent and 2. Ability to hold the securities until Maturity

Question 4

How are investments NOT held to security valued?

Answer 4

Fair Value (Whatever the market rate is)

Question 5

The market price of a bond is :

Answer 5

The present value of all remaining payments(principle and interest) at the effective(market) interest rate.

Question 6

A term bond matures on:

Answer 6

A single date

Question 7

When do serial bonds mature?

Answer 7

According to a schedule

Question 8

If a bond is issued at 97 plus accrued interest what does that mean?

Answer 8

It’s issued at 97% of its face value. So a $1000 bond would be issued for $970.

Question 9

When debt is issued at a discount, the interest expense equals the Cash Paid + ?

Answer 9

Plus Discount

Question 10

For Bonds, Interest is defined as:

Answer 10

The True Yield Rate x the Debt balance at the beginning of the interest Period.

Question 11

Are the purchase of Cash Equivalents reported in the Statement of Cash Flows?

Answer 11

No, because the purchase of a Cash Equivalent makes the Cash Inflow go down by the same as the Cash Outflow

Question 12

What is a difference between Managerial Accounting and Financial Accounting?

Answer 12

Managerial doesn’t have to follow GAAP, while Financial does.

Question 13

Which method is LEAST likely to be used to report an investment in a corporate Joint Venture? Equity Method or Fair Value method

Answer 13

Fair Value

Question 14

When using LCM for Inventory, which results in the least inventory amount ($)? By Total Inventory, By Groups, or By Separate Items

Answer 14

Separate Items - In no case will market exceed cost

Question 15

Which valuation method would NOT be used to value Inventory?

Answer 15

Present Value of Future Cash Flows

Question 16

For a Company’s 10-Q’s, what does it have to file along with last month’s Balance Sheet?

Answer 16

Balance Sheet from the fiscal Year before.

Question 17

Payment of Dividends are a ____________ activity.

Answer 17

Financing