ACC 225 ACC225 Module 8 Check Your Understanding Answers (AAU Online)
ACC 225 Module 8 Check Your Understanding (AAU Online)
1)What is a company likely to do when it has extra cash?
2)If a trading security declines in value, where in the financial statements should this change be reported?
3)Which classification of investments is used when a company owns 20 to 50 percent of another company?
4)Temporary changes in the value of securities after purchase would not be recorded for which two types of securities?
5)Dividends received on trading securities should be credited to:
6)If 600 shares of stock are purchased for $27 per share and are sold one year later for $24 per share, what is the net gain or loss on sale? (Assume that there are no transaction costs.)
7)Marksbury Company is recording a loss in value of its trading securities. The entry to record this change in value would include a credit to what account?
8)Five hundred shares of stock were originally purchased for $30 per share and are being held as trading securities. The price increases to $36 per share on July 1 and then decreases to $28 on December 31. At what amount should the investment be valued in the December 31 balance sheet?
9)The amortization of a bond premium has what effect on the balance of the investment account?
10)When an investor uses the equity method to account for investments in common stock, earnings announced by the investee should be recorded by the investor as:
11)Exercise 12-11 “Investment in Trading Securities—Journal Entries” (p. 586)
12)Exercise 12-15 “Investment in Equity Securities” (p. 587)
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