Information regarding Stone Co.'s available-for-sale portfolio of marketable equity securities is as follows:
Aggregate cost as of 12/31/Y2 $ 170,000
Market value as of 12/31/Y2 148,000

1、At December 31, Year 1, Stone reported an unrealized loss of $1,500 to reduce investments to market value. This was the first such adjustment made by Stone on these types of securities. In its Year 2 statement of comprehensive income, what amount of unrealized loss should Stone report?
a. $0
b. $30,000
c. $22,000
d. $20,500

Explanation
Choice "d" is correct. Stone must report a net cumulative loss on its Statement of Stockholders' Equity (under "Accumulated Other Comprehensive Income") of $22,000 ($148,000 FMV ? $170,000 Cost). Stone has already reported a $1,500 loss as of 12/31/Y1; therefore, an unrealized loss of $20,500 ($22,000 ? $1,500) should be reported in the Statement of Comprehensive Income (as part of other comprehensive income) for Year 2.

2、Which of the following characteristics most likely would be indicative of check kiting?
a. Frequent ATM checking account withdrawals.
b. Many large checks that are recorded on Mondays.
c. High turnover of employees who have access to cash.
d. Low average balance compared to high level of deposits.

Explanation
Choice "d" is correct. Kiting occurs when a check drawn on one bank is deposited in another bank and no record is made of the disbursement in the balance of the first bank. Frequent kiting may result in a high level of deposits coupled with a low average balance.
Choice "c" is incorrect. High turnover of employees who have access to cash may be normal in certain industries, or it may be indicative of poor hiring policies, but it would not be indicative of check kiting.
Choice "b" is incorrect. More checks may arrive on Mondays simply because Monday's mail includes the mail from over the weekend. This characteristic is not particularly indicative of check kiting.
Choice "a" is incorrect. Frequent ATM checking account withdrawals indicate a frequent need for cash, but this situation is not particularly indicative of check kiting.

3、A couple filed a joint return in prior tax years. During the current tax year, one spouse died. The couple has no dependent children. What is the filing status available to the surviving spouse for the first subsequent tax year?
a.Surviving spouse.
b.Single.
c.Married filing separately.
d.Head of household.

Explanation
Choice "b" is correct. For the first subsequent tax year (and all other subsequent tax years) after the death of a spouse with no dependent children, filing status is single.
Choice "a" is incorrect. Filing status is not "surviving spouse" because there are no dependent children.
Choice "c" is incorrect. Filing status is not "married filing separately" in the first subsequent tax year after the death of a spouse since the couple is no longer married.
Choice "d" is incorrect. Filing status is not "head of household" because there are no dependent children and no other qualifying dependents.

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