INTERMEDIATE ACCOUNTING FINAL EXAM ALL 25
CHAPTERS COVERED QUESTIONS AND 100%
CORRECT ANSWERS 2025/2026
CHAPTER 1:THE ENVIRONMENT AND CONCEPTUAL FRAMEWORK OF FINANCIAL REPORTS
QUESTION :Both fair values and subsequent growth of the investee are not as relevant for investments
in which of the following categories?
A. Securities reported under the equity method.
B. Trading securities.
C. Held-to-maturity securities.
D. Securities available for sale. - Correct Answer-C. Held-to-maturity securities.
QUESTION :Which category completely excludes equity securities?
A. Securities available for sale.
B. Consolidating securities.
C. Held-to-maturity securities.
D. Trading securities. - Correct Answer-C. Held-to-maturity securities.
1|Page
, QUESTION :In 2011, Osgood Corporation purchased $4 million in 10-year municipal bonds at face value.
On December 31, 2013, the bonds had a market value of $3,600,000 and Osgood reclassified the bonds
from held to maturity to trading securities. Osgood's December 31, 2013, balance sheet and the 2013
income statement would show the following:
A. Option a
B. Option b
C. Option c
D. Option d - Correct Answer-B. Option B
QUESTION :What balance sheet amount would Beresford report for its total investment securities at
12/31/2012?
A.
$637,000.
B.
$644,500.
C.
$645,400.
D.
None of the above is correct. - Correct Answer-A. $637,000
2|Page
, QUESTION :What would be the balance in Beresford's accumulated other comprehensive income with
respect to these investments in its 12/31/2013 balance sheet (ignore taxes)?
A.
$55,100.
B.
$26,500.
C.
$10,400.
D.
None of the above is correct. - Correct Answer-C. $10,400
QUESTION :What total unrealized holding gain would Beresford report in its 2013 income statement
relative to its investment securities?
A.
$55,900.
B.
$36,000.
C.
$80,900.
3|Page
, D.
$48,200. - Correct Answer-B. $36,000
QUESTION :On January 1, 2013, Rupar Retailers purchased $100,000 of Anand Company bonds at a
discount of $5,000. The Anand bonds pay 6% interest but were purchased when the market interest rate
was 7% for bonds of similar risk and maturity. The bonds pay interest semiannually on January 1 and July
1 of each year. Rupar accounts for the bonds as a held-to-maturity investment, and uses the effective
interest method. In Rupar's December 31, 2013, journal entry to record the second period of interest,
Rupar would record a credit to interest revenue of:
A. $3,336.
B. $3,325.
C. $3,000.
D. $3,500. - Correct Answer-A.$3,336
QUESTION :If Dinsburry Company concluded that an investment originally classified as a trading security
would now more appropriately be classified as held to maturity, Dinsburry would:
A. Not reclassify the investment, as original classifications are irrevocable.
B. Reclassify the investment as held to maturity and immediately recognize in net income all unrealized
gains and losses that have not already been recognized as of the reclassification date.
C. Reclassify the investment as held to maturity and treat the fair value as of the date of reclassification
as the investment's amortized cost basis for future amortization.
D. Reclassify the investment as held to maturity, but there would be no income effect. - Correct Answer-
B. Reclassify the investment as held to maturity and immediately recognize in net income all unrealized
gains and losses that have not already been recognized as of the reclassification date.
4|Page
CHAPTERS COVERED QUESTIONS AND 100%
CORRECT ANSWERS 2025/2026
CHAPTER 1:THE ENVIRONMENT AND CONCEPTUAL FRAMEWORK OF FINANCIAL REPORTS
QUESTION :Both fair values and subsequent growth of the investee are not as relevant for investments
in which of the following categories?
A. Securities reported under the equity method.
B. Trading securities.
C. Held-to-maturity securities.
D. Securities available for sale. - Correct Answer-C. Held-to-maturity securities.
QUESTION :Which category completely excludes equity securities?
A. Securities available for sale.
B. Consolidating securities.
C. Held-to-maturity securities.
D. Trading securities. - Correct Answer-C. Held-to-maturity securities.
1|Page
, QUESTION :In 2011, Osgood Corporation purchased $4 million in 10-year municipal bonds at face value.
On December 31, 2013, the bonds had a market value of $3,600,000 and Osgood reclassified the bonds
from held to maturity to trading securities. Osgood's December 31, 2013, balance sheet and the 2013
income statement would show the following:
A. Option a
B. Option b
C. Option c
D. Option d - Correct Answer-B. Option B
QUESTION :What balance sheet amount would Beresford report for its total investment securities at
12/31/2012?
A.
$637,000.
B.
$644,500.
C.
$645,400.
D.
None of the above is correct. - Correct Answer-A. $637,000
2|Page
, QUESTION :What would be the balance in Beresford's accumulated other comprehensive income with
respect to these investments in its 12/31/2013 balance sheet (ignore taxes)?
A.
$55,100.
B.
$26,500.
C.
$10,400.
D.
None of the above is correct. - Correct Answer-C. $10,400
QUESTION :What total unrealized holding gain would Beresford report in its 2013 income statement
relative to its investment securities?
A.
$55,900.
B.
$36,000.
C.
$80,900.
3|Page
, D.
$48,200. - Correct Answer-B. $36,000
QUESTION :On January 1, 2013, Rupar Retailers purchased $100,000 of Anand Company bonds at a
discount of $5,000. The Anand bonds pay 6% interest but were purchased when the market interest rate
was 7% for bonds of similar risk and maturity. The bonds pay interest semiannually on January 1 and July
1 of each year. Rupar accounts for the bonds as a held-to-maturity investment, and uses the effective
interest method. In Rupar's December 31, 2013, journal entry to record the second period of interest,
Rupar would record a credit to interest revenue of:
A. $3,336.
B. $3,325.
C. $3,000.
D. $3,500. - Correct Answer-A.$3,336
QUESTION :If Dinsburry Company concluded that an investment originally classified as a trading security
would now more appropriately be classified as held to maturity, Dinsburry would:
A. Not reclassify the investment, as original classifications are irrevocable.
B. Reclassify the investment as held to maturity and immediately recognize in net income all unrealized
gains and losses that have not already been recognized as of the reclassification date.
C. Reclassify the investment as held to maturity and treat the fair value as of the date of reclassification
as the investment's amortized cost basis for future amortization.
D. Reclassify the investment as held to maturity, but there would be no income effect. - Correct Answer-
B. Reclassify the investment as held to maturity and immediately recognize in net income all unrealized
gains and losses that have not already been recognized as of the reclassification date.
4|Page
