(answered) – 1) Consolidated financial statements A) are used to offset gainsDescriptionSolution downloadThe Question1) Consolidated financial statementsA) are used to offset gains and losses on the parent company’s income statement.B) combine the financial records of two or more separate legal entities.C) make clear distinctions between principal and secondary long-term asset owners.D) provide a depiction of process costs.E) must provide predetermined overhead costs with earnings per share in the annual report.2) If an investment is to be held only for a short time, it should be classified on the balance sheet as a ________.A) current liabilityB) noncurrent asset, which appears in a separate investments categoryC) noncurrent asset, which appears as part of other assets below the plant assets categoryD) current assetE) liquid asset3) The key to classifying a marketable security as short-term isA) whether or not it is a government issued security.B) whether or not management has a written contract to sell the asset within the next 3 months.C) the type of security held (i.e., Is it a note, bond, or stock?).D) whether or not management expects to convert it into cash within a year after the date on the balance sheet (or operating cycle if longer).E) the small dollar amount.4) When deciding whether to report an investment among current or long-term assets, companies base their decision on their purpose or intent when holding the investment.True or False5) The method of accounting for trading securities and available-for-sale securities in which the assets are valued at market value on the balance sheet is known as theA) balance sheet method.B) market method.C) equity method.D) consolidated method.E) maturity method.6) Accumulated other comprehensive income in stockholders’ equity shows the difference between historical cost and market for which account(s)?A) Trading securitiesB) Held-to-maturity securitiesC) Available-for-sale securitiesD) Trading securities and available-for-sale securitiesE) Trading securities and held-to-maturity securities7) ________ are current investments in equity or debt securities held for short-term profit.A) Short-term equity securitiesB) Trading securitiesC) Held-to-maturity securitiesD) Available-for-sale securitiesE) Cash equivalents8) ________ are investments in debt securities that are not held for active trading but that may be sold before maturity.A) Short-term equity securitiesB) Held-to-maturity securitiesC) Trading securitiesD) Available-for-sale securitiesE) Cash equivalents9) ________ are debt securities that the investor expects to hold until maturity.A) Short-term equity securitiesB) Trading securitiesC) Cash equivalentsD) Available-for-sale securitiesE) Held-to-maturity securities10) Which of the following securities are accounted for at market value?1. Trading securities2. Held-to-maturity securities3. Available for sale securitiesA) 1 onlyB) 2 onlyC) 3 onlyD) 1 and 3E) 1 and 2
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