_07__Key - ICE #7 Multiple Choice Identify the choice that...

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ICE #7 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1 .Why do businesses invest in short term investments? a. They are trying to gain control over the activities of other companies. b. They are investing excess cash to meet future business operation or investment needs. c. They are lending money to companies that cannot obtain bank loans. d. More than one of the above is correct. ____ 2. For what reason would a company buy 10% of the common stock of a second company? a. The company has idle cash and wishes to have a higher return than that available from temporary money market investments. b. The company wishes to insure a steady source of goods from the second company. c. The company wishes to prepare consolidated financial statements. d. More than one of the above is correct. ____ 3. A company is referred to as a parent if it owns a. 33% of the debt securities of another company b. More than 50% of the equity securities of another company c. More than 50% of the debt securities of another company d. 50% of the equity securities of another company ____ 4. The equity method of accounting for an investment is used when a company purchases a. More than 20% of the debt securities of a second company. b.
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This note was uploaded on 04/07/2008 for the course ACCOUNTING 1 taught by Professor Worst during the Fall '06 term at Temple.

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_07__Key - ICE #7 Multiple Choice Identify the choice that...

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