Home » Quizzes » Accounting for marketable securities » Multiple choice questions (MCQs) quiz Accounting for marketable securities Multiple choice questions (MCQs) quiz Posted in: Accounting for marketable securities (quizzes) By: Rashid Javed | Updated on: August 25th, 2024 /16 Chapter: Accounting for marketable securitiesQuiz type: Multiple choice questions (MCQs) quizNumber of questions: 16Estimated time required: 8 - 10 minutesPassing score: 60%Your result will be displayed at the end of the quiz. 1. Marketable securities are: fixed assets intangible assets highly liquid short term investments current liabilities 2. Marketable securities are reported in the balance sheet at their: cost excluding brokerage fee cost including brokerage fee current market value par value 3. Which of the following cannot be an example of marketable security? Cash at bank Stocks Short-term bonds Treasury bills 4. Which of the following is a correct journal entry to record the purchase of marketable securities? Cash Dr. and Marketable Securities Cr. Marketable Securities Dr. and Assets Cr. Marketable Securities Dr. and Accounts Receivable Cr. Marketable Securities Dr. and Cash Cr. 5. ABC Company purchases 1,000 shares of XYZ Company at a cost of $25 per share. It also pays a $500 brokerage commission. The marketable securities account would be debited by: $25,000 $24,500 $25,500 $500 Computation:Total cost of shares = (Number of shares x cost per share) + Brokerage commission= (1,000 shares x $25) + $500= $25,500 6. The cash flows resulting from sale or purchase of marketable securities is classified as: operating cash flow investing cash flow financing cash flow none of the above 7. The marketable securities usually generate dividend or interest revenue which is an inflow of cash. Under US-GAAP, this revenue (inflow of cash) is classified as: operating cash flow investing cash flow financing cash flow none of the above 8. Which of the following may be a correct journal entry for the sale of marketable securities? Marketable Securities Dr. and Cash Cr. Cash Dr., Marketable Securities Cr. and Loss on sale of marketable securities Cr. Cash Dr., Marketable Securities Cr. and Gain on sale of marketable securities Cr. Marketable Securities Dr., Cash Cr. and Gain on sale of marketable securities Cr. 9. Which of the following would be reported in income statement? Cash received from sale of marketable securities Total cost of marketable securities sold Current market value of marketable securities sold Gain or loss from sale of marketable securities 10. Mark to market principle is generally applicable to: all current assets all current assets except cash all liquid assets except inventory marketable securities 11. Fast Company provides you the following information about marketable securities held by it:Cost of marketable securities: $25,000Market value of marketable securities on balance sheet date: $26,500On the basis of above information, which of the following is a correct journal entry to make mark-to-market adjustment to marketable securities? Unrealized Holding Gain $1,500 Dr. and Marketable Securities $1,500 Cr. Marketable Securities $1,500 Dr. and Unrealized Holding Gain $1,500 Cr. Marketable Securities $1,500 Dr. and Unrealized Holding Loss $1,500 Cr. Unrealized Holding Gain $1,500 Dr. and Marketable Securities $1,500 Cr. Unrealized holding gain = $26,500 - $25,000= $1,500 12. Meta Company sold marketable securities costing $60,000 for $75,000 cash. In income statement and statement of cash flows, respectively, this will appear as: a $15,000 gain and a $75,000 cash receipt a $75,000 gain and a $15,000 cash receipt a $15,000 gain and a $60,000 cash receipt a $75,000 sales and a $75,000 cash receipt 13. Lazy Company provides you the following information about marketable securities held by it:Cost of marketable securities: $25,000Market value of marketable securities on balance sheet date: $20,000On the basis of above information, which of the following is a correct journal entry to make mark-to-market adjustment to marketable securities? Marketable Securities $5,000 Dr. and Unrealized Holding Loss $5,000 Cr. Unrealized Holding Loss $5,000 Dr. and Marketable Securities $5,000 Cr. Marketable Securities $5,000 Dr. and Unrealized Holding Gain $5,000 Cr. Unrealized Holding Gain $5,000 Cr. and Marketable Securities $5,000 Dr. 14. When the assets are presented in balance sheet in the order of their liquidity, the marketable securities are presented immediately after: plant and machinery inventory accounts receivable cash and cash equivalents 15. The unrealized holding gain on marketable securities will: decrease marketable securities; decrease stockholders' equity increase marketable securities; increase net income increase marketable securities; increase stockholders' equity increase marketable securities; increase cash 16. The marketable securities are classified as available for sale securities. Therefore, the unrealized holding loss on marketable securities will: decrease marketable securities; decrease stockholders' equity decrease marketable securities; decrease cash decrease marketable securities; decrease common stock decrease marketable securities; decrease net income 0% Restart quiz Next » Help us grow by sharing our content ♡
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