Advanced Accounting Principles
Test Preparation
Course Introduction
Advanced Accounting Principles delves into complex accounting concepts and standards vital for higher-level financial reporting and analysis. The course covers areas such as consolidated financial statements, accounting for mergers and acquisitions, foreign currency transactions, partnerships, and segment reporting. Students will also examine recent developments in international accounting standards and ethical considerations affecting the accounting profession. Emphasis is placed on real-world applications, analytical problem-solving, and interpretation of financial information to support sound decision making in organizations.
Recommended Textbook
Advanced Financial Accounting 9th Edition by Richard Baker
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20 Chapters
1069 Verified Questions
1069 Flashcards
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Chapter 1: Intercorporate Acquisitions and Investments in Other Entities
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Sample Questions
Q1) Based on the preceding information,what was Conservative's book value of assets transferred to Spin Company?
A)$243,000
B)$263,000
C)$221,000
D)$201,000
Answer: D
Q2) Based on the preceding information,what amount of goodwill will be reported in consolidated financial statements presented immediately following the combination if Zenith paid $550,000 for the acquisition?
A)$0
B)$50,000
C)$150,000
D)$40,000
Answer: D
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Chapter 2: Reporting Intercorporate Investments and
Consolidation of Wholly Owned Subsidiaries With No Differential
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39 Verified Questions
39 Flashcards
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Sample Questions
Q1) If Push Company owned 51 percent of the outstanding common stock of Shove Company,which reporting method would be appropriate?
A)Cost method
B)Consolidation
C)Equity method
D)Merger method
Answer: B
Q2) Based on the preceding information,what amount will be reported by Yang as income from its investment in Spiel for 20X8,if it used the fair value method of accounting?
A)$11,250
B)$2,500
C)$6,250
D)$7,500
Answer: B
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Chapter 3: The Reporting Entity and Consolidation of
Less-Than-Wholly-Owned Subsidiaries With No Differential
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Sample Questions
Q1) Based on the preceding information,what is the total stockholders' equity in the consolidated balance sheet as of January 3,20X9?
A)$1,580,000
B)$1,064,000
C)$1,150,000
D)$1,236,000
Answer: C
Q2) Based on the preceding information,what will be the amount of net income reported by Frazer Corporation in 20X9?
A)$44,000
B)$55,000
C)$66,000
D)$36,000
Answer: B
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5
Chapter 4: Consolidation of Wholly Owned Subsidiaries
Acquired at More Than Book Value
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Q1) Based on the preceding information,what amount of total liabilities will be reported in the consolidated balance sheet for 20X8?
A)$225,000
B)$221,000
C)$217,000
D)$137,000
Q2) Based on the information given above,at what amount will West's investment in Coast stock be reported in the consolidated balance sheet?
A)$0
B)$400,000
C)$440,000
D)$480,000
Q3) Based on the information provided,the consolidated balance sheet of Enya and Celtic will reflect goodwill in the amount of:
A)$0.
B)$58,000.
C)$22,000.
D)$36,000.
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Chapter 5: Consolidation of Less-Than-Wholly-Owned
Subsidiaries Acquired at More Than Book Value
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41 Verified Questions
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Sample Questions
Q1) Based on the preceding information,in the entry to eliminate the investment balance,
A)retained earnings will be credited for $20,000.
B)additional paid-in-capital will be credited for $20,000.
C)retained earnings will be credited for $10,000.
D)noncontrolling interest will be debited for 30,000.
Q2) Based on the preceding information,what is the amount of consolidated comprehensive income reported for 20X8?
A)$125,000
B)$123,750
C)$118,750
D)$130,000
Q3) Based on the preceding information,what amount of land will be included in the consolidated balance sheet immediately following the acquisition?
A)$0
B)$10,000
C)$90,000
D)$100,000
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Page 7
Chapter 6: Intercompany Inventory Transactions
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Sample Questions
Q1) Assume Shove sold the inventory to Push. Using the fully adjusted equity method,what journal entry would be recorded by Push to defer the unrealized gross profit on inventory sales to Shove in 20X1?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Based on the information given above,what amount of sales will be reported in the 20X8 consolidated income statement?
A)$62,000
B)$120,000
C)$90,000
D)$58,000
Q3) Based on the information given above,what will be the consolidated net income for 20X7?
A)$495,000
B)$317,750
C)$486,250
D)$690,000
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Page 8
Chapter 7: Intercompany Transfers of Services and
Noncurrent Assets
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Sample Questions
Q1) Based on the preceding information,in the preparation of the 20X9 consolidated balance sheet,machine will be:
A)debited for $1,000.
B)debited for $15,000.
C)credited for $45,000.
D)debited for $25,000.
Q2) Based on the preceding information,consolidated net income for 20X9 will be:
A)$150,000.
B)$100,000.
C)$148,000.
D)$130,000.
Q3) Based on the information provided,while preparing the 20X8 consolidated income statement,depreciation expense will be:
A)debited for $750 in the eliminating entries.
B)credited for $750 in the eliminating entries.
C)credited for $1,500 in the eliminating entries.
D)debited for $1,500 in the eliminating entries.
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Page 9
Chapter 8: Intercompany Indebtedness
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Sample Questions
Q1) Based on the information given above,what amount of interest expense will be eliminated in the preparation of the 20X9 consolidated financial statements?
A)$17,000
B)$13,300
C)$18,500
D)$22,200
Q2) Based on the information given above,what amount of consolidated net income should be reported for 20X8?
A)$163,750
B)$161,250
C)$146,250
D)$148,750
Q3) Based on the information given above,in the preparation of the 20X8 consolidated financial statements,premium on bonds payable will be:
A)debited for $45,000 in the eliminating entries.
B)credited for $40,500 in the eliminating entries.
C)debited for $40,500 in the eliminating entries.
D)credited for $45,000 in the eliminating entries.
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Chapter 9: Consolidation Ownership Issues
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Q1) Based on the information provided,what amount will be reported as the noncontrolling interest in the consolidated balance sheet on January 1,20X9?
A)$70,000
B)$130,000
C)$118,000
D)$142,000
Q2) Based on the preceding information,Trevor Company's net income for 2009 and 2010 are:
A)$10,000 and $20,000 respectively.
B)$25,000 and $35,000 respectively.
C)$35,000 and $45,000 respectively.
D)$25,000 and $45,000 respectively.
Q3) Based on the preceding information,what is First's contribution to consolidated net income for 20X9?
A)$80,000
B)$100,000
C)$90,000
D)$50,000
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11
Chapter 10: Additional Consolidation Reporting Issues
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Sample Questions
Q1) Based on the information provided,income to the controlling interest for 20X9 is:
A)$155,370.
B)$56,000.
C)$168,000.
D)$250,000.
Q2) Which sections of the cash flow statement are affected by the difference in the direct and indirect approaches of presenting a cash flow statement?
I.Operating activities section
II.Investing activities section
III.Financing activities section
A)I
B)II
C)III
D)I,II,and III
Q3) Using the data presented in question 38:
1)Prepare a worksheet to develop a consolidated statement of cash flows for 2008 using the direct method of computing cash flows from operations.
2)Prepare a consolidated statement of cash flows for 2008.
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12
Chapter 11: Multinational Accounting: Foreign Currency
Transactions and Financial Instruments
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66 Verified Questions
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Sample Questions
Q1) Based on the preceding information,the entries on January 30,20X9,include a:
A)Debit to Dollars Payable to Exchange Broker,$180,000.
B)Credit to Cash,$184,000.
C)Credit to Premium on Forward Contract,$4,000.
D)Credit to Foreign Currency Receivable from Exchange Broker,$180,000.
Q2) Based on the preceding information,what is the overall effect of speculation on 20X8 net income?
A)$4,000 gain
B)$6,000 gain
C)$8,000 loss
D)$8,000 gain
Q3) Based on the preceding information,what is the Heavy's overall net gain or net loss from its foreign currency exposure related to this transaction?
A)$4,860 loss
B)$2,600 loss
C)$7,120 gain
D)$2,260 gain
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Page 13
Chapter 12: Multinational Accounting: Issues in Financial
Reporting and Translation of Foreign Entity Statements
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60 Verified Questions
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Q1) All of the following describe the International Accounting Standard Board (IASB)except for:
A)The IASB is a privately funded accounting standards-setting body based in London.
B)The mission of the IASB is to develop a single set of high-quality,understandable and enforceable global accounting standards.
C)Board members of the IASB come from diverse geographical countries that have adopted IFRS.
D)IASB members serve a five-year term subject to one reappointment.
Q2) All of the following are benefits the U.S.will gain from the adoption of globally consistent accounting standards except for:
A)Reduction in reporting costs as the need for multiple sets of financial statements decreases.
B)Increased quality of information available to investors.
C)Continued expansion of capital markets across national borders,facilitating more efficient use of global capital.
D)Nearly seamless transition with minimal expenses related to corporate governance considerations.
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Page 14
Chapter 13: Segment and Interim Reporting
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Sample Questions
Q1) Based on the preceding information,in the entry in August to record the sale of the 2,000 units:
A)Cost of Goods Sold will be debited for $70,000.
B)Inventory will be credited for $85,000.
C)Excess of Replacement Cost over LIFO Cost of Inventory Liquidation will be credited for $15,000.
D)Excess of Replacement Cost over LIFO Cost of Inventory Liquidation will be credited for $67,000.
Q2) FASB 131 (ASC 280)uses a(n)______ approach to the definition of segments.
A)line of business
B)entity approach
C)portfolio
D)management
Q3) Refer to the above information.Which of the operating segments above meet the revenue test?
A)B,D,and E
B)A and D
C)A,B,and D
D)B,C,D,and E
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Page 15
Chapter 14: Sec Reporting
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Q1) "Tombstone ad"
A) Provides preliminary information to investors about an upcoming issue.
B) Informs investors of an upcoming offering.
C) Required annual filing to the SEC.
D) Discloses unscheduled material events.
E) Includes amendments to the Securities Act, additional disclosure requirements, and other current issues regarding accounting and auditing principles and standards.
F) Results in a thorough examination by the SEC of a registration statement.
G) Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered for sale.
H) Quarterly report to SEC.
I) Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J) Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K) Includes Regulations S-X and S-K.
Q2) Accounting and Auditing Enforcement Releases
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16
Chapter 15: Partnerships: Formation, operation, and
Changes
in Membership
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Sample Questions
Q1) The partnership of X and Y shares profits and losses in the ratio of 60 percent to X and 40 percent to Y.For the year 20X8,partnership net income was double X's withdrawals.Assume X's beginning capital balance was $80,000,and ending capital balance (after closing)was $140,000.Partnership net income for the year was:
A)$120,000.
B)$300,000.
C)$500,000.
D)$600,000.
Q2) Which of the following observations is true of an S corporation?
A)It elects to be taxed in the same manner as a corporation.
B)It does not have the burden of double taxation of corporate income.
C)Its shareholders have personal liability for the corporation's obligations.
D)Its primary income source should be passive investments.
Q3) Refer to the information provided above.David invests $50,000 for a one-fifth interest.What amount of goodwill will be recorded?
A)$20,000
B)$4,000
C)$40,000
D)$15,000
Page 17
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Chapter 16: Partnerships: Liquidation
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Q1) Based on the preceding information,what amount will be paid out to Scott upon liquidation of the partnership?
A)$0
B)$2,500
C)$5,000
D)$6,429
Q2) During the liquidation of the FGH partnership,a cash distribution was made to all the partners,who share profits and losses 60 percent,20 percent,and 20 percent,respectively.Assuming that the cash distribution referred to was made properly,how much would G receive if an additional $60,000 was distributed?
A)$60,000
B)$20,000
C)$17,000
D)$12,000
Q3) On a partner's personal statement of financial condition,how are assets valued?
A)Historical cost
B)Book value
C)Discounted value
D)Estimated current value
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Page 18
Chapter 17: Governmental Entities: Introduction and General
Fund Accounting
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Sample Questions
Q1) Revenues from parking meters and parking fines should be reported in the general fund when:
A)received.
B)measurable and available.
C)measurable and earned.
D)available.
Q2) Which of the following characteristics are emphasized in the accounting for state and local government entities?
I.Revenues should be matched with expenditures to measure success or failure of the government entity.
II.There is an emphasis on expendability of resources to accomplish objectives of the governmental entity.
A)I only
B)II only
C)I and II
D)Neither I nor II
Q3) Accounting processes differ between a for-profit entity and a governmental entity.Discuss three differences between a governmental entity and a for-profit entity.
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Chapter 18: Governmental Entities: Special Funds and
Government-Wide Financial Statements
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Q1) Which of the following items is optional information for a special-purpose governmental entity when issuing financial reports?
A)Management's Discussion and Analysis
B)Footnotes to the financial repots
C)Supplementary Information to the financial reports
D)All of the above are required.
Q2) The City of Fargo issued general obligation bonds to finance construction of a new fire station.The bonds were issued at a premium.In the fire station capital projects fund,the premium should be transferred to:
A)an agency fund.
B)a special revenue fund.
C)a debt service fund.
D)an expendable trust fund.
Q3) GASB 34 requires a Reconciliation schedule for the Statement of Net Assets.What does this schedule document?
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Chapter 19: Not-For-Profit Entities
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Q1) Based on the information provided,in Golden Path's statement of activities for the year ended December 31,20X8,what amount should be reported under the classification of program services?
A)$720,000
B)$910,000
C)$440,000
D)$760,000
Q2) Endowment income was earned.The donor specified that the income be used for community service.
Q3) Based on the preceding information,the journal entry to recognize present value at the time the pledge is received includes:
A)a credit to Pledges Receivable-Temporarily Restricted for $25,000.
B)a debit to Contributions-Temporarily Restricted for $21,062.
C)a debit to Pledges Receivable-Temporarily Restricted for $21,062.
D)a credit to Contributions-Temporarily Restricted for $25,000.
Q4) "Classification of an endowment contribution" describes which term listed above?
Q5) Incurred fund-raising costs.
Q6) "Basis for measuring expenditures for contributed services requiring special skills" describes which term listed above?
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Chapter 20: Corporations in Financial Difficulty
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Sample Questions
Q1) Under the Bankruptcy Code,an insolvent corporation may be:
I.Reorganized.
II.Liquidated.
A)I
B)II
C)Either I or II
D)Neither I nor II
Q2) In which of the following ways can debt be restructured?
I.Assets can be transferred to the creditor.
II.An equity interest can be granted to the creditor.
III.The terms of the debt can be modified.
A)I and II only
B)I and III only
C)II and III only
D)I,II,and III
Q3) Based on the preceding information,what is the estimated dividend percentage?
A)23 percent
B)93 percent
C)77 percent
D)68 percent
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