CHAPTER 13 - INVESTMENTS AND FAIR
VALUE ACCOUNTING QUESTIONS WITH
CORRECT ANSWERS 2026
debt securities - correct answer-are notes and bonds that pay interest and have a fixed maturity date
equity securities - correct answer-
are preferred and common stock that represent ownership in a company and do not have a fixed matu
rity date
investments (temporary investments) - correct answer-
investments in debt and equity securities are reported in the Current Assets Section of the balance she
et
what are the primary objectives of investing in temporary investments? - correct answer-
1. earn interest revenue
2. receive dividends
3. realize gains from increases in the market price of the securities
cash and cash equivalents - correct answer-
investments in certificates of deposit and other securities that do not normally change in value are dis
closed on the balance sheet as
reduction of cost - correct answer-
when one company buys another company, the combined company may be able to reduce administrat
ive expenses
replacement of management - correct answer-
if the purchased company has been mismanaged, the acquiring company may replace the company's
management and, thus, improve operations and profits
expansion - correct answer-
the acquiring company may purchase a company because it has a complementary product line, territor
y, or customer base
VALUE ACCOUNTING QUESTIONS WITH
CORRECT ANSWERS 2026
debt securities - correct answer-are notes and bonds that pay interest and have a fixed maturity date
equity securities - correct answer-
are preferred and common stock that represent ownership in a company and do not have a fixed matu
rity date
investments (temporary investments) - correct answer-
investments in debt and equity securities are reported in the Current Assets Section of the balance she
et
what are the primary objectives of investing in temporary investments? - correct answer-
1. earn interest revenue
2. receive dividends
3. realize gains from increases in the market price of the securities
cash and cash equivalents - correct answer-
investments in certificates of deposit and other securities that do not normally change in value are dis
closed on the balance sheet as
reduction of cost - correct answer-
when one company buys another company, the combined company may be able to reduce administrat
ive expenses
replacement of management - correct answer-
if the purchased company has been mismanaged, the acquiring company may replace the company's
management and, thus, improve operations and profits
expansion - correct answer-
the acquiring company may purchase a company because it has a complementary product line, territor
y, or customer base
