Question 1

Investments in debt securities are always current assets.

Accepted Answer

Investments in debt securities can be classified as either current assets if they are intended to be sold within a year or as non-current assets if they are intended to be held for longer than a year.

Question 2

When you purchase a debt investment such as a bond of another corporation, this type of investment represents an "equity security."

Accepted Answer

When you purchase a debt investment such as a bond of another corporation, this type of investment represents a "debt security," not an equity security. Equity securities represent ownership in a corporation, such as stocks.

Question 3

Non-strategic investments can result in gains or losses for a company.

Accepted Answer

Non-strategic investments refer to investments made by a company that are not directly related to their core business operations or long-term strategy. These investments can result in gains or losses depending on various factors such as market conditions, economic trends, and management decisions. Therefore, non-strategic investments are not a guaranteed way to make profits and can result in both gains and losses for a company.

Question 4

When a corporation purchases the shares or bonds of other companies, it has made an intercorporate investment.

Accepted Answer

A corporation making investments by purchasing shares or bonds of other companies is known as intercorporate investment.

Question 5

Management's intent and the marketability of a security determine whether or not a security is classified as a long-term or current asset.

Accepted Answer

Management's intent and marketability are two factors that are considered when determining whether a security is classified as a long-term or a current asset. Long-term securities are those that management intends to hold for an extended period of time, while current assets are those that are expected to be sold or converted into cash within a year. Marketability refers to the ease with which a security can be sold, and securities that are more easily traded are generally considered to be current assets.

Question 6

Non-strategic investments are usually held as an investment of cash for use in current operations.

Accepted Answer

Non-strategic investments are investments made in assets that are not directly related to a company's core operations or long-term goals. They are typically seen as more passive and long-term investments, rather than investments made for current operations.

Question 7

The term "equity security" refers to the guarantee your broker gives you concerning an investment that was just made for you.

Accepted Answer

The term "equity security" refers to a type of investment that represents ownership in a company, such as stocks or mutual funds. It does not refer to a guarantee given by a broker.

Question 8

Strategic investments include investments in associates, business combinations and joint arrangements.

Accepted Answer

Strategic investments refer to investments made in associates, business combinations and joint arrangements.

Question 9

Investments in shares are the same as debt investments.

Accepted Answer

Investments in shares represent ownership in a company and involve equity investments, while debt investments involve lending money to a company and receiving interest payments in return. They are two distinct types of investments with different risks and returns.

Question 10

Long-term bonds are examples of non-strategic investments.

Accepted Answer

The answer of Long-term bonds are examples of non-strategic investments....

Question 11

"Debt investment" and "debt security" are interchangeable terms.

Accepted Answer

Both terms refer to the purchase of a loan agreement or lending instrument that pays fixed or variable interest over a set period of time.

Question 12

Non-strategic investments are always classified as short-term regardless of how long the investment is planned to be held.

Accepted Answer

Non-strategic investments can be either short-term or long-term depending on the investment plan and purpose.

Question 13

When a company purchases the shares of another company with the goal ofparticipating in new markets or technologies, they are considered non-strategic investors.

Accepted Answer

Non-strategic investors are typically those who purchase shares for financial gain, rather than to expand their own business into new markets or technologies. Strategic investors, on the other hand, tend to acquire shares to gain access to new customers, products, or technologies that are relevant to their existing business.

Question 14

A joint arrangement requires the use of consolidation to account for the investment in the joint operation.

Accepted Answer

A joint arrangement requires the use of equity accounting to account for the investment in the joint operation, not consolidation.

Question 15

You have just purchased some shares in a Canadian public company. Your friends call you an "investee." You are surprised that they got it wrong: you are an investor.

Accepted Answer

An "investee" is a term used to refer to the company in which an investor has invested. As an investor, you have purchased shares in the company and are not the investee.

Question 16

If a company has cash available for longer term investments, both debt and equity investments may be considered.

Accepted Answer

Both debt and equity investments can be considered for longer term investments if a company has cash available.

Question 17

A joint arrangement can be classified as either a joint operation or a joint venture.

Accepted Answer

A joint arrangement can be classified as either a joint operation or a joint venture.

Question 18

Non-strategic investments are of two types: debt and share investments.

Accepted Answer

Non-strategic investments, also known as passive investments, can indeed be categorized into two main types: debt investments (such as bonds or certificates of deposit) and share investments (such as stocks or equity securities). These investments are typically made to earn a return rather than to gain control or significant influence over the entity in which the investment is made.

Question 19

Investments are often made by companies with excess cash hoping to earn a higher return than might be realized by holding cash in the bank.

Accepted Answer

This statement is true. Companies may choose to make investments with excess cash to earn a higher return on that cash than they would by holding it in a bank account.

Question 20

"Share investment" and "equity security" are interchangeable terms.

Accepted Answer

The answer of "Share investment" and "equity security" are interchangeable...

Quiz 15: Accounting for Debt and Share Investments

Investments in debt securities are always current assets.

When you purchase a debt investment such as a bond of another corporation, this type of investment represents an "equity security."

Non-strategic investments can result in gains or losses for a company.

When a corporation purchases the shares or bonds of other companies, it has made an intercorporate investment.

Management's intent and the marketability of a security determine whether or not a security is classified as a long-term or current asset.

Non-strategic investments are usually held as an investment of cash for use in current operations.

The term "equity security" refers to the guarantee your broker gives you concerning an investment that was just made for you.

Strategic investments include investments in associates, business combinations and joint arrangements.

Investments in shares are the same as debt investments.

Long-term bonds are examples of non-strategic investments.

"Debt investment" and "debt security" are interchangeable terms.

Non-strategic investments are always classified as short-term regardless of how long the investment is planned to be held.

When a company purchases the shares of another company with the goal ofparticipating in new markets or technologies, they are considered non-strategic investors.

A joint arrangement requires the use of consolidation to account for the investment in the joint operation.

You have just purchased some shares in a Canadian public company. Your friends call you an "investee." You are surprised that they got it wrong: you are an investor.

If a company has cash available for longer term investments, both debt and equity investments may be considered.

A joint arrangement can be classified as either a joint operation or a joint venture.

Non-strategic investments are of two types: debt and share investments.

Investments are often made by companies with excess cash hoping to earn a higher return than might be realized by holding cash in the bank.

"Share investment" and "equity security" are interchangeable terms.