ACCT 2101 Final Exam 3 Questions
with Revised Complete Answers.
Plant Assets - Answer Long lived, tangible assets used in the operations of a business (Ex.
Land, Buildings, Equipment, Furniture, Fixtures, Automobiles)
Depreciation - Answer The process by which businesses spread the allocation of a plant asset's
cost over its useful life
Cost Principle - Answer A principle that states that acquired assets and services should be
recorded at their actual cost
Lump Sum Purchases - Answer
Capital Expenditures - Answer An expenditure that increases the capacity or efficiency of a
plant asset or extends its useful life
Revenue Expenditures - Answer An expenditure that does not increase the capacity or
efficiency of an asset or extend its useful life
Investor - Answer The owner of a bond or stock of a corporation
Investee - Answer The corporation that issued the bond or stock to the investor
Security - Answer A share or interest representing financial value
Debt Securities - Answer Represents a credit relationship with another company or
governmental entity that typically pays interest for a fixed period
Equity Securities - Answer Represents stock ownership in another company that sometimes
pays dividends
Short Term Investments - Answer Investments in debt and equity securities that are highly
, Trading Investments - Answer A debt security or an equity security in which the investor holds
less than 20% of the voting stock and that the investor plans to sell in the very near future
Held to Maturity Investments - Answer A debt security the investor intends to hold until it
matures
Available for Sale Investments - Answer A debt security or an equity security in which the
investor holds less than 20% of the voting stock and that isn't a trading investment or a held to
maturity investment
Significant Interest Investments - Answer An equity security in which the investor owns from
20% to 50% of the investee's voting stock
Controlling Interest Investments - Answer An equity security in which the investor owns more
than 50% of the investee's voting stock
Parent Company - Answer A company that owns a controlling interest in another company
Subsidiary Company - Answer A company that is controlled by another corporation
Consolidated Statements - Answer Financial statements that combine the balance sheets,
income statements, and statements of cash flow of the parent company with those of its
controlling interest affiliates
Consolidated Accounting - Answer The way to combine the financial statements of two or
more companies that have the same owners
Fair Value - Answer The price that would be used if the investments were sold on the market
Comprehensive Income - Answer A company's change in total stockholder's equity from all
sources other than the owner's investments and dividends
Rate of Return on Total Assets - Answer A ratio that measures the success a company has in
using its assets earn income
with Revised Complete Answers.
Plant Assets - Answer Long lived, tangible assets used in the operations of a business (Ex.
Land, Buildings, Equipment, Furniture, Fixtures, Automobiles)
Depreciation - Answer The process by which businesses spread the allocation of a plant asset's
cost over its useful life
Cost Principle - Answer A principle that states that acquired assets and services should be
recorded at their actual cost
Lump Sum Purchases - Answer
Capital Expenditures - Answer An expenditure that increases the capacity or efficiency of a
plant asset or extends its useful life
Revenue Expenditures - Answer An expenditure that does not increase the capacity or
efficiency of an asset or extend its useful life
Investor - Answer The owner of a bond or stock of a corporation
Investee - Answer The corporation that issued the bond or stock to the investor
Security - Answer A share or interest representing financial value
Debt Securities - Answer Represents a credit relationship with another company or
governmental entity that typically pays interest for a fixed period
Equity Securities - Answer Represents stock ownership in another company that sometimes
pays dividends
Short Term Investments - Answer Investments in debt and equity securities that are highly
, Trading Investments - Answer A debt security or an equity security in which the investor holds
less than 20% of the voting stock and that the investor plans to sell in the very near future
Held to Maturity Investments - Answer A debt security the investor intends to hold until it
matures
Available for Sale Investments - Answer A debt security or an equity security in which the
investor holds less than 20% of the voting stock and that isn't a trading investment or a held to
maturity investment
Significant Interest Investments - Answer An equity security in which the investor owns from
20% to 50% of the investee's voting stock
Controlling Interest Investments - Answer An equity security in which the investor owns more
than 50% of the investee's voting stock
Parent Company - Answer A company that owns a controlling interest in another company
Subsidiary Company - Answer A company that is controlled by another corporation
Consolidated Statements - Answer Financial statements that combine the balance sheets,
income statements, and statements of cash flow of the parent company with those of its
controlling interest affiliates
Consolidated Accounting - Answer The way to combine the financial statements of two or
more companies that have the same owners
Fair Value - Answer The price that would be used if the investments were sold on the market
Comprehensive Income - Answer A company's change in total stockholder's equity from all
sources other than the owner's investments and dividends
Rate of Return on Total Assets - Answer A ratio that measures the success a company has in
using its assets earn income
