Corporate Reporting
Final Exam
Course Introduction
Corporate Reporting is a comprehensive course that examines the principles, practices, and regulatory frameworks underlying the preparation and presentation of corporate financial statements. The course covers topics such as international accounting standards, consolidation of group accounts, interpretation and analysis of financial statements, and the ethical responsibilities of corporate reporters. Through case studies and practical exercises, students learn to apply relevant accounting standards, assess the quality and transparency of reporting, and understand the impact of corporate disclosures on stakeholders decision-making processes. This course is essential for students seeking a strong foundation in delivering accurate and meaningful financial information in modern business environments.
Recommended Textbook
Advanced Financial Accounting 8th Edition by Richard Baker
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20 Chapters
1041 Verified Questions
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Page 2
Chapter 1: Intercorporate Acquisitions and Investments in Other Entities
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Sample Questions
Q1) Based on the information provided,what amount of goodwill will be reported immediately following the business combination in the combined company's balance sheet?
A)$0
B)$50,000
C)$40,000
D)$105,000
Answer: C
Q2) Based on the preceding information,what amount will be recorded by Zenith as its investment in Plummet,if it paid $500,000 for the acquisition?
A)$610,000
B)$400,000
C)$500,000
D)$510,000
Answer: D
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3
Chapter 2: Reporting Intercorporate Interests
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Sample Questions
Q1) Based on the information provided,what amount of income will be reported by Wheeley from its investment in Twain for the year 2007?
A)$22,400
B)$11,800
C)$4,800
D)$12,400
Answer: B
Q2) A change from the cost method to the equity method of accounting for an investment in common stock resulting from an increase in the number of shares held by the investor requires:
A)only a footnote disclosure.
B)that the cumulative amount of the change be shown as a line item on the income statement,net of tax.
C)that the change be accounted for as an unrealized gain included in other comprehensive income.
D)retroactive restatement as if the investor always had used the equity method. Answer: D
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Chapter 3: The Reporting Entity and Consolidated Financial Statements
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Sample Questions
Q1) Company Pea owns 90 percent of Company Essone which in turn owns 80 percent of Company Esstwo.Company Esstwo owns 100 percent of Company Essthree.Consolidated financial statements should be prepared to report the financial status and results of operations for:
A)Pea.
B)Pea plus Essone.
C)Pea plus Essone plus Esstwo.
D)Pea plus Essone plus Esstwo plus Essthree.
Answer: D
Q2) Based on the preceding information,what is the amount of net income to be reported in the consolidated income statement for the year under the parent company theory approach?
A)$220,000
B)$202,000
C)$160,000
D)$200,000
Answer: B
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Chapter 4: Consolidation of Wholly Owned Subsidiaries
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Sample Questions
Q1) Based on the preceding information,what amount of liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?
A)$615,000
B)$406,000
C)$300,000
D)$265,000
Q2) Based on the preceding information,the differential reflected in a consolidation workpaper to prepare a consolidated balance sheet immediately after the business combination is:
A)$0.
B)$25,000.
C)$70,000.
D)$45,000.
Q3) Based on the preceding information,what amount of differential will arise in the consolidation process?
A)$0
B)$5,000
C)$15,000
D)$65,000
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Page 6
Chapter 5: Consolidation of Less-Than-Wholly Owned Subsidiaries
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Sample Questions
Q1) Based on the preceding information,what amount would be reported as noncontrolling interest in the consolidated balance sheet at December 31,2009?
A)$27,000
B)$4,000
C)$15,000
D)$18,000
Q2) On January 1,2008,Zeta Company acquired 85 percent of Theta Company's common stock for $100,000 cash.The fair value of the noncontrolling interest was determined to be 15 percent of the book value of Theta at that date.What portion of the retained earnings reported in the consolidated balance sheet prepared immediately after the business combination is assigned to the noncontrolling interest?
A)Nil
B)15 percent
C)100 percent
D)Cannot be determined
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Chapter 6: Intercompany Transfers of Services and
Noncurrent Assets
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Sample Questions
Q1) Based on the preceding information,in the preparation of the 2009 consolidated balance sheet,accumulated depreciation will be:
A)debited for $110,000 in the eliminating entries.
B)credited for $110,000 in the eliminating entries.
C)credited for $100,000 in the eliminating entries.
D)debited for $100,000 in the eliminating entries.
Q2) Based on the information provided,while preparing the 2008 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 $1500 in the eliminating entries.
D)debited for $1500 in the eliminating entries.
Q3) Phobos Company holds 80 percent of Deimos Company's voting shares.During the preparation of consolidated financial statements for 2009,the following eliminating entry was made: Which of the following statements is correct?
A)Phobos Company purchased land from Deimos Company during 2009.
B)Phobos Company purchased land from Deimos Company before January 1,2009.
C)Deimos Company purchased land from Phobos Company during 2009.
D)Deimos Company purchased land from Phobos Company before January 1,2009.
Page 8
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Chapter 7: Intercompany Inventory Transactions
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Sample Questions
Q1) Based on the information given above,what amount of inventory should be eliminated in the consolidation workpaper for 2008?
A)$15,000
B)$14,000
C)$12,000
D)$13,000
Q2) A subsidiary made sales of inventory to its parent at a profit this year.The parent,in turn,sold all but 20 percent of the inventory to unaffiliated companies,recognizing a profit.The amount that should be reported as cost of goods sold in the consolidated income statement prepared for the year should be:
A)the amount reported as intercompany sales by the subsidiary.
B)the amount reported as intercompany sales by the subsidiary minus unrealized profit in the ending inventory of the parent.
C)the amount reported as cost of goods sold by the parent minus unrealized profit in the ending inventory of the parent.
D)the amount reported as cost of goods sold by the parent.
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9
Chapter 8: Intercompany Indebtedness
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Sample Questions
Q1) Based on the information given above,what amount of premium on bonds payable will be eliminated in the preparation of the 2008 consolidated financial statements?
A)$3,500
B)$2,800
C)$5,000
D)$2,500
Q2) Based on the information given above,what amount of interest expense will be eliminated in the preparation of the 2009 consolidated financial statements?
A)$17,000
B)$13,300
C)$18,500
D)$22,200
Q3) Based on the information given above,what percentage of the subsidiary's ownership does the parent company hold?
A)75 percent
B)65 percent
C)80 percent
D)95 percent
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10
Chapter 9: Consolidation Ownership Issues
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Q1) Assume that Bricks declared a stock dividend of 3,000 shares on its $5 par value common stock.The investment elimination entry required to prepare a consolidated balance sheet immediately after the stock dividend is issued will include a debit to Retained Earnings for:
A)$185,000.
B)$65,000.
C)$155,000.
D)$140,000.
Q2) Based on the preceding information,what will be the amount of income to be assigned to the noncontrolling interest in the 2009 consolidated income statement?
A)$21,000
B)$18,000
C)$23,000
D)$15,000
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11
Chapter 10: Additional Consolidation Reporting Issues
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Q1) Assume that New Life uses the direct method of computing cash flows from operating activities.Based on the preceding information,what amount will be reported by the company as cash payments to suppliers for 2009?
A)$350,000
B)$348,000
C)$312,000
D)$352,000
Q2) Based on the preceding information,what amount will be reported in the consolidated cash flow statement as net cash provided by operating activities for 2009?
A)$350,000
B)$463,000
C)$335,000
D)$421,000
Q3) Based on the information provided,income to the controlling interest for 2009 is:
A)$155,370.
B)$56,000.
C)$168,000.
D)$250,000.
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12
Chapter 11: Multinational Accounting: Foreign Currency
Transactions and Financial Instruments
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Sample Questions
Q1) Based on the preceding information,which of the following journal entries will be made on February 20,2009?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) 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
Q3) Based on the preceding information,the entry to revalue foreign currency payable to current U.S.dollar value on March 1 will have:
A)a credit to Foreign Currency Transaction Gain for $1,500.
B)a debit to Foreign Currency Transaction Loss for $2,500.
C)a debit to Foreign Currency Transaction Loss for $1,500.
D)a credit to Foreign Currency Transaction Gain for $1,000.
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Chapter 12: Multinational Accounting: Issues in Financial
Reporting and Translation of Foreign Entity Statements
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Sample Questions
Q1) Based on the preceding information,on Leo's consolidated balance sheet at December 31,2008,what amount should be reported for the goodwill acquired on January 1,2008?
A)$36,845
B)$39,286
C)$36,905
D)$36,607
Q2) Refer the information provided above.Assuming the U.S.dollar is the functional currency,what is the amount of Mercury's cost of goods sold remeasured in U.S.dollars?
A)$1,680
B)$1,712
C)$1,700
D)$1,692
Q3) Briefly explain the following terms associated with accounting for foreign entities:
a)Functional Currency
b)Translation
c)Remeasurement
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Page 14
Chapter 13: Segment and Interim Reporting
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Sample Questions
Q1) Samuel Corporation foresees a downturn in its business in the medium term.It expects to sustain an operating loss of $160,000 for the full year ending December 31,2008.Samuel's tax rate is 35 percent.Anticipated tax credits for 2008 total $8,000.No permanent differences are expected.Realization of the full tax benefit of the expected operating loss and realization of anticipated tax credits are assured beyond any reasonable doubt because they will be carried back.For the first quarter ended March 31,2008,Samuel reported an operating loss of $30,000.How much of a tax benefit should Samuel report for the interim period ended March 31,2008?
A)$8,000
B)$12,000
C)$13,500
D)$15,500
Q2) Refer to the above information.Which of the operating segments above are reportable segments?
A)B,C,and D
B)A,B,D,and E
C)B,D,and E
D)A,B,C,D,and E
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Page 15
Chapter 14: Sec Reporting
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Sample Questions
Q1) Which of the following best describes a "red herring" prospectus?
A)A shortened version of registration Form S-1 available to those companies that already have publicly traded securities.
B)A prospectus containing material irregularities and deficiencies.
C)Preliminary information provided to investors about an upcoming issue,and issued between the time a registration statement is presented to the SEC and its effective date.
D)Disclosure in the business press,outlined in red,informing investors of an upcoming offering.
Q2) Pro forma disclosures are:
A)used to disclose unscheduled material events.
B)interim financial statements need not be audited.
C)materials submitted to shareholders for votes on corporate matters.
D)"what-if " presentations often taking the form of summarized financial statements.
Q3) "Red Herring" Prospectus
Q4) Accounting and Auditing Enforcement Releases
Q5) Comment Letter
Q6) Financial Reporting Releases
Q7) Form 10-Q
Page 16
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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 2008,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) Refer to the above information.Which statement below is correct if a new partner receives a bonus upon contributing assets into the partnership?
A)B < A and D = C - A
B)B > A and D = C + A
C)A = B and A = D + C
D)B > A and C = D + A
Q3) Transferable interest of a partner includes all of the following except:
A)the partner's share of the profits and losses of the partnership.
B)the right to receive distributions.
C)the right to receive any liquidating distribution.
D)the authority to transact any of the partnership's business operations.
Page 17
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Chapter 16: Partnerships: Liquidation
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Sample Questions
Q1) On December 31,2008,Mr.and Mrs.Williams owned a parcel of land held as an investment.The land was purchased for $40,000 in 2006,and was encumbered by a mortgage with a principal balance of $30,000 at December 31,2008.On this date the fair value of the land was $75,000.In the Williams' December 31,2008,personal statement of financial condition,at what amount should the land investment and mortgage payable be reported?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Based on the preceding information,the journal entry on W & M Corporation's books to record the assets and the issuance of the common stock will include a credit to Additional Paid-In Capital for:
A)$0.
B)$81,000.
C)$31,000.
D)$50,000.
Q3) A partnership may be involved in "Dissociation" or "Dissolution".
Required:
Describe "Dissociation" and "Dissolution."
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Chapter 17: Governmental Entities: Introduction and General Fund Accounting
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Sample Questions
Q1) In accounting for governmental funds,which of the following items could appear only on government-wide financial statements?
A)I only
B)I and II
C)I and III
D)I,II,III
Q2) Which organization has the authority to establish generally accepted accounting principles for state and local government entities?
A)The National Council on Governmental Accounting
B)The Governmental Accounting Standards Board
C)The Financial Accounting Standards Board
D)The Municipal Officers Finance Organization
Q3) Under the modified accrual basis of accounting,revenue should be recognized when it is:
A)measurable and earned.
B)received in cash.
C)available and earned.
D)measurable and available.
Q4) Briefly discuss the various types of governmental funds and proprietary funds.
Page 19
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Chapter 18: Governmental Entities: Special Funds and
Government-Wide Financial Statements
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Sample Questions
Q1) GASB 34 specifies two criteria for determining major governmental funds to be reported separately in the Governmental Fund Balance Sheet and Statement of Revenues,Expenditures,and Changes in Fund Balances.To be considered a major governmental fund,a fund must:
A)meet at least one criterion.
B)be the general fund or meet at least one criterion.
C)be the general fund or meet two criteria.
D)either A or C
Q2) What account is debited in a debt service fund when it records matured interest payable? I.Interest Expense
II)Expenditures
A)I only
B)II only
C)Either I or II
D)Neither I nor II
Q3) Which of the following characteristics best describes an enterprise fund?
A)Capital maintenance,revenues from general public user charges,and net income.
B)Operating budgets,expenditures,and tax revenues from general public.
C)Capital maintenance,revenues from user charges to other funds,and net income.
Page 20
D)Capital maintenance,tax revenues from general public,and net income.
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Chapter 19: Not-For-Profit Entities
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Q1) Refer to the above information.At June 30,2009,the amount of permanently restricted net assets reported on the statement of financial position would be:
A)$1,070,000.
B)$1,030,000.
C)$1,000,000.
D)$960,000.
Q2) Refer to the above information.On the statement of activities for the year ended June 30,2009,reclassifications would be reported at
A)$190,000.
B)$100,000.
C)$90,000.
D)$230,000.
Q3) Refer to the above information.On the statement of activities for the year ended June 30,2009,temporarily restricted net assets:
A)increased $130,000.
B)increased $40,000.
C)decreased $100,000.
D)decreased $60,000.
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21
Chapter 20: Corporations in Financial Difficulty
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Q1) The accounting statement of affairs is prepared:
A)at the end of the reorganization process.
B)at the end of the liquidation process.
C)at the beginning of the reorganization process.
D)at the beginning of the liquidation process.
Q2) Based on the preceding information,what is the total amount of unsecured claims?
A)$113,000
B)$126,000
C)$93,000
D)$121,000
Q3) To obtain cash quickly,DebCo.sold $750,000 of its receivables to Finco. ,with recourse.As the accountant for DebCo. ,what issues do you need to resolve in order to determine the appropriate accounting treatment?
Q4) Which of the following could be true of the proceedings under Chapter 11 of the Bankruptcy Code?
A)Always administered by the bankruptcy courts.
B)The debtor's assets are sold and its liabilities extinguished.
C)The company does not operate during this period.
D)The debtor continues as a business after the reorganization.
Q5) Briefly explain the three classes of creditors specified in the Bankruptcy Code.
Page 22
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