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Chapter $8$ Practice

Common examples of cash equivalents are all of the following EXCEPT

a$)$ Money market funds

b$)$ Treasury bills

$($c$)$ Accounts receivable

d$).$ Certificates of deposit with an original maturity date of $90$ days

Cash Equivalents refer to

a$)$ Accounts receivable that are highly collectible

b$)$ Investments that pay dividends

$($C$)$ Short$-$term investments that have a maturity date no longer than three months

d$)$ Interest receivable

One of the primary reasons for investing in equity securities includes

$($a$)$ Receiving dividend payments

b$)$ Earning interest revenue

c$)$ Acquiring debt of competing companies

d$)$ Deducting dividend payments for tax purposes

One of the primary reasons for investing in debt securities includes

a$)$ Deducting interest payments for tax purposes

b$)$ Acquiring ownership control in other companies

$($c$)$ Earning interest revenue

d$)$ Receiving dividend payments

On January $1,$ Gentle Ben, Inc. purchased $1,200$ shares of stock in The Gear Shed for $$25$ per share. The effect of the purchase on the financial statements would include

a$)$ An increase to assets, an increase to stockholders' equity

b$)$ An increase to assets, an increase to revenues

c$)$ An increase to assets, a decrease to assets

d$)$ An increase to liabilities, a decrease to stockholders' equity

On January $1,$ Gentle Ben, Inc. purchased $1,200$ shares of stock in The Gear Shed for $$25$ per share. On June $30,$ The Gear Shed paid cash dividends of $$\mathrm{.}50$ per share to all shareholders. The effect on Gentle Ben's financial statements for the cash dividends received would be

a$)$ An increase in assets, an increase in revenues

b$)$ A decrease in assets, an increase in expenses

c$)$ An increase in assets, a decrease in assets

d$)$ A decrease in assets, a decrease in liabilities

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