Advanced Accounting Exam Review
Course Introduction
Advanced Accounting explores complex topics in financial accounting and reporting beyond the fundamentals covered in introductory courses. The course examines business combinations, consolidated financial statements, partnerships, foreign currency transactions, translation of foreign financial statements, segment and interim reporting, and accounting for governmental and nonprofit entities. Through a rigorous analysis of accounting standards and real-world scenarios, students develop critical thinking and problem-solving skills necessary for addressing advanced accounting issues in diverse organizational contexts. This course prepares students for professional accounting certifications and higher-level roles in public accounting, corporate finance, and consultancy.
Recommended Textbook Fundamentals of Advanced Accounting 5th Edition by Joe Ben Hoyle
Available Study Resources on Quizplus 12 Chapters
1192 Verified Questions
1192 Flashcards
Source URL: https://quizplus.com/study-set/3824
Page 2
Chapter 1: The Equity Method of Accounting for Investments
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/76310
Sample Questions
Q1) On January 1, 2010, Pond Co. acquired 40% of the outstanding voting common shares of Ramp Co. for $700,000. On that date, Ramp reported assets and liabilities with book values of $2.2 million and $700,000, respectively. A building owned by Ramp had an appraised value of $300,000, although it had a book value of only $120,000. This building had a 12-year remaining life and no salvage value. It was being depreciated on the straight-line basis.
Ramp generated net income of $300,000 in 2010 and a loss of $120,000 in 2011. In each of these two years, Ramp paid a cash dividend of $70,000 to its stockholders. During 2010, Ramp sold inventory to Pond that had an original cost of $60,000. The merchandise was sold to Pond for $96,000. Of this balance, $72,000 was resold to outsiders during 2010 and the remainder was sold during 2011. In 2011, Ramp sold inventory to Pond for $180,000. This inventory had cost only $108,000. Pond resold $120,000 of the inventory during 2011 and the rest during 2012.
Required:
For 2010 and then for 2011, calculate the equity income to be reported by Pond for external reporting purposes.
Answer: 11ea8df8_a858_f828_b636_c11a0f4eb61d_TB4172_00
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Consolidation of Financial Information
Available Study Resources on Quizplus for this Chatper
118 Verified Questions
118 Flashcards
Source URL: https://quizplus.com/quiz/76309
Sample Questions
Q1) A statutory merger is a(n)
A) business combination in which only one of the two companies continues to exist as a legal corporation.
B) business combination in which both companies continues to exist.
C) acquisition of a competitor.
D) acquisition of a supplier or a customer.
E) legal proposal to acquire outstanding shares of the target's stock.
Answer: A
Q2) Peterman Co. owns 55% of Samson Co. Under what circumstances would Peterman not be required to prepare consolidated financial statements?
Answer: Peterman would not be required to prepare consolidated financial statements if control of Samson is temporary or if, despite majority ownership, Peterman does not have control over Samson. A lack of control might exist if Samson is in a country that imposes restrictions on Peterman's actions.
Q3) How are direct combination costs accounted for in an acquisition transaction?
Answer: In an acquisition, direct combination costs are expensed in the period of the acquisition.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Consolidationssubsequent to the Date of Acquisition
Available Study Resources on Quizplus for this Chatper
122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/76308
Sample Questions
Q1) When consolidating a subsidiary under the equity method, which of the following statements is true with regard to the subsidiary subsequent to the year of acquisition?
A) All net assets are revalued to fair value and must be amortized over their useful lives.
B) Only net assets that had excess fair value over book value when acquired by the parent must be amortized over their useful lives.
C) All depreciable net assets are revalued to fair value at date of acquisition and must be amortized over their useful lives.
D) Only depreciable net assets that have excess fair value over book value must be amortized over their useful lives.
E) Only assets that have excess fair value over book value must be amortized over their useful lives.
Answer: C
Q2) For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping is the easiest for the parent to use?
Answer: The initial value method is the easiest to use.
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Consolidated Financial Statements and Outside Ownership
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/76307
Sample Questions
Q1) On January 1, 2010, Jannison Inc. acquired 90% of Techron Co. by paying $477,000 cash. There is no active trading market for Techron stock. Techron Co. reported a Common Stock account balance of $140,000 and Retained Earnings of $280,000 at that date. The fair value of Techron Co. was appraised at $530,000. The total annual amortization was $11,000 as a result of this transaction. The subsidiary earned $98,000 in 2010 and $126,000 in 2011 with dividend payments of $42,000 each year. Without regard for this investment, Jannison had income of $308,000 in 2010 and $364,000 in 2011. Use the economic unit concept to account for this acquisition. Prepare a proper presentation of consolidated net income for 2010.
Q2) Alonzo Co. acquired 60% of Beazley Corp. by paying $240,000 cash. There is no active trading market for Beazley Corp. At the time of the acquisition, the book value of Beazley's net assets was $300,000.
Required:
What amount should have been assigned to the non-controlling interest immediately after the combination?
Q3) Where may a non-controlling interest be presented in a consolidated balance sheet?
Q4) Where should a non-controlling interest appear on a consolidated balance sheet?
Q5) What is preacquisition income?
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Consolidated Financial Statementsintra-Entity
Asset Transactions
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/76306
Sample Questions
Q1) Strickland Company sells inventory to its parent, Carter Company, at a profit during 2010. One-third of the inventory is sold by Carter in 2010.
In the consolidation worksheet for 2010, which of the following choices would be a credit entry to eliminate unrealized intra-entity gross profit with regard to the 2010 intra-entity sales?
A) Retained earnings.
B) Cost of goods sold.
C) Inventory.
D) Investment in Strickland Company.
E) Sales.
Q2) Why do intra-entity transfers between the component companies of a business combination occur so frequently?
Q3) How does a gain on an intra-entity sale of equipment affect the calculation of a non-controlling interest?
Q4) On April 7, 2011, Pate Corp. sold land to Shannahan Co., its subsidiary. From a consolidated point of view, when will the gain on this transfer actually be earned?
Q5) How is the gain on an intra-entity transfer of a depreciable asset realized?
Q6) When is the gain on an intra-entity transfer of land realized?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Variable Interest Entities, Intra-Entity Debt, Consolidated Cash
Flows, and Other Issues
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/76305
Sample Questions
Q1) Which of the following statements is false regarding the assignment of a gain or loss on intercompany bond transfer?
A) Subsidiary net income is not affected by a gain on bond transaction.
B) Subsidiary net income is not affected by a loss on bond transaction.
C) Parent Company net income is not affected by a gain on bond transaction.
D) Parent Company net income is not affected by a loss on bond transaction.
E) Consolidated net income is not affected by a gain or loss on bond transaction.
Q2) Rojas Co. owned 7,000 shares (70%) of the outstanding 10%, $100 par preferred stock and 60% of the outstanding common stock of Brett Co. When Brett reported net income of $780,000, what was the non-controlling interest in the subsidiary's income?
A) $234,000.
B) $273,000.
C) $302,000.
D) $312,000.
E) $284,000.
Q3) What documents or other sources of information would be used to prepare a consolidated statement of cash flows?
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Foreign Currency Transactions and Hedging
Foreign Exchange Risk
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/76304
Sample Questions
Q1) The forward rate may be defined as
A) The price a foreign currency can be purchased or sold today.
B) The price today at which a foreign currency can be purchased or sold in the future.
C) The forecasted future value of a foreign currency.
D) The U.S. dollar value of a foreign currency.
E) The Euro value of a foreign currency.
Q2) What is the purpose of a hedge of foreign exchange risk?
Q3) Pigskin Co., a U.S. corporation, sold inventory on credit to a British company on April 8, 2011. Pigskin received payment of 35,000 British pounds on May 8, 2011. The exchange rate was £1 = $1.54 on April 8 and £1 = 1.43 on May 8. What amount of foreign exchange gain or loss should be recognized? (round to the nearest dollar)
A) $10,500 loss
B) $10,500 gain
C) $1,750 loss
D) $3,850 loss
E) No gain or loss should be recognized.
Q4) What happens when a U.S. company sells goods denominated in a foreign currency and the foreign currency appreciates?
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Translation of Foreign Currency Financial Statements
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/76303
Sample Questions
Q1) What is a company's functional currency?
A) the currency of the primary economic environment in which it operates.
B) the currency of the country where it has its headquarters.
C) the currency in which it prepares its financial statements.
D) the reporting currency of its parent for a subsidiary.
E) the currency it chooses to designate as such.
Q2) Under the temporal method, common stock would be remeasured at what rate?
A) Beginning of the year rate.
B) Average rate.
C) Current rate.
D) Historical rate.
E) Composite amount.
Q3) A net asset balance sheet exposure exists and the foreign currency appreciates. Which of the following statements is true?
A) There is no translation adjustment.
B) There is a transaction loss.
C) There is a transaction gain.
D) There is a negative translation adjustment.
E) There is a positive translation adjustment.
Q4) Contrast the purpose of remeasurement with the purpose of translation.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Partnerships: Formation and Operation
Available Study Resources on Quizplus for this Chatper
88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/76302
Sample Questions
Q1) Norr and Caylor established a partnership on January 1, 2010. Norr invested cash of $100,000 and Caylor invested $30,000 in cash and equipment with a book value of $40,000 and fair value of $50,000. For both partners, the beginning capital balance was to equal the initial investment. Norr and Caylor agreed to the following procedure for sharing profits and losses:
- 12% interest on the yearly beginning capital balance
- $10 per hour of work that can be billed to the partnership's clients
- the remainder divided in a 3:2 ratio
The Articles of Partnership specified that each partner should withdraw no more than $1,000 per month.
For 2010, the partnership's income was $70,000. Norr had 1,000 billable hours, and Caylor worked 1,400 billable hours. In 2011, the partnership's income was $24,000, and Norr and Caylor worked 800 and 1,200 billable hours respectively. Each partner withdrew $1,000 per month throughout 2010 and 2011.
Determine the amount of net income allocated to each partner for 2010.
Q2) What theoretical argument could be made against the recognition of goodwill when there is a change in the ownership of a partnership?
Q3) What events cause the dissolution of a partnership?
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Partnerships: Termination and Liquidation
Available Study Resources on Quizplus for this Chatper
69 Verified Questions
69 Flashcards
Source URL: https://quizplus.com/quiz/76301
Sample Questions
Q1) A local partnership has assets of cash of $5,000 and a building recorded at $80,000. All liabilities have been paid. The partners' capital accounts are as follows Harry $40,000, Landers $30,000 and Waters 15,000. The partners share profits and losses 4:4:2. If the building is sold for $50,000, how much cash will Harry receive in the final settlement?
A) $5,000.
B) $9,000.
C) $18,000.
D) $28,000.
E) $55,000.
Q2) Jones, Marge, and Tate LLP decided to dissolve and liquidate the partnership on September 30, 2011. After realization of a portion of the noncash assets, the capital account balances were Jones $50,000; Marge $40,000; and Tate $15,000. Cash of $35,000 and other assets with a carrying amount of $100,000 were on hand. Creditors' claims totaled $30,000. Jones, Marge, and Tate shared net income and losses in a 2:1:1 ratio, respectively.
Prepare a working paper to compute the amount of cash that may be paid to creditors and to partners at this time, assuming that no partner is solvent.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Accounting for State and Local Governments
Part 1
Available Study Resources on Quizplus for this Chatper
78 Verified Questions
78 Flashcards
Source URL: https://quizplus.com/quiz/76300
Sample Questions
Q1) Which of the following statements is true about Fund Balance classifications for the governmental funds?
A) A restricted fund balance is for monies the governing board has appropriated.
B) An assigned fund balance has been designated for a specific purpose and is restricted to use for only that purpose.
C) An unassigned fund balance has no restriction for use of the money and is only applicable to the General Fund.
D) A committed fund balance has been designated by an outside party for a particular use.
E) A non-spendable fund balance is designated only for Permanent Fund balances.
Q2) Trapper City issued 30-year bonds for the purpose of building a new City Hall. The proceeds of the bonds are deposited in the General Fund. For the Fund Financial Statements, in what fund will Bonds Payable appear?
A) General Fund.
B) Capital Projects Fund.
C) Permanent Fund.
D) Debt Service Fund.
E) Bonds Payable do not appear in Fund Financial Statements.
Q3) What are the five types of governmental funds?
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Accounting for State and Local Governments
Part 2
Available Study Resources on Quizplus for this Chatper
51 Verified Questions
51 Flashcards
Source URL: https://quizplus.com/quiz/76299
Sample Questions
Q1) Marie Todd works for the City of Rochester and volunteered to work the New Years Eve holiday in December, 2010. In exchange for working the holiday, the city will grant her 2 vacation days compensated at $500 per day. Marie decided to take these vacation days during January, 2011. For Government-wide financial statements, what are the journal entries to record these events in 2010 and in 2011?
Q2) The City of Kamen maintains a collection of paintings of a former citizen in its City Hall building. During the year, one painting was purchased by the city for $2,000 at an auction using appropriated funds in the General Fund. Also during the year, a donation of a painting valued at $3,000 was made to the city.
Required: Prepare the journal entry/entries for the two transactions for the purposes of preparing the fund financial statements.
Q3) What is meant by the term fiscally independent?
Q4) What three criteria must be met to identify a governmental unit as a primary government?
Q5) What information is required in the introductory section of a state or local government's CAFR?
Page 14
To view all questions and flashcards with answers, click on the resource link above.