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    Investment Reviewer

    Uploaded by

    Lilibeth Solis
    This document contains 15 multiple choice questions testing knowledge of accounting for financial assets and investments. The questions cover topics such as the purposes of investments, classification of financial assets, methods for measuring equity investments, calculating market value of investments, accounting entries for purchases and sales of investments, impairment testing requirements, and accounting for dividends and stock splits. The correct answer is identified for each multiple choice question.

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    © All Rights Reserved
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    Investment Reviewer

    Uploaded by

    Lilibeth Solis
    304 views2 pages
    This document contains 15 multiple choice questions testing knowledge of accounting for financial assets and investments. The questions cover topics such as the purposes of investments, classification of financial assets, methods for measuring equity investments, calculating market value of investments, accounting entries for purchases and sales of investments, impairment testing requirements, and accounting for dividends and stock splits. The correct answer is identified for each multiple choice question.

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    Sample questions and answers

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    This document contains 15 multiple choice questions testing knowledge of accounting for financial assets and investments. The questions cover topics such as the purposes of investments, classification of financial assets, methods for measuring equity investments, calculating market value of investments, accounting entries for purchases and sales of investments, impairment testing requirements, and accounting for dividends and stock splits. The correct answer is identified for each multiple choice question.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    304 views2 pages

    Investment Reviewer

    Uploaded by

    Lilibeth Solis
    This document contains 15 multiple choice questions testing knowledge of accounting for financial assets and investments. The questions cover topics such as the purposes of investments, classification of financial assets, methods for measuring equity investments, calculating market value of investments, accounting entries for purchases and sales of investments, impairment testing requirements, and accounting for dividends and stock splits. The correct answer is identified for each multiple choice question.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    1.

    All of the following are purposes of investments except:


    a. Accretion of wealth
    b. Capital appreciation
    c. Ownership and control
    d. All are purpose of investment
    2. _____________________ is a financial asset because it represents the medium of
    exchange and is therefore the basis on which all transactions are measured
    and recognized in financial statements.
    a. Accounts receivable
    b. Notes Receivable
    c. Bonds Receivable
    d. Cash
    3. Financial assets at fair value through profit or loss include:
    a. Equity securities
    b. Debt securities
    c. Both a and b
    d. None of the above
    4. True or False. In measuring the equity investments, investments of 20% to
    50% uses the consolidation method of accounting. (equity method)
    5. An investment of 10,000 shares costing P800,000 and is quoted at 90, what
    is the market value?
    a. 900,000
    b. 800,000
    c. 720,000
    d. None of the above
    6. An investment in 2,000,000 face value bond, costing 1,700,000 is quoted at
    90, the market value is?
    a. 1,800,000
    b. 1,700,000
    c. 1,530,000
    d. 2,200,000
    7. On January 1, 2016, an entity purchased marketable equity securities for
    5,000,000. The equity securities qualify as financial asset held for trading.
    The entity also paid 50,000 as commission to the broker. What is the entry?
    a. Equity Security 5,050,000
    Cash 5,050,000
    b. Trading Securities 5,000,000
    Commission Expense 50,000
    Cash 5,050,000
    c. Equity Security 5,000,000
    Cash 5,000,000
    8. True or False. If an entity reclassifies a financial asset at amortized cost to
    fair value through other comprehensive income, the fair value is measured
    at reclassification date.
    9. ________________ are the present value of all cash shortfalls.
    a. Debt investment
    b. Equity investment
    c. Credit losses
    d. Trade losses
    10. What financial assets are assessed for impairment?
    a. Equity investments at FVPL
    b. Equity investments at FVOCI
    c. Debt investments at FVPL
    d. Debt investments at amortized cost and Debt investments at FVOCI
    11. True or False. If two or more equity securities are acquired at a single cost
    or lump sum, the single cost is allocated to the securities acquired on the
    basis of their fair value.
    12. On derecognition of a financial asset measured at fair value through profit
    or loss, the difference between the consideration received and the carrying
    amount of the financial asset shall be recognized in:
    a. OCI
    b. Profit or loss
    c. Balance Sheet
    d. None of the above
    13. If the equity securities are measured at fair value through profit or loss, or
    at fair value through other comprehensive income or at cost, dividends
    earned are considered as __________
    a. Receivable
    b. Payable
    c. Income
    d. None of the above
    14. ____________ is a transaction whereby the outstanding shares are called in
    and replaced by a larger number, accompanied by a reduction in the par
    or stated value of each share.
    a. Share split
    b. Split down
    c. Stock right
    d. Split up
    15. ______________ is valuable to shareholder because the price at which the new
    shares are sold is generally below the prevailing market price. The
    ownership of this is evidenced by instruments or certificates called
    _____________.
    a. Stock right; share warrants
    b. Share split; share warrants
    c. Share split; stock certificates
    d. Stock right; stock certificates

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