Full file at http://testbankwizard.eu/Test-Bank-for-Financial-and-Managerial-Accounting-Information-for-Decisions-3rd-Edition-by-Wil
Summary of Questions by Difficulty Level (DL) and Learning Objective (LO)
True/False
Item / DL / LO / Item / DL / LO / Item / DL / LO1. / Easy / C1 / 21. / Med / C3 / 41. / Easy / P2
2. / Med / C1 / 22. / Hard / C3 / 42. / Med / P2
3. / Med / C1 / 23. / Hard / C3 / 43. / Easy / P3
4. / Med / C1 / 24. / Hard / C3 / 44. / Easy / P3
5. / Med / C1 / 25. / Easy / C4 / 45. / Med / P3
6. / Hard / C1 / 26. / Easy / C4 / 46. / Med / P3
7. / Hard / C1 / 27. / Med / C4 / 47. / Hard / P3
8. / Med / C2 / 28. / Hard / C4 / 48. / Hard / P3
9. / Med / C2 / 29. / Easy / A1 / 49. / Easy / P4
10. / Med / C2 / 30. / Easy / A1 / 50. / Easy / P4
11. / Med / C2 / 31. / Med / A1 / 51. / Med / P4
12. / Med / C2 / 32. / Med / A1 / 52. / Hard / P4
13. / Med / C2 / 33. / Hard / A1 / 53. / Hard / P4
14. / Hard / C2 / 34. / Hard / A1 / 54. / Med / P5
15. / Hard / C2 / 35. / Easy / P1 / 55. / Med / P5
16. / Easy / C3 / 36. / Easy / P1 / 56. / Med / P5
17. / Easy / C3 / 37. / Easy / P1 / 57. / Med / P5
18. / Med / C3 / 38. / Med / P1 / 58. / Hard / P5
19. / Med / C3 / 39. / Easy / P2 / 59. / Hard / P5
20. / Med / C3 / 40. / Easy / P2
Multiple Choice
Item / DL / LO / Item / DL / LO / Item / DL / LO60. / Easy / C1 / 81. / Easy / C4 / 102. / Hard / P3
61. / Med / C1 / 82. / Easy / C4 / 103. / Hard / P3
62. / Med / C1 / 83. / Med / C4 / 104. / Hard / P3
63. / Hard / C1 / 84. / Easy / A1 / 105. / Hard / P3
64. / Easy / C2 / 85. / Med / A1 / 106. / Hard / P3
65. / Easy / C2 / 86. / Med / A1 / 107. / Easy / P4
66. / Easy / C2 / 87. / Med / A1 / 108. / Easy / P4
67. / Easy / C2 / 88. / Med / A1 / 109. / Med / P4
68. / Med / C2 / 89. / Hard / A1 / 110. / Med / P4
69. / Med / C2 / 90. / Hard / A1 / 111. / Med / P4
70. / Med / C2 / 91. / Hard / A1 / 112. / Med / P4
71. / Hard / C2 / 92. / Hard / A1 / 113. / Hard / P4
72. / Hard / C2 / 93. / Hard / A1 / 114. / Hard / P4
73. / Easy / C3 / 94. / Easy / P1 / 115. / Easy / P5
74. / Easy / C3 / 95. / Med / P1 / 116. / Easy / P5
75. / Med / C3 / 96. / Med / P1 / 117. / Med / P5
76. / Med / C3 / 97. / Med / P1 / 118. / Med / P5
77. / Med / C3 / 98. / Easy / P2 / 119. / Hard / P5
78. / Med / C3 / 99. / Easy / P3 / 120. / Hard / P5
79. / Hard / C3 / 100. / Easy / P3
80. / Hard / C3 / 101. / Med / P3
Matching
Item / DL / LO / Item / DL / LO / Item / DL / LO121. / Med / C1,C3 A1,
P1-P4
Short Essay
Item / DL / LO / Item / DL / LO / Item / DL / LO122. / Med / C1 / 127. / Med / C4 / 132. / Hard / P3
123. / Med / C2 / 128. / Med / A1 / 133. / Hard / P4
124. / Med / C2 / 129. / Easy / P1 / 134. / Hard / P5
125. / Med / C3 / 130. / Med / P1
126. / Hard / C3 / 131. / Hard / P1
Problems
Item / DL / LO / Item / DL / LO / Item / DL / LO135. / Easy / C2 / 145. / Hard / A1 / 154. / Hard / P3
136. / Easy / C2 / 146. / Med / P1 / 155. / Med / P4
137. / Med / C2 / 147. / Hard / P1 / 156. / Med / P4
138. / Med / C2 / 148. / Hard / P1 / 157. / Med / P4
139. / Hard / C2 / 149. / Easy / P3 / 158. / Hard / P4
140. / Easy / A1 / 150. / Easy / P3 / 159. / Med / P5
141. / Easy / A1 / 151. / Med / P3 / 160. / Med / P5
142. / Med / A1 / 152. / Med / P3 / 161. / Hard / P5
143. / Med / A1 / 153. / Hard / P3 / 162. / Hard / P5
144. / Hard / A1
Completion Problems
Item / DL / LO / Item / DL / LO / Item / DL / LO163. / Easy / C1 / 169. / Med / C3 / 174. / Easy / P1
164. / Easy / C1 / 170. / Med / C3 / 175. / Easy / P1
165. / Med / C1 / 171. / Med / C3 / 176. / Easy / P2
166. / Easy / C3 / 172. / Easy / C4 / 177. / Med / P3
167. / Med / C3 / 173. / Med / A1 / 178. / Med / P4
168. / Med / C3 / 179. / Hard / P5
True / False Questions
1.Long-term investments are usually held as an investment of cash for use in current operations.
TrueFalse
2.Long-term investments can include funds earmarked for special purposes such as bond sinking funds.
TrueFalse
3.Bond sinking funds are examples of short-term investments.
TrueFalse
4.Equity securities reflect a creditor relationship such as investments in notes, bonds and certificates of deposit.
TrueFalse
5.Cash equivalents are investments that are readily converted to known amounts of cash and mature within three months.
TrueFalse
6.Short-term investments are intended to be converted into cash within the longer of one year or the current operating cycle of the business and are readily convertible to cash.
TrueFalse
7.Long-term investments include investments in land or other assets not used in a company's operations.
TrueFalse
8.Management's intent determines whether an available-for-sale security is classified as long-term or short-term.
TrueFalse
9.Management's intent and the marketability of a security determine whether or not a security is classified as a long-term or short-term investment.
TrueFalse
10.Debt securities are recorded at cost when purchased and interest revenue for investments in debt securities is recorded when earned.
TrueFalse
11.Any cash dividends received from equity securities are recorded as Dividend Expense.
TrueFalse
12.When an equity security is sold, the sale proceeds are compared with the cost and if the cost is greater than the proceeds, a gain on the sale of the security is recorded.
TrueFalse
13.A company received dividends of $0.35 per share on 300 shares of stock. The journal entry to record this transaction would be to debit Cash for $105 and credit Dividend Revenue for $105.
TrueFalse
14.An investor purchased $50,000 of bonds and held them to maturity. This investor's journal entry at maturity of the bonds should include a debit to Cash for $50,000 and a credit to Long-Term Investments for $50,000.
TrueFalse
15.A company holds $40,000 of 7% bonds as a held-to-maturity security. This bondholder's journal entry to record receipt of the semiannual interest payment includes a debit to Cash for $2,800 and a credit to Interest Revenue for $2,800.
TrueFalse
16.A controlling investor is called the parent and the investee company is called the subsidiary.
TrueFalse
17.When an investor company owns more than 25% of the voting stock of an investee company, it has a controlling influence.
TrueFalse
18.The equity method with consolidation is used in accounting for long-term investments in equity securities with controlling influence.
TrueFalse
19.Short-term held-to-maturity debt securities are accounted for using the cost method with amortization.
TrueFalse
20.Investments in trading securities are accounted for using the equity method with consolidation.
TrueFalse
21.Comprehensive income refers to all changes in equity in a period except those due to investments and distributions to income.
TrueFalse
22.Consolidated financial statements show the financial position, results of operations and cash flows of all entities under the parent's control.
TrueFalse
23.Consolidated statements are prepared as if a company is organized as one entity, with the amounts allocated for subsidiaries reported in the investment accounts.
TrueFalse
24.Trading securities, held-to-maturity debt securities and equity securities giving an investor significant influence over an investee are always considered short-term investments.
TrueFalse
25.Multinational corporations can be U.S. companies with operations in other countries.
TrueFalse
26.Foreign exchange rates fluctuate due to many factors including changing political and economic conditions.
TrueFalse
27.The price of one currency stated in terms of another currency is called a foreign exchange rate.
TrueFalse
28.If the exchange rate for Canadian and U.S. dollars is 0.7382 to 1, this implies that 2 Canadian dollars will buy 1.48 worth of U.S. dollars.
TrueFalse
29.Return on total assets can be separated into the profit margin ratio and total asset turnover.
TrueFalse
30.Profit margin is sales divided by net income.
TrueFalse
31.Net profit margin reflects the percent of net income in each dollar of net sales.
TrueFalse
32.All companies desire a low return on total assets.
TrueFalse
33.A company has net income of $130,500. Its net sales were $1,740,000 and its total assets were $2,750,000. Its profit margin equals 7.5%.
TrueFalse
34.A company has net income of $130,500. Its net sales were $1,740,000 and its total assets were $2,750,000. Its total asset turnover equals 4.7%.
TrueFalse
35.Investments in trading securities are always short-term investments.
TrueFalse
36.A company should report its portfolio of trading securities at its market value.
TrueFalse
37.Trading securities are securities that are purchased by trading other securities rather than by paying cash.
TrueFalse
38.Unrealized gains and losses on trading securities are reported as part of net income.
TrueFalse
39.Investments in held-to-maturity debt securities are always current assets.
TrueFalse
40.A long-term investment is recorded at cost when purchased.
TrueFalse
41.Held-to-maturity securities are equity securities a company intends and is able to hold until maturity.
TrueFalse
42.Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it accrues.
TrueFalse
43.Long-term investments in debt securities not classified as held-to-maturity securities are classified as available-for-sale securities.
TrueFalse
44.If a long-term investment in an equity security gives the investor significant influence over the investee, the investment is classified as available-for-sale.
TrueFalse
45.Long-term investments in available-for-sale securities are reported at market value on the balance sheet.
TrueFalse
46.Any unrealized gain or loss on available-for-sale securities is reported on the income statement in the other gain or loss section.
TrueFalse
47.On May 1, Franke Co. purchases 2,000 shares of Computech stock for $25,000. This investment is considered to be an available-for-sale investment. On July 31 (Franke's year-end), the stock had a market value of $28,000. Franke should record a credit to Unrealized Gain-Equity for $3,000.
TrueFalse
48.On May 15, Briar Company purchased 10,000 shares of Broder Corp. for $80,000. On September 30, the stock had a market value of $85,000. The $5,000 difference must be reported on the income statement as a $5,000 gain.
TrueFalse
49.An investor with significant influence owns as least 20% but not more than 50% of another company's voting stock.
TrueFalse
50.The cost method of accounting is used for long-term investments in equity securities with significant influence.
TrueFalse
51.When using the equity method for investments in equity securities, the receipt of cash dividends is recorded as revenue.
TrueFalse
52.Micron owns 30% of JVT stock. Micron received $6,500 in cash dividends from its investment in JVT. The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.
TrueFalse
53.When using the equity method, receipt of cash dividends increases the carrying value of an investment in equity securities.
TrueFalse
54.An increase in the price of the U.S. dollar against other currencies puts U.S. companies in a stronger competitive position internationally.
TrueFalse
55.To prepare consolidated financial statements when a company has an international subsidiary, the international subsidiary's financial statements must be translated into U.S. dollars.
TrueFalse
56.A U.S. company's credit sale to an international customer to be paid in a foreign currency is recorded using the exchange rate on the date of sale.
TrueFalse
57.A U.S. Company's credit sale to an international customer to be paid in a foreign currency requires using the same exchange rate for the date of sale and the cash payment date.
TrueFalse
58. Sanuk purchased on credit £20,000 worth of parts from a British company when the exchange rate was $1.66 per British pound. At the year-end balance sheet date the exchange rate increased to $1.69. Sanuk must record a gain of $600.
TrueFalse
59. Brown Company sold supplies in the amount of 15,000 euros to a French company when the exchange rate was $1.15 per euro. At the time of payment, the exchange rate decreased to $1.12. Brown must record a loss of $450.
TrueFalse