Bachelor of Commerce: Intermediate Accounting Final Exam Questions
Course Introduction
Intermediate Accounting is a core course in the Bachelor of Commerce program, designed to deepen students' understanding of accounting principles, frameworks, and reporting standards. Building on foundational knowledge, this course emphasizes the application of International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) in the preparation and analysis of financial statements. Students will explore topics such as revenue recognition, measurement of assets and liabilities, equity accounting, and the complexities of financial disclosures. Through case studies, problem-solving exercises, and analytical assignments, students will develop the technical skills and critical thinking required for professional accounting roles, preparing them for advanced studies and careers in finance and accounting.
Recommended Textbook
Intermediate Accounting Volume 1 12th Canadian Edition by Donald E. Kieso
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13 Chapters
1318 Verified Questions
1318 Flashcards
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Page 2
Chapter 1: The Canadian Financial Reporting Environment
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Sample Questions
Q1) The auditor's primary responsibility is to
A) review financial statements and discuss them with management.
B) prepare financial statements.
C) report to Canada Revenue Agency.
D) report to standard setters.
Answer: A
Q2) Objectives of financial reporting do NOT include
A) providing information that is useful to users in making resource allocation decisions.
B) providing information about the liquidation value of an enterprise.
C) providing information about an entity's economic resources, obligations, and equity/net assets.
D) providing information about changes in an entity's economic resources, obligations, and equity/net assets.
Answer: B
Q3) Explain the advantages of an effective capital allocation process.
Answer: An effective capital allocation process encourages innovation, promotes productivity, and provides a platform for buying and selling securities and obtaining and granting credit.
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3
Chapter 2: Conceptual Framework Underlying Financial Reporting
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81 Flashcards
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Sample Questions
Q1) Which of the following statements regarding liabilities is true?
A) They must arise through a contractual obligation.
B) They may be attributable to a future transaction or event.
C) The duty or responsibility obligates the entity.
D) The entity often has reasonable discretion to avoid the obligation.
Answer: C
Q2) Use of an allowance for doubtful accounts is an application of the
A) matching principle.
B) revenue recognition principle.
C) historical cost principle.
D) full disclosure principle.
Answer: A
Q3) Under GAAP, inflation has been historically ignored due to the A) economic entity assumption.
B) going concern assumption.
C) monetary unit assumption.
D) periodicity assumption.
Answer: C
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Chapter 3: Measurement
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31 Verified Questions
31 Flashcards
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Sample Questions
Q1) Which of the following is an example of an item that would be measured under the hybrid measurement categorization?
A) investment properties.
B) inventory measured at the lower of cost and net realizable value.
C) biological assets.
D) financial instruments carried at cost.
Answer: B
Q2) Raleigh Inc. is considering leasing a piece of equipment with a fair value of $108,000 for three years. The current market interest rate for financing the equipment is 5% compounded semi-annually. Calculate the semi-annual lease payment assuming that the payment is made at the beginning of the period (round to the nearest dollar).
Answer: Present value of an annuity due of $108,000 for six periods at 2.5% ($108,000 / 5.64583) = $19,129.
Q3) In order to measure fair value under IFRS13, an entity must determine
A) the item being measured, and how the item could or would be used.
B) the market the item would be (or is) bought and sold in.
C) which fair value model is being used to value the item.
D) all of the above
Answer: D
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Page 5
Chapter 4: Reporting Financial Performance
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125 Flashcards
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Sample Questions
Q1) The view of income that IFRS generally supports is referred to as the A) all-inclusive approach.
B) current operating performance approach.
C) other comprehensive income approach.
D) operating income approach.
Q2) The following information is available for Quiny Inc. for 2020: \(\begin{array}{llcc}
\text { Disbursements for purchases........................ } &\$715,000 \\ \text {Increase in trade accounts payable................. } &63,800\\ \text { Decrease in merchandise inventory.............. } &30,800\\ \end{array}\)
Cost of goods sold for 2020 was
A) $715,000.
B) $778,800.
C) $770,000.
D) $809,600.
Q3) Low-cost/high-volume strategy versus cost differentiation strategy Explain the difference between a low-cost/high-volume strategy and a cost differentiation strategy.
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Chapter 5: Financial Position and Cash Flows
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) Current liabilities
Define current liabilities without using the word "liability."
Q2) The statement of cash flows reports all of the following EXCEPT
A) the net change in cash for the period.
B) the cash effects of operations during the period.
C) the free cash flows generated during the period.
D) investing transactions.
Q3) Non-monetary assets
A) are those for which the cash value is determinable in amount and timing.
B) are often measured at historical cost.
C) are always classified as non-current.
D) will required future cash outflows from the company.
Q4) The cash debt coverage ratio is calculated by dividing net cash provided by operating activities by
A) average long-term liabilities.
B) average total liabilities.
C) ending long-term liabilities.
D) ending total liabilities.
Q5) Current assets
Define current assets without using the word "asset."
Page 7
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Chapter 6: Revenue Recognition
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Sample Questions
Q1) Assume that Hemsworth uses the percentage-of-completion method of accounting. The portion of the total gross profit to be recognized in 2020 is
A) $ 60,000.
B) $ 80,000.
C) $ 240,000.
D) $ 320,000.
Q2) Control of an asset normally coincides with A) transfer of possession to the buyer.
B) transfer of legal title to the buyer.
C) transfer of both possession and legal title to the buyer.
D) the receipt of payment from the buyer.
Q3) When a contract becomes unprofitable to an entity, this is called a(n)
A) uncompleted contract.
B) zero-profit contract.
C) onerous contract.
D) unenforceable contract.
Q4) Explain what a bill-and-hold sale is and why a customer might engage in such an arrangement.
Q5) Explain the advantages and disadvantages of the completed-contract method.
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Chapter 7: Cash and Receivables
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114 Flashcards
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Sample Questions
Q1) Classification of accounts receivable
Trade receivables are amounts owed by customers to whom a company has sold goods or services as part of normal business operations. Briefly explain the difference between open accounts receivable and notes receivable.
Q2) Cookie Ltd. receives a four-year, $100,000, zero-interest-bearing note. The present value of this note is $82,270. Assuming the note was issued on January 1, 2020, and the effective interest method is used, the interest income to be recognized for calendar 2020 will be
A) $5,000.
B) $9,000.46.
C) $4,113.50.
D) $6,587.31.
Q3) Which of the following approaches to determine bad debts expense best achieves the matching concept?
A) percentage of sales
B) percentage of ending accounts receivable
C) percentage of average accounts receivable
D) direct write off
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9
Chapter 8: Inventory
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Sample Questions
Q1) Adjustments to lower of cost and NRV
The controller of Utah Corp. has provided you with the following information relating to its inventory:
\[\begin{array} { c c c }
\text { Date } & \text { Cost } & \text { Lower of cost and NFN } \\
\operatorname { Dec } 31 / 17 & \$ 457,000 & \$ 410,000 \\
\operatorname { Dec } 31 / 18 & \$ 615,000 & \$ 555,000
\end{array}\] Utah uses the periodic inventory system, and records its inventory at cost. An allowance account is adjusted at the end of each year to adjust the value of the inventory to the lower of cost and NRV.
Instructions
Prepare the journal entries that Utah would have prepared for its 2019 and 2020 year ends, assuming that 2019 was its first year of operations.
Q2) Lower of cost and net realizable value
A) is most conservative if applied to the total inventory.
B) is most conservative if applied to major categories of inventory.
C) is most conservative if applied to individual items of inventory.
D) must be applied to major categories for income tax purposes.
Q3) What is a perpetual inventory system?
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Page 10
Chapter 9: Investments
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Sample Questions
Q1) An interest-bearing investment is sold mid-way through the year. At the time of sale, how is the accrued interest typically treated?
A) The seller forfeits the right to any interest payment, and loses on the investment sale.
B) The original issuer (investee) must settle the interest owing before the sale can be completed.
C) The purchaser pays the seller an amount equal to the accrued interest since the last payment date.
D) At the next interest payment date, the original issuer (investee) splits the interest payments amongst anyone who held the investment over the period.
Q2) Assuming the revised amount and timing of cash flows for an investment can be reasonably determined, the incurred loss impairment model uses which discount rate?
A) the investor's internal rate of return
B) the historical interest rate
C) the current market rate
D) either the historical rate or the current market rate
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11
Chapter 10: Property, Plant, and Equipment: Accounting Model Basics
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99 Flashcards
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Sample Questions
Q1) When a closely held corporation issues preferred shares for land, the land should be recorded at the
A) total value of the shares issued.
B) total book value of the shares issued.
C) total liquidating value of the shares issued.
D) fair market value of the land.
Q2) Assume the same facts as indicated above, except that, between December 31, 2020, and December 31, 2021, the property's fair value had decreased by $ 10,000. As a result, Tunisia's 2021 income statement will include a
A) $ 10,000 loss.
B) $ 8,000 loss.
C) $ 8,000 gain (other comprehensive income).
D) $ 2,000 loss.
Q3) The costs of land improvements with limited lives, such as a parking lot, are
A) added to the land account.
B) recorded in a separate account.
C) depreciated over their useful lives.
D) recorded in a separate account and depreciated over their useful lives.
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Chapter 11: Depreciation, Impairment, and Disposition
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Sample Questions
Q1) On January 3, 2018, City Corp. purchased machinery. The machinery has an estimated useful life of eight years and an estimated residual value of $67,500. City uses straight-line depreciation for all their machinery, and recorded $115,500 depreciation expense for 2020. The acquisition cost of the machinery was
A) $991,500.
B) $924,000.
C) $856,500.
D) $655,500.
Q2) Long-lived assets that are held for sale
A) continue to be depreciated.
B) are carried at the higher of book value and fair values less costs of disposal.
C) are generally not re-measured at each balance sheet date.
D) are reported separately from other assets.
Q3) Which of the following is NOT a time-based depreciation method?
A) straight-line
B) units of production
C) double-declining balance
D) any diminishing balance method
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Chapter 12: Intangible Assets and Goodwill
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Sample Questions
Q1) Journal entries for patent sale
Amplify Inc. purchased a patent on September 1, 2020 for $ 41,080. At the time of purchase, Amplify estimated that the patent's economic benefits would last until the end of 2024. Amplify's fiscal year end is December 31. On April 1, 2023, Amplify sold the patent to another company.
Instructions
a) Prepare the journal entry to record the sale, assuming Amplify sold the patent for $ 21,690.
b) Prepare the journal entry to record the sale, assuming Amplify sold the patent for $ 12,240.
Q2) An "indefinite life" for an intangible asset means that
A) the asset will last forever.
B) unlimited amortization may be recorded for the asset.
C) amortization is only recorded if future economic benefits can be determined.
D) there appears to be no foreseeable limit to how long the asset will generate positive future cash flows.
Q3) Accounting for unidentifiable intangible assets
Explain how an entity that acquires control over one or more businesses accounts for intangible assets when they are not identifiable.
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Page 14
Chapter 13: Accounting Information Systems and Adjusting
Entries: A Comprehensive Guide
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) The double-entry accounting system means
A) each transaction is recorded with two journal entries.
B) each item is recorded in a journal entry, then in a general ledger account.
C) the dual effect of each transaction is recorded with debits and credits of equal amount.
D) None of these answer choices is correct.
Q2) Calculation of revenue
The records for Oriole Corp. showed the following for 2020: \(\begin{array}{cccc}
&\underline{\text {Jan 1 }} &\underline{ \text {Dec 31} } \\
\text { Unearned revenue............................... } &\$3,000&\$3,400\\
\text {Accrued revenue................................... } &1,400&1,100\\ \text {Cash collected during the year from revenue....... } &\$85,000&\\ \end{array}\) Instructions
Show the calculation of the amount of revenue that should be reported on the 2020 statement of comprehensive income.
Q3) The accounting cycle
Summarize the steps in the accounting cycle.
Page 15
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