Bcom sem3|| Higher financial accounting|| IMP MCQ of investment accounting

 

MCQ of investment accounting

1. If there is an increase in interest rates than the fixed interest rate of the corporate bond will

(a) Return to the corporation
(b) Decrease in value
(c) Remain unchanged
(d) Increase in value

Answer: (b

2. Which one of the following is shown first when the assets are arranged in the order of their liquidity?
(a) Investment
(b) Cash in hand
(c) Debtors
(d) None of the above

Answer: (b)

3. An investor invests in assets known as a
(a) Securities
(b) Block of Assets
(c) Portfolio
(d) None of the above

Answer: (c)

4. Over the period, investors determine the compound growth rate of an investment by
(a) Arithmetic median
(b) Arithmetic mean
(c) Calculus mean
(d) Geometric mean

Answer: (d)

5. Investors agree to invest in high- risk investments if only
(a) There are any true speculations
(b) The predicted return is satisfactory for taking a risk
(c) There are no safe options except for holding cash
(d) The return is short

Answer: (b)

6. In Capital Market Line every investment is
(a) Finitely divisible
(b) Infinitely divisible
(c) Both a & b
(d) None of the above

Answer: (b)

7. Investments would score high only if there is a protection to
(a) Real estate
(b) Preferred stock
(c) Government bonds
(d) Common stock

Answer: (c)

 

Long Term Investment Accounting Questions & Answers

1. At year end, Rim Co. held several investments with the intent of selling them in the near term. The investments consisted of $100,000, 8%, 5-year bon...

A.$50,000 
B.$127,000
C.$142,000
D.$155,000

2.On January 2, Year 1, Adam Co. purchased as a long-term investment 10,000 shares of Mill Corp.�s common stock for $40 a share. These securities were ...

A.$100,000
B.$80,000
C.$60,000
D.$40,000

3. A corporation acquires a 30% voting interest in another corporation. In this situation, the long-term investment is generally accounted for on the in...

A.Lower-of-cost-or-market.
B.Cost.
C.Consolidated.
D.Equity.

4. Johnstone Company owns 10,000 shares of Breva Corporations stock; Breva currently has 40,000 shares outstanding. During the year, Breva had net inco...

A.$110,000
B.$150,000
C.$160,000
D.$240,000

5. An investor uses the equity method to account for an investment in common stock. The investors equity in the earnings of the investee is affected by...

A.No Yes
B.No No
C.Yes No
D.Yes Yes

6. An investor uses the equity method to account for an investment in common stock. After the date of acquisition, the investment account of the investo...

A.Not affected by its share of the earnings or losses of the investee.
B.Not affected by its share of the earnings of the investee, but is decreased by its share of the losses of the investee
C.Increased by its share of the earnings of the investee, but is not affected by its share of the losses of the investee.
D.Increased by its share of the earnings of the investee, and is decreased by its share of the losses of the investee.

7. On January 1, Dyer Co. acquired as a long-term investment a 20% common stock interest in Eason Co. Dyer paid $700,000 for this investment when the fai...

A.$32,000
B.$48,000
C.$80,000
D.$112,000

8. Peel Co. received a cash dividend from a common stock investment. Should Peel report an increase in the investment account if it uses the fair value m...

A.No No
B.Yes Yes
C.Yes No
D.No Yes

9. When an investor uses the equity method to account for investments in common stock, the investment account will be increased when the investor recogn...

A. A proportionate interest in the net income of the investee.
B. A cash dividend received from the investee
C.Periodic amortization of the goodwill related to the purchase.
D.Depreciation related to the excess of fair value over the carrying amount of the investees depreciable assets at the date of purchase by the investor.

10. Green Corp. owns 30% of the outstanding common stock and 100% of the outstanding noncumulative nonvoting preferred stock of Axel Corp. In Year 1, Axe...

A.$0
B.$30,000
C.$60,000
D.$90,000

11. Ajit wants to receive Rs. 40000 p.a. for 20 years by investing @ 5%. How much he will have to invest now?

A.498489
B.498849 
C.498948 
D.498984

12. Which of the following statements CORRECTLY describe(s) a bearer bond? I It usually does not have a maturity date. II. It is considered to be owned ...

A.II only 
B.I & II only 
C.I & III only 
D.I, II & III

13. Mr. A, a risk-averse investor, is considering to invest in either an US Treasury bill which currently pays a 4.5% rate of return, or a risky portfolio...

A.The risk premium is 0 and Mr. A should invest in the risky portfolio. 
B.The risk premium is 0 and Mr. A should invest in the US Treasury bill. 
C.The risk premium is 0.5% and Mr. A should invest in the risky portfolio. D
D.The risk premium is 0.5% and Mr. A should invest in the US Treasury bills