chapter13b

chapter13b - Chapter 13b 1. Businesses invest in other...

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Chapter 13b 1. Businesses invest in other companies only to house excess cash until needed and to generate earnings. A. True B. Fals e 2. When bonds are sold, any difference between the net proceeds and the cost of the bonds is recorded as a gain or loss. A. True B. Fals e 3. Under the cost method, companies record the investment at cost, and recognize revenue when the investee reports net income. A. True B. Fals e 4. In accounting for stock investments of more than 50%, the equity method is used. A. True B. Fals e 5. The entity whose stock is owned by a parent company is called the subsidiary company. A. True B. Fals e 6. Available-for-sale securities are securities bought and held primarily for sale in the near term.
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A. True B. Fals e 7. Companies report the unrealized loss on trading securities under “Other expenses and losses” in the income statement. A. True B. Fals e 8. Both the adjusting entry and the reporting of the unrealized gain/loss for available-for-sale securities are the same as for trading securities. A. True B. Fals e 9. Short-term investments are readily marketable and intended to be converted into cash within the next year or operating cycle, whichever is longer. A.
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chapter13b - Chapter 13b 1. Businesses invest in other...

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