Upgrade to remove ads
Only $35.99/year

ACCT 12,13,14 QUIZ

Terms in this set (30)

Securities classified as held-to-maturity could be reported as either current or long-term in a classified balance sheet, depending upon their maturity dates.
TRUE
Both debt and equity securities can be categorized as trading securities.
FALSE
Both trading securities and securities available-for-sale are reported at their fair values.
TRUE
When available-for-sale securities are sold, the amount of unrealized holding gain or loss realized from the date of purchase is included in before-tax net income.
TRUE
Under the equity method of accounting for a stock investment, cash dividends received are considered a reduction of the investee's net assets.
TRUE
The investment category for which the investor's "positive intent and ability to hold" is important is:
Securities classified as held-to-maturity.
In which investment category are fair values and subsequent growth of an investee not relevant for reporting?
Held-to-maturity securities.
For trading securities, unrealized holding gains and losses are included in net income:
On each reporting date.
The equity method of accounting for investments in voting common stock is appropriate when
The investor can significantly influence the investee.
If Pop Company exercises significant influence over Son Company and owns 40% of its common stock, then Pop Company:
Would record 40% of the net income of Son Company as investment income each year.
Revenue is recognized upon sale of gift cards, rather than being deferred.
FALSE
Long-term debt that is callable by the creditor in the upcoming year should be classified as a current liability only if the debt is expected to be called.
FALSE
An asset for a gain contingency should not be accrued unless it is probable that the gain contingency will be realized.
FALSE
Under IFRS, if it is probable that a contingent liability will result in a future payment but there is a range of equally likely amounts that will be paid, the midpoint of the range should be accrued as a loss.
TRUE
The most common type of liability is:
One to be paid in cash and for which the amount and timing are known.
Which of the following is the best definition of a current liability?
An obligation expected to be satisfied with current assets or by the creation of other current liabilities.
When cash is received from customers in the form of a refundable deposit, the cash account is increased with a corresponding increase in:
A current liability.
Which of the following is not true about deferred revenue?
Deferred revenue is recognized on credit sales when collectibility can be estimated.
When a product or service is delivered for which a customer advance has been previously received, the appropriate journal entry includes:
A debit to a liability and a credit to a revenue account.
Under IFRS, a liability that is refinanced after the balance sheet date but before the financial statements are issued would typically be classified as a current liability.
TRUE
The specific provisions of a bond issue are described in a document called a bond indenture.
TRUE
Bonds will sell for a premium when the market rate of interest exceeds their stated rate.
FALSE
The initial selling price of bonds represents the sum of all the future cash outflows required by the obligation.
FALSE
Premium on bonds payable is a contra liability account.
FALSE
Companies are not required to, but have the option to, value some or all of their financial assets and liabilities at fair value.
TRUE
The interest rate that is printed on the bond certificate is referred to as any of the following except:
Effective rate.
Bonds usually sell at their:
Present value
The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest:
Plus the present value of all future interest payments at the market (effective) rate of interest.
Interest expense is:
The effective interest rate times the amount of the debt outstanding during the interest period.
Straight-line amortization of bond discount or premium:
Provides the same total amount of interest expense over the life of the bond issue as does the effective interest method.
Other sets by this creator