ACC 310 EXAM REVISION QUESTIONS AND
CORRECT ANSWERS!!
Accumulated other comprehensive income in the shareholders' equity section of the
balance sheet reflects changes in the fair value of securities for which type of securities?
a) securities available for sale
b) trading securities
c) consolidated securities
d) held-to-maturity securities
A
GAAP regarding accounting for unrealized gains and losses on investments in equity
securities will apply to an investment when the percentage of ownership of another
company is:
a) Less than 20%
b) 20% to 50%
c) Over 50%
d) Exactly 100%
A
When an investor classifies an investment in common stock as securities available for sale,
cash dividends are classified by the investor as:
a) return of capital
b) loss
, c) deduction from the investment account
d) dividend income
D
When an equity security is appropriately carried and reported as securities available for
sale, a gain should be reported in the income statement:
a) when the fair value of the security increases
b) when the present value of the security increases
c) only when the Dow Jones industrial average increases at least 100 points
d) Only when the security is sold
D
Investments in securities to be held for an unspecified period of time are reported at:
a) historical cost
b) present value
c) lower cost of market
d) fair value
D
Unrealized holding gains and losses on securities available for sale would have the
following effects on accumulated other comprehensive income:
d) Gains increase, losses decrease
D
CORRECT ANSWERS!!
Accumulated other comprehensive income in the shareholders' equity section of the
balance sheet reflects changes in the fair value of securities for which type of securities?
a) securities available for sale
b) trading securities
c) consolidated securities
d) held-to-maturity securities
A
GAAP regarding accounting for unrealized gains and losses on investments in equity
securities will apply to an investment when the percentage of ownership of another
company is:
a) Less than 20%
b) 20% to 50%
c) Over 50%
d) Exactly 100%
A
When an investor classifies an investment in common stock as securities available for sale,
cash dividends are classified by the investor as:
a) return of capital
b) loss
, c) deduction from the investment account
d) dividend income
D
When an equity security is appropriately carried and reported as securities available for
sale, a gain should be reported in the income statement:
a) when the fair value of the security increases
b) when the present value of the security increases
c) only when the Dow Jones industrial average increases at least 100 points
d) Only when the security is sold
D
Investments in securities to be held for an unspecified period of time are reported at:
a) historical cost
b) present value
c) lower cost of market
d) fair value
D
Unrealized holding gains and losses on securities available for sale would have the
following effects on accumulated other comprehensive income:
d) Gains increase, losses decrease
D
