Corporate Accounting
Question Bank
Course Introduction
Corporate Accounting focuses on the principles and practices involved in accounting for corporate entities. The course covers essential topics such as the preparation and presentation of company financial statements, treatment of share capital and debentures, accounting for mergers and acquisitions, internal reconstruction, and liquidation of companies. It also addresses compliance with legal and regulatory requirements, including relevant accounting standards and disclosures. Students will gain practical knowledge of key corporate transactions and develop the analytical skills needed to interpret financial information for decision-making and reporting purposes.
Recommended Textbook
Accounting for Corporate Combinations and Associations 7th Australian Edition by Neal Arthur
Available Study Resources on Quizplus
11 Chapters
368 Verified Questions
368 Flashcards
Source URL: https://quizplus.com/study-set/3411
Page 2
Chapter 1: Text Objectives and Introduction to Consolidation
Available Study Resources on Quizplus for this Chatper
28 Verified Questions
28 Flashcards
Source URL: https://quizplus.com/quiz/67731
Sample Questions
Q1) What are the major criticisms of the control criterion applied to the definition of the group?
Answer: Criticisms of control criterion:
- Lack of clear guidelines as to what constitutes control where there is less than 50% ownership
- Current proposals attempt to clarify this ambiguity
Diff.Moderate Page: 28
Q2) If a parent entity is a reporting entity the group must also be a reporting entity. A)True
B)False
Answer: False
Q3) If a parent loses control of a subsidiary during a financial year,that subsidiary's results are ignored for consolidation purposes.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Principles of Consolidation
Available Study Resources on Quizplus for this Chatper
42 Verified Questions
42 Flashcards
Source URL: https://quizplus.com/quiz/67732
Sample Questions
Q1) In a consolidation it would be double counting to record the net assets of a subsidiary and the parent company's investment in subsidiary asset
A)True
B)False
Answer: True
Q2) Any goodwill arising on a business combination is required to be tested at least annually for impairment.This requirement arises from the operation of:
A) AASB116 Property Plant and Equipment
B) AASB3 Business Combinations
C) AASB138 Intangible Assets
D) AASB 136 Impairment
Answer: D
Q3) In a business combination share issue costs are not included as part of the cost of acquisition.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Fair Value Adjustments and Tax Effects
Available Study Resources on Quizplus for this Chatper
34 Verified Questions
34 Flashcards
Source URL: https://quizplus.com/quiz/67733
Sample Questions
Q1) A company purchases all the issued shares of B company for $2,000,000.The net assets of B Company consist of land $2,100,000 and a liability of $100,000.A company will record the acquisition as follows:
A) DR Land $2,100,000 CR Liability $100,000
CR Cash $2,000,000
B) DR Shares in B $2,000,000 CR Share Capital $2,000,000
C) DR Shares in B $2,000,000 CR Cash $2,000,000
D) none of the above
Answer: C
Q2) Accounting Standard AASB 3 Business Combinations requires the recognition of contingent assets in a business combination
A)True
B)False Answer: False
Q3) All assets acquired in a business combination must be recognised at fair value
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Intra-Group Transactions
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/67734
Sample Questions
Q1) A loss on intra-group sales of inventory will be regarded as realised by the group at the time of the sale only if the transfer price represents the net realisable value of the inventories
A)True
B)False
Q2) Where service fees are accrued by group members there is no tax effect on consolidation
A)True
B)False
Q3) Explain why temporary differences (and therefore deferred tax adjustments)arise when depreciable assets are sold at a profit on an intra-group basis.
Q4) Dividends paid by the parent company and all subsidiaries will be eliminated as consolidation adjustments
A)True
B)False
Q5) Explain why some consolidation adjusting entries are required to be carried forward to future years.
Q6) Explain why cash will never be adjusted in consolidation journal entries
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Non-Controlling Interest
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/67735
Sample Questions
Q1) The fair value method of measuring NCI includes an amount representing the non controlling shareholder's interest in goodwill.
A)True
B)False
Q2) Where the shareholder's equity of a subsidiary is negative:
A) the NCI will be included as part of the parent interests
B) the NCI will be shown as a separate amount in the consolidated accounts
C) NCI is ignored for consolidation purposes
D) none of the above
Q3) Company A owns 40% of Company B and this ownership is deemed to represent control.The non controlling interest in B is:
A) 40%
B) 60%
C) 100%
D) No non controlling interest
Q4) If A owns 80% of B and B owns 75% of C,A's ownership interest in B and C is characterised as direct.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Partly-Owned Subsidiaries: Indirect
Non-Controlling Interest
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/67736
Sample Questions
Q1) Circular shareholdings arise where:
A) a subsidiary holds an equity interest in its parent
B) a subsubsidiary holds an interest in another subsidiary of its parent
C) a subsidiary holds an interest in a subsubsidiary
D) none of the above
Q2) Discuss the current position of the Corporations Act in respect to reciprocal ownership interests.
Q3) Why does the multiple consolidation method adopt a revaluation approach to the net assets of subsubsidiaries?
Q4) Using the data from Question 2 the Parent Ltd NCI indirect ownership interest in S2 is:
A) 10%
B) 40%
C) 6%
D) none of the above
Q5) The parent-son-grandson description applies to corporate groups involving indirect ownership interests
A)True
B)False
Q6) Discuss the disadvantages of the sequential consolidation method.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Consolidated Cash Flow Statements
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/67737
Sample Questions
Q1) Why is cash flow from operating activities seen as a performance measure?
Q2) Cash flows from operating activities is the default classification in a statement of cash flows
A)True
B)False
Q3) A company has total sales revenue of $600,000 for a period.The balance of Accounts Receivable was $200,000 at the start of the year and $220,000 at the end of the year.Cash sales amounted to $50,000.Receipts from customers is:
A) $600,000
B) $530,000
C) $550,000
D) $580,000
Q4) Cash payments to buy back shares will be classified as:
A) cash flow from operating activities
B) cash flow from investing activities
C) cash flow from financing activities
D) none of the above
Q5) Discuss why Australia moved from a requirement to prepare a statement of sources and application of funds to a statement of cash flows.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Accounting for Joint Arrangements
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/67738
Sample Questions
Q1) Discuss whether equity accounting profits are 'realised' from the viewpoint of the investor
Q2) Assume the same data as in Question 4-27.In July 20X8,Calpurnia Ltd acquired an additional 20% of the share capital of Portia Ltd and the power to control that company.In preparing the consolidated financial statements of the group controlled by Portia Ltd for the year ended June 30 20X8:
A) An adjustment would be made to recognise the equity of Calpurnia Ltd in the retained earnings at June 30 20X7 of Portia Ltd.
B) No adjustments would be required since the consolidation process would automatically recognise the equity of Calpurnia Ltd in the retained earnings at June 30 20X7 of Portia Ltd.
C) Adjustment would be required to reverse the recognition of the deferred tax liability at June 30 20X7 and the minority interest recognised on that adjustment.
D) None of the above.
Q3) The equity accounting method must be applied by all applicable reporting entities
A)True B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Accounting for Associates and Joint Ventures: the Equity Method
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/67739
Sample Questions
Q1) An investor in a joint venture is required to account for the investment in accordance with AASB131
A)True
B)False
Q2) The line by line method of accounting is required for interests in joint ventures which are:
A) jointly controlled entities
B) jointly controlled operations
C) jointly controlled assets
D) both B and C
Q3) Jointly controlled operations and jointly controlled assets result from an unincorporated contractual association
A)True
B)False
Q4) Discuss the issue of entitlement of venturers to share in profits of a jointly controlled entity.
Q5) What is meant by the statement that a venturer will account for an interest in a jointly controlled operation or jointly controlled asset by 'converting from the one line method to the line by line method'?
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Translation and Consolidation of Foreign Currency Financial Statements
Available Study Resources on Quizplus for this Chatper
31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/67740
Sample Questions
Q1) In the consolidated balance sheet at June 30 20X7 of the group controlled by Johnson Ltd,the foreign currency translation reserve attributable to the members the parent entity would be (rounded to the nearest thousand dollars):
A) $311,111
B) $839,300
C) $108,538
D) None of the above.
Q2) The translation gain or loss on a foreign operation using the current rate method represents the effect of exchange rate movements on net assets.
A)True
B)False
Q3) A foreign exchange gain arising from translating financial statements should always be recorded as revenue
A)True
B)False
Q4) Discuss whether the use of the current rate method provides adequate disclosure of the exposure of a foreign operation to exchange rate movements.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Segment Reporting by Diversified Entities
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/67741
Sample Questions
Q1) The management approach to identifying segments will result in consistency between internal and external reporting of segment information.
A)True
B)False
Q2) The definition of operating segments requires recognition of components of the entity that:
A) are cost centres
B) are production units
C) have similar gross margins
D) none of the above
Q3) Segment information must be disclosed:
A) on the face of the financial statements
B) in a note to the financial statements
C) either A or B
D) none of the above
Q4) A diversified group is one that operates in markets that:
A) have different rates of profitability
B) have different opportunities for growth
C) have different degrees of risk
D) all of the above
To view all questions and flashcards with answers, click on the resource link above. Page 13