Advanced Accounting Exam Review
Course Introduction
Advanced Accounting delves into complex topics beyond the basics of financial accounting, focusing on specialized transactions and reporting issues that arise in consolidated entities, mergers and acquisitions, international accounting, and partnerships. The course covers the preparation and analysis of consolidated financial statements, accounting for business combinations, intercompany transactions, foreign currency transactions and translation, as well as segment and interim reporting. Students also explore topics such as governmental and not-for-profit accounting, equity method investments, and emerging issues in accounting standards. This course prepares students for professional accounting practice by deepening their understanding of advanced concepts and enhancing their analytical and problem-solving skills in multifaceted accounting scenarios.
Recommended Textbook
Advanced Accounting Global 12th Edition by Floyd A. Beams
Available Study Resources on Quizplus
23 Chapters
894 Verified Questions
894 Flashcards
Source URL: https://quizplus.com/study-set/3524
Page 2
Chapter 1: Business Combinations
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/69981
Sample Questions
Q1) When considering an acquisition, which of the following is NOT a method by which one company may gain control of another company?
A) Purchase of the majority of outstanding voting stock of the acquired company.
B) Purchase of all assets and liabilities of another company.
C) Purchase all the outstanding voting stock of the acquired company.
D) All of the above methods result in a company gaining control over another company.
Answer: D
Q2) According to FASB Statement No. 141, liabilities assumed in an acquisition will be valued at the ________.
A) reasonably estimated fair value
B) historical book value
C) current replacement cost
D) present value using market interest rates
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Stock Investments - Investor Accounting and Reporting
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/69976
Sample Questions
Q1) In reference to intercompany transactions between an investor and an investee, when the investor can significantly influence the investee, which of the following statements is correct, assuming that the investor is using the equity method?
A) There is the presumption of arms-length bargaining between the related parties.
B) As long as the investor recognizes the effects of the transaction in its financial statements, it is not required to provide any additional disclosures.
C) In reporting its share of earnings and losses of an investee, the investor must eliminate the effect of profits and losses on the intercompany transactions until they are realized.
D) None of the above is correct.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: An Introduction to Consolidated Financial Statements
Available Study Resources on Quizplus for this Chatper
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/69975
Sample Questions
Q1) A subsidiary can be excluded from consolidation if
A) control does not rest with the majority owner.
B) the subsidiary is in legal reorganization.
C) the subsidiary is operating under severe foreign-exchange restrictions.
D) All of the above are correct.
Answer: D
Q2) The unamortized excess account is
A) a contra-equity account.
B) used in allocating the amounts paid for recorded balance sheet accounts that are above or below their fair values.
C) used in allocating the amounts paid for each asset and liability that are above or below their book values, especially when numerous assets or liabilities are involved.
D) the excess purchase cost that is attributable to goodwill.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
5
Chapter 4: Consolidated Techniques and Procedures
Available Study Resources on Quizplus for this Chatper
38 Verified Questions
38 Flashcards
Source URL: https://quizplus.com/quiz/69974
Sample Questions
Q1) Pigeon Corporation acquired an 80% interest in Statue Company on January 1, 2014, for $90,000 cash when Statue had Capital Stock of $60,000 and Retained Earnings of $40,000. The fair value/book value differential was attributable to equipment with a 10-year (straight-line) life. Statue suffered a $10,000 net loss in 2014 and paid no dividends. At year-end 2014, Statue owed Pigeon $18,000 on account. Pigeon's separate income for 2011 was $150,000. Controlling interest share of consolidated net income for 2014 was
A) $140,000.
B) $141,000.
C) $142,000.
D) $150,000.
Q2) What is the reported amount for the noncontrolling interest?
A) $80,000
B) $84,400
C) $98,000
D) $122,500
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Intercompany Profit Transactions Inventories
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69973
Sample Questions
Q1) What is Pouch's income from Shenley for 2014?
A) $27,200
B) $29,600
C) $39,200
D) $49,000
Q2) A parent company regularly sells merchandise to its 70%-owned subsidiary. Which of the following statements describes the computation of noncontrolling interest share?
A) The subsidiary's net income times 30%
B) (The subsidiary's net income × 30%) + unrealized profits in the beginning inventoryunrealized profits in the ending inventory
C) (The subsidiary's net income + unrealized profits in the beginning inventoryunrealized profits in the ending inventory) × 30%
D) (The subsidiary's net income + unrealized profits in the ending inventory - unrealized profits in the beginning inventory) × 30%
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Intercompany Profit Transactions Plant Assets
Available Study Resources on Quizplus for this Chatper
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/69972
Sample Questions
Q1) Parrot Company owns all the outstanding voting stock of Southern Manufacturing. On January 1, 2014, Parrot sold machinery to Southern at its book value of $24,000. Parrot had the machinery three years before selling it and used an eight-year straight-line depreciation method, with zero salvage value. Southern will use the straight-line depreciation method, and assumes the machine has five years remaining and no salvage value. In the 2014 consolidating working papers, the depreciation expense A) required no adjustment. B) decreased by $4,800. C) increased by $4,800 D) increased by $8,000.
Q2) The noncontrolling interest share for 2014 was
A) $18,000.
B) $22,000.
C) $23,000.
D) $27,000.
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Intercompany Profit Transactions Bonds
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69971
Sample Questions
Q1) Platts Incorporated purchased 80% of Scarab Company several years ago when the fair value equaled the book value. On January 1, 2013, Scarab has $100,000 of 8% bonds that were issued at face value and have five years to maturity. Interest is paid annually on December 31. Both Platts and Scarab would use the straight-line method to amortize any premium or discount incurred in the issuance or purchase of bonds. On January 1, 2014, Platts purchased all of Scarab's bonds for $96,000.
Required:
1. Prepare the journal entries in 2014 that would be recorded by Platts and Scarab on their separate financial records.
2. Prepare the consolidating working paper entries required for the year ending December 31, 2014.
Q2) If the bonds were originally issued at 106, and 80% of them were purchased by Scrawn on January 2, 2015 at 98, the gain or (loss) from the intercompany purchase was
A) $(384,000).
B) $(211,200).
C) $ 211,200.
D) $ 384,000.
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Consolidations - Changes in Ownership
Interests
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/69970
Sample Questions
Q1) If a parent company and outside investors purchase shares of a subsidiary in relation to existing stock ownership (ratably), then
A) there will be an adjustment to additional paid-in capital if the stock is sold above book value.
B) there will be no adjustment to additional paid-in capital regardless whether the stock is sold above or below book value.
C) there will be an adjustment to additional paid-in capital if the stock is sold below book value.
D) there will be the elimination of a gain.
Q2) Utah Company holds 80% of the stock of a subsidiary company. The subsidiary issues 100 additional shares of stock to Utah Company at a price above book value per share. The subsidiary does not issue any additional shares at the same time. How will Utah Company record the purchase?
A) Utah Company records a gain on sale of stock.
B) Utah Company increases additional paid-in capital.
C) Utah Company decreases additional paid-in capital.
D) Utah Company assigns any excess cost over book value acquired to increase undervalued identifiable assets or goodwill as appropriate.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Indirect and Mutual Holdings
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/69969
Sample Questions
Q1) The equation, in a set of simultaneous equations, that computes Paiva Corporation income on a consolidated basis is
A) P = $50,000 + 0.8B.
B) P = $30,000 + 0.2A.
C) P = $100,000 + 0.2A.
D) P = $100,000 + 0.8A.
Q2) Bailey's noncontrolling interest share for 2014 is
A) $7,609.
B) $8,044.
C) $15,652.
D) $23,696.
Q3) Raymond Company owns 90% of Rachel Company. Rachel Company owns 10% of Raymond Company. The treasury stock method is used. On the books of Rachel Company, we maintain the Investment in Raymond using the ________ method. The ending balance in Investment in Raymond is ________ stockholders' equity in the consolidated balance sheet.
A) equity; deducted from B) cost; deducted from C) treasury stock; deducted from D) conventional; added to
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Subsidiary Preferred Stock, Consolidated
Earnings Per Share, and Consolidated Income Taxation
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/69991
Sample Questions
Q1) Parker Corporation owns an 80% interest in Sample Corporation's common stock. Throughout 2014, Sample had 10,000 shares of common stock outstanding and Parker had 100,000 shares of common stock outstanding. Sample's only dilutive security consists of $50,000 face amount of 8% bonds payable. Each $1,000 bond is convertible into 20 shares of Sample stock. Parker and Sample's separate incomes for the year are $100,000 and $75,000, respectively. Assume a 34% flat income tax rate.
Required:
Compute the amount of basic and diluted earnings per share for Parker (Consolidated) and Sample Corporations.
Q2) How much should the Parminter's Investment in Sanchez-Common Stock, change during 2014?
A) $5,000
B) $20,000
C) $25,000
D) $30,000
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Consolidation Theories, Push-Down Accounting, and Corporate Joint Ventures
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/69990
Sample Questions
Q1) Under the parent company theory, what amount of goodwill was reported on the consolidated balance sheet at December 31, 2014?
A) $148,000
B) $153,000
C) $154,400
D) $160,000
Q2) Noncontrolling interest share was reported in the 2014 consolidated income statement at
A) $5,000.
B) $6,000.
C) $8,000.
D) $10,000.
Q3) Under GAAP, the ________ will include the variable interest entity in consolidated financial statements.
A) special purpose entity
B) limited liability company
C) trust
D) primary beneficiary
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Derivatives and Foreign Currency: Concepts and Common Transactions
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69989
Sample Questions
Q1) Ulysses Company purchases goods from China amounting to 372,372 Yuan (the transaction is denominated in the Chinese Yuan). Assume the Yuan is trading at $0.154 at the date the goods are ordered, and the Yuan is trading at $0.155 at the date the goods are received. When the invoice is paid a month later, the Yuan is trading at $.156. Assume all three dates are in the same fiscal year. Which of the following is true?
A) The entry to record the payment will include a gain of $744.74.
B) The entry to record the payment will include a gain of $372.37.
C) The entry to record the purchase will include a credit to Accounts Payable of $57,345.29.
D) The entry to record the purchase will include a credit to Accounts Payable of $57,717.66.
Q2) Gains or losses on foreign currency transactions are recorded before the related receivable or payable is settled when
A) the government cannot set an exchange rate for the foreign currency. B) the foreign currency is unknown.
C) the fiscal year ends after the settlement of the receivable or payable.
D) the fiscal year ends before the settlement of the receivable or payable.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Accounting for Derivatives and Hedging
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69988
Sample Questions
Q1) On June 1, 2014, Dapple Industries purchases an option contract for $5,000 on 10,000 gallons of aviation gas to minimize its purchasing cost price exposure. At the time, the market price is $2.50 per gallon and the option price of $2 per gallon will expire 6 months later. Dapple can exercise the option at its discretion. When Dapple prepares quarterly reports on June 30, Dapple is still holding the option. On June 30, the market price of aviation gas is $4.50 per gallon. The option is to be settled net. On August 1, Dapple exercises the option when the gas market price is $5.00 per gallon and purchases 40,000 gallons of gas. On August 15, Dapple uses all of the gas on a charter flight.
Required:
What are Dapple's journal entries with regard to the aviation gas option? Assume this is a cash flow hedge. Ignore the time value of money.
Q2) What is the fair value of the forward contract at January 30?
A) $796 liability
B) $796 asset
C) $800 liability
D) $800 asset
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Foreign Currency Financial Statements
Available Study Resources on Quizplus for this Chatper
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/69987
Sample Questions
Q1) A foreign entity is a subsidiary of a U.S. parent company and has always used the current rate method to translate its foreign financial statements on behalf of its parent company. Which one of the following statements is false?
A) The U.S. dollar is the functional currency of this company.
B) Changes in exchange rates between the subsidiary's country and the parent's country are not expected to affect the foreign entity's cash flows.
C) Translation adjustments are shown in stockholders' equity as increases or decreases in other comprehensive income.
D) Translation adjustments are not shown on the income statement.
Q2) A U.S. firm has a Belgian subsidiary that uses the British pound as its functional currency. According to GAAP, the U.S. dollar from Belgian unit's point of view will be
A) its only foreign currency.
B) its local currency.
C) its current rate method currency.
D) its reporting currency.
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Segment and Interim Financial Reporting
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69986
Sample Questions
Q1) Which one of the following operating segment information items is not directly named by GAAP to be reconciled to consolidated totals?
A) Assets
B) Liabilities
C) Revenues
D) Profit or loss
Q2) How does GAAP view interim accounting periods?
A) As discrete units for which net income may be separately determined
B) As integral units of the entire year for which each interim period is an essential part of an annual period
C) As integral units of the entire year with each interim period as an independent accounting period
D) As discrete units of the entire year using the same principles that are applied to the annual period
Q3) What is the threshold for reporting a major customer?
A) 5 percent of revenues
B) 5 percent of profits
C) 10 percent of revenues
D) 10 percent of profits
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Partnerships - Formation, Operations, and
Changes in Ownership Interests
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69985
Sample Questions
Q1) What partnership capital will Robert have after Quincy retires?
A) $200,000
B) $280,000
C) $360,000
D) $440,000
Q2) What is the weighted-average capital for Bertram and Ernest in 2014?
A) $224,000 and $245,000
B) $203,333 and $221,167
C) $221,333 and $239,167
D) $256,000 and $220,000
Q3) If the partnership experiences a net loss of $60,000 for the year, what will be the final net amount of profit or (loss) closed to each partner's capital account?
A) ($90,000) to Alfred and $30,000 to Barne
B) ($30,000) to Alfred and ($30,000) to Barne
C) ($24,000) to Alfred and ($36,000) to Barne
D) $30,000 to Alfred and ($90,000) to Barne
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Partnership Liquidation
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69984
Sample Questions
Q1) If all partners are included in the first installment of an installment liquidation, then in future installments
A) cash will be distributed according to the residual profit and loss sharing ratios.
B) cash should not be distributed until all non-cash assets are converted into cash.
C) vulnerability rankings for each partner should be prepared.
D) a cash distribution plan must be prepared so that partners will know when they will be included in cash distributions.
Q2) Using a safe payment schedule, how much cash should Lola receive in the first distribution?
A) $ 81,000
B) $ 98,000
C) $168,600
D) $202,500
Q3) A cash distribution plan for the Sammi, Tammy, and Udd partnership was as follows:
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Corporate Liquidations and Reorganizations
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69983
Sample Questions
Q1) When the bankruptcy court grants an order for relief under Chapter 7,
A) creditors may not seek payment for their claims directly from the debtor corporation.
B) the reorganization plan was accepted by creditors having at least one-half of the total number of claims and the claims represent at least two-thirds of the total amount owed.
C) the bankruptcy court confirms that the reorganization plan is fair and equitable to creditors.
D) the court discharges the debtor except for those claims provided for in the reorganization plan.
Q2) The duties of a debtor in possession in a Chapter 11 bankruptcy case do not include A) filing a list of creditors and schedules of assets and liabilities with the bankruptcy court.
B) operating the business during the reorganization period.
C) filing a reorganization plan.
D) issuing an order of relief.
To view all questions and flashcards with answers, click on the resource link above.
20
Chapter 19: An Introduction to Accounting for State and Local Governmental Units
Available Study Resources on Quizplus for this Chatper
38 Verified Questions
38 Flashcards
Source URL: https://quizplus.com/quiz/69982
Sample Questions
Q1) Governmental fund financial statements are prepared on the ________ basis of accounting. Proprietary fund financial statements are prepared on the ________ basis of accounting.
A) modified accrual; modified accrual
B) accrual; fund
C) modified accrual; accrual
D) blended; discrete
Q2) What basis of accounting is used to prepare Government-wide financial statements?
A) Modified accrual basis
B) Accrual basis
C) Cash basis
D) Fiduciary basis
Q3) The accounting equation for a governmental fund is
A) Assets = Liabilities + Equity.
B) Current assets + Noncurrent assets - Current liabilities - Noncurrent liabilities = Net position.
C) Current assets - Current liabilities = Fund Balance.
D) Assets = Liabilities + Fund Balance.
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Accounting for State and Local Governmental Units
- Governmental Funds
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/69980
Sample Questions
Q1) Assume you are preparing journal entries for the General Fund under the consumption method. What account should be debited when office supplies are ordered?
A) Appropriations
B) Encumbrances
C) Expenditures
D) Other financing use
Q2) What type of fund should be used to account for the gift of bonds and the interest income?
A) General Fund
B) Special Revenue Fund
C) Proprietary Fund
D) Permanent Fund
Q3) When the donation of bonds is received, what account should be debited?
A) Encumbrance
B) Other Financing Sources
C) Other Financing Uses
D) Investment
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: Accounting for State and Local Governmental Units
- Proprietary and Fiduciary Funds
Available Study Resources on Quizplus for this Chatper
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/69979
Sample Questions
Q1) Prepare journal entries to record the following grant-related transactions of the municipal swimming pool, which is funded primarily by membership fees.
1. Received an operating grant in cash from the state for $200,000, to be used for life-saving and first-aid training.
2. Incurred and paid qualifying expenses on the state grant program by providing training, $165,000.
3. Received a federal grant to finance purchase of an energy efficient heating system for the pool, $120,000 (cash received in advance).
4. New heating system installed and paid, $115,000.
Q2) Platinum City collects state sales taxes quarterly from local businesses and then gives the state revenue department the money at the end of the year. The sales taxes would go in Platinum City's
A) special revenue fund.
B) general fund.
C) agency fund.
D) enterprise fund.
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter
Available Study Resources on Quizplus for this Chatper
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/69978
Sample Questions
Q1) A nongovernmental, not-for-profit entity is subject to: I. GASB
II) FASB
A) I only
B) II only
C) a combination of I and II depending on the entity's purpose
D) neither I or II
Q2) Voluntary health and welfare organizations
A) may not have paid executives or staff.
B) are governed by separate GASB statements.
C) use fund accounting, following the rules for proprietary fund reporting.
D) are supported by, and provide voluntary services to, the public.
Q3) For a Voluntary Health and Welfare Organization, what entry is prepared when the restriction on a cash donation is met?
A) Debit Unrestricted Net Assets, Credit Restricted Net Assets
B) Debit Unrestricted Fund Balance, Credit Restricted Fund Balance
C) Debit Restricted Fund Balance, Credit Unrestricted Fund Balance
D) Debit Temporarily Restricted Net Assets - Reclassifications out, Credit Unrestricted Net Assets - Reclassifications in
To view all questions and flashcards with answers, click on the resource link above.
24
Chapter 23: Estates and Trusts
Available Study Resources on Quizplus for this Chatper
38 Verified Questions
38 Flashcards
Source URL: https://quizplus.com/quiz/69977
Sample Questions
Q1) Under the Uniform Probate Code, the term "personal representative" refers to which of the following?
A) An executor, but not an administrator
B) An administrator, but not an executor
C) Neither an executor nor an administrator
D) Either an executor or an administrator
Q2) Under the Revised Uniform Principal and Income Act, gains or losses incurred on investments that occur after the death of the decedent
A) are considered to be income of the estate.
B) are included in the inventory fair value at the time of death.
C) are taxed separately from other estate income.
D) are adjustments to the principal of the estate.
Q3) In reference to accounting for trusts or estates, which of the following statements is correct?
A) Estates are subject to taxation, but trusts are not.
B) Estates are subject to probate laws that vary widely across the fifty states.
C) Estates are subject to income taxes at the federal level, but not at the state level.
D) Estates and trusts are taxed regardless of size.
To view all questions and flashcards with answers, click on the resource link above.
25