Accounting 201 Final

Front 1

trading securities

Back 1

debt or equity securities bought and held primarily for the purpose of being sold in the near term

Front 2

available for sale securities

Back 2

short or long term debt or equity securities that do not meet the criteria for either trading or held to maturity securities

Front 3

held to maturity securities

Back 3

debt securities that management intends to hold until their maturity date

Front 4

noninfluential and noncontrolling investment

Back 4

owns less than 20% of the stock of another company and has no influence on the other companys operations

Front 5

influential but noncontrolling investment

Back 5

owns 20-50% of another companys stock; can exercise significant influence over that companies operating and financial policies

Front 6

controlling investment

Back 6

owns more than 50% of another companys stock and can exercise control over that companys operating and financial policies

Front 7

trading securities

Back 7

all are short term, bought and sold to generate profits on the short term changes in their prices. classified as CURRENT ASSETS, valued at fair value, which is usualy the same as market value. an increase or decrease in the fair value of a companys total trading portfolio (the group of securities it holds for trading purposes) is included net income in the accounting pd in which the increase or decrease occurs

Front 8

Jackson company purchases 10,000 shares of IBM stock for 900,000, and 10,000 shares of Microsoft stock for 300,000 on october 25. What is the journal entry?

Back 8

Short term investments 1,200,000
Cash 1,200,000

Front 9

adjustment on loss of 80,000 on portfolio

Back 9

unrealized loss on investments 80
allowance to adjust short term 80
(unrealized loss appears on the income statement as a reduction in income, unrealized because the securities have not been sold)

Front 10

Jackson sells its 10,000 shares of stock in Microsoft for 35 per share. A realized gain is reported.

Back 10

Cash 350,000
Short Term invest. 300,000
realized gain on inv. 50.000

Front 11

accounting for short term available for sale securities...

Back 11

an unrealized gain or loss is reported as a special item in the stockholders equity section, not as a gain or loss on the income statment. 2) if a decline in the value of a security is considered permanent, it is charged as a loss on the income statement.

Front 12

available for sale securities...

Back 12

debt or equity securities not classified as trading or held to maturity securities. 2) if equity securities must be less than 20% of ownership. 3) account for using cost adjusted to market method (record at cost, adjust periodically through an allowance account for changes in market value)

- long term is held for more than one year, unrealized gain or loss from adjustment reported in stockholders equity section of balance sheet, determine total cost and total market value at end of each accounting pd for long term stock investments. if total market value < total cost, the dollar amount of difference should be equal to the credit balance in teh allowance to adjusted long term investments to market account.