Corporate Accounting
Exam Answer Key
Course Introduction
Corporate Accounting is a comprehensive course that provides students with an in-depth understanding of the accounting practices and financial reporting requirements specific to corporations. The course explores key topics such as the preparation and analysis of corporate financial statements, accounting for share capital and debentures, dividend distribution, mergers and acquisitions, and consolidation of financial statements. Students will also examine the regulatory framework governing corporate accounting and learn about corporate income tax, valuation of goodwill, and liquidation procedures. Emphasis is placed on applying accounting standards and principles to real-world scenarios, enabling students to critically evaluate financial information for informed decision-making in the corporate environment.
Recommended Textbook
Horngren's Accounting Volume 2 10th Canadian Edition by Tracie L. Miller Nobles
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7 Chapters
1392 Verified Questions
1392 Flashcards
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Page 2
Chapter 1: Partnerships
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) Refer to Table 12-2.Assuming the business incurs a loss of $87,000,Toe's share of the loss is:
A) $35,148
B) $20,184
C) $29,000
D) $31,668
Answer: B
Q2) The resignation of a partner dissolves the partnership.
A)True
B)False
Answer: True
Q3) Refer to Table 12-3.Assuming the business incurs a net loss of $36,000,Brittney's capital account will be:
A) debited for $56,625
B) debited for $94,375
C) credited for $4,375
D) credited for $40,375
Answer: C
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3
Chapter 2: Corporations: Share Capital and the Balance Sheet
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180 Verified Questions
180 Flashcards
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Sample Questions
Q1) Which of the following statements describes the corporate characteristic termed no mutual agency?
A) The liabilities of the corporation cannot be extended to the personal assets of the shareholder.
B) Shares of stock can be readily bought and sold by investors on the open market.
C) Shareholders are not authorized to sign contracts or make business commitments on behalf of the corporation.
D) Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from sale of stock.
Answer: C
Q2) Retained earnings:
A) is classified as an asset on the corporate balance sheet
B) is part of contributed capital
C) represents investments by the shareholders of the corporation
D) represents capital earned by profitable operations
Answer: D
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Chapter 3: Corporations: Retained Earnings and the Income Statement
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205 Verified Questions
205 Flashcards
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Sample Questions
Q1) Retained earnings cannot be invested by shareholders.
A)True
B)False
Answer: True
Q2) Which of the following is NOT included on the Statement of Retained Earnings?
A) Net Income
B) Dividends
C) Common Share Issuance
D) Retained Earnings, January 1
Answer: C
Q3) Refer to Table 14-7.How much of an income/(loss_should be reported for discontinuing operations net of tax?
A) $(78,750)
B) $(105,000)
C) $(120,000)
D) $(90,000)
Answer: D
Q4) Refer to Table 14-5.The total contributed capital after the declaration of a 10% common stock dividend is: __________.
Answer: $700,000 + (50,000 × 10% × $12.00_= $760,000
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Chapter 4: Long-Term Liabilities
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Refer to Table 15-6.The entry to record the issuance of the bonds on June 1,2017,at 96.5 includes a debit to Cash of what amount?
Q2) Smith Corporation issues $400,000,10%,five-year bonds at 95.The total interest expense over the life of the bonds is:
A) $40,000
B) $220,000
C) $180,000
D) $200,000
Q3) Saint Martin Inc.issued $300,000,12%,10-year bonds on July 1,2017.Interest payments dates are January 2 and July 1.The issue price was $293,400.The bonds are convertible into common shares at the rate of 15 common shares for each $1,000 bond.The market price of Saint Martin Inc.common shares has risen steadily over the last two years and on July 1,2019,half of the bonds are converted into common shares.
a_Compute the balance in the premium or discount account on date of conversion.Saint Martin Inc.uses the straight-line method of amortization.
b_Prepare the entry to convert half of the bonds into common shares.
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6
Chapter 5: Investments and International Operations
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191 Flashcards
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Sample Questions
Q1) All share purchases are initially recorded at cost.
A)True
B)False
Q2) Refer to Table 16-4.Assume that Parson Products Inc.fails to make the necessary six-month amortization entry on December 31,2017.What is the effect of that error on the December 31,2017,financial statements?
A) Interest revenue is overstated by $930.
B) Investment in bonds is understated by $558.
C) Interest revenue is overstated by $558.
D) Investment in bonds is overstated by $1,116.
Q3) Long-term investments in bonds are reported on the balance sheet at their fair market value.
A)True
B)False
Q4) When the equity method is used to account for a share investment,dividends received are recorded as a reduction to the investment account and the investor's share of income reported by the investee is treated as an increase in the investment account.Explain why this is done.
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Page 7
Chapter 6: The Cash Flow Statement
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207 Flashcards
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Sample Questions
Q1) The cash flow statement aids investors and creditors in assessing a business's ability to meet its debt obligations and its ability to pay cash dividends.
A)True
B)False
Q2) Which of the following is not considered an operating activity?
A) interest earned on short-term investments
B) sale of inventory
C) dividends received on investments in shares
D) dividends paid to shareholders
Q3) What is the most important source of cash for most successful companies? Explain why.
Q4) Your best friend just lost his job because the company he was working for went bankrupt.He was complaining to you that even though the company had been profitable for three years in a row,it still went out of business.He asks you how this can happen.
a_Explain the most likely reason for the company's declaring bankruptcy.Could your best friend have seen it coming? How?
b_Discuss the four purposes of the cash flow statement.
Q5) The difference between the sales proceeds and book value of an asset being sold
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Chapter 7: Financial Statement Analysis
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Sample Questions
Q1) Refer to Table 18-8.How much is the current ratio at year-end 2017?
A) 17.5
B) 16.1
C) 3.5
D) 0.5
Q2) Refer to Table 18-5.On a vertical analysis,what percentage would be shown for cost of goods sold?
A) 59.4%
B) 61.0%
C) 63.4%
D) 64.1%
Q3) Assume a company has a current ratio of 1.5 and working capital equal to $40,000.Total current assets are:
A) $120,000
B) $60,000
C) $80,000
D) $20,000
Q4) Describe what is meant by the phrase efficient capital market.How does the level of market efficiency affect a value investor.
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