Acc 305 Week 5 Midterm Exam Essay

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ACC 305 Week 5 Midterm Exam - Strayer University NEW
ACC 305 Week 5 Midterm Exam

TRUE-FALSE—Conceptual 1. Debt securities include corporate bonds and convertible debt, but notU.S.government securities. 2. Trading securities are securities bought and held primarily for sale in the near term to generate income on short-term price differences. 3. Unrealized holding gains and losses are recognized in net income for available-for-sale debt securities. 4. A company can classify a debt security as
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14. A controlling interest occurs when one corporation acquires a voting interest of more than 50 percent in another corporation. 15. Companies may not use the fair value option for investments that follow the equity method of accounting. 16. Changes in the fair value of a company's debt instruments are included as part of earnings in any given period. 17. If a decline in a security’s value is judged to be temporary, a company needs to write down the cost basis of the individual security to a new cost basis. 18. A reclassification adjustment is necessary when a company reports realized gains/losses as part of net income but also shows unrealized gains/losses as part of other comprehensive income. 19. If a company transfers held-to-maturity securities to available-for-sale securities, the unrealized gain or loss is recognized in income. 20. The transfer of securities from trading to available-for-sale and from available-for-sale to trading has the same impact on stockholders’ equity and net income.

MULTIPLE CHOICE—Conceptual 21. Which of the following is not a debt security?
a. Convertible bonds
b. Commercial paper
c. Loans receivable
d. All of these are debt securities. 22. A correct valuation is
a. available-for-sale at amortized cost.
b. held-to-maturity at amortized cost.
c. held-to-maturity at fair value.
d. none of these. 23. Securities

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