Financial Accounting II
Study Guide Questions
Course Introduction
Financial Accounting II builds upon the foundational principles introduced in the initial financial accounting course, delving deeper into the preparation, analysis, and interpretation of financial statements. Topics covered include accounting for investments, revenue recognition, accounting for current and long-term liabilities, stockholders equity, earnings per share, and cash flow statements. The course emphasizes the application of accounting standards, ethical considerations, and the use of financial information for decision-making by various stakeholders. Students will develop enhanced analytical skills through problem-solving, case studies, and practical exercises designed to mirror real-world business scenarios.
Recommended Textbook
Advanced Financial Accounting 11th Edition by Theodore Christensen
Available Study Resources on Quizplus
21 Chapters
1386 Verified Questions
1386 Flashcards
Source URL: https://quizplus.com/study-set/3586
Page 2
Chapter 1: Intercorporate Acquisitions and Investments in Other Entities
Available Study Resources on Quizplus for this Chatper
58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/71187
Sample Questions
Q1) Based on the preceding information,what amount of goodwill will be reported in consolidated financial statements presented immediately following the combination if Mercury paid $295,000 for the acquisition?
A) $0
B) $5,000
C) $15,000
D) $45,000
Answer: C
Q2) 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
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Reporting Intercorporate Investments and
Consolidation of Wholly Owned Subsidiaries With No
Differential
Available Study Resources on Quizplus for this Chatper
59 Verified Questions
59 Flashcards
Source URL: https://quizplus.com/quiz/71188
Sample Questions
Q1) Based on the information provided,what amount of net income will be reported in the consolidated financial statements prepared on December 31,20X4?
A) $100,000
B) $85,000
C) $110,000
D) $125,000
Answer: C
Q2) A cash dividend returns assets to the stockholders while reducing corporate liquidity.Why are not all cash dividends considered to be "liquidating dividends"? In your response include a discussion of how an investor accounts for a liquidating dividend. Answer: A dividend represents earnings of a company being returned to its shareholders. A liquidating dividend occurs when an investee declares dividends in excess of the earnings from the purchase date of the investment.An individual investor must treat a liquidating dividend associated with its investment as a return of capital and reduce the investment account accordingly.It is possible for blocks of stock acquired at different times to have different amounts associated with a potential liquidating dividend.
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: The Reporting Entity and Consolidation of
Less-Than-Wholly-Owned Subsidiaries With No Differentials
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/71189
Sample Questions
Q1) Which of the following usually does not represent a variable interest?
A) Common stock, with no special features or provisions
B) Senior debt
C) Subordinated debt
D) Loan or asset guarantees
Answer: B
Q2) ASC 805 is related to the Consolidation of Variable Interest Entities.Describe what a Variable Interest Entity is and discuss why the FASB has difficulty in prescribing when these entities are consolidated?
Answer: A Variable Interest Entity (VIE)is a legal structure used for business purposes that either:
1.Does not have equity investors that: a.have voting rights or b.doesn't share in all of the entity's profits or losses.
2.Has equity investors that do not provide sufficient financial resources to support the entity's activities.
Therefore,FASB has been trying to define the Primary Beneficiary and from this lead to consolidation not just control as presumed under ASC 805.
Page 5
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Consolidation of Wholly Owned Subsidiaries
Acquired at More Than Book Value
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/71190
Sample Questions
Q1) Based on the information given above,what will be the amount of net assets reported in the consolidated balance sheet?
A) $1,420,000
B) $1,325,000
C) $1,250,000
D) $900,000
Q2) The Greenpath Corporation's (Greenpath)balance sheet shows assets of $800,000 and liabilities of $300,000.In addition,the company has an unrecorded intangible asset with a value of $100,000 and a 10-year useful life.On January 1,20X1,the Montana Corporation acquires 30% of Greenpath's outstanding stock for $290,000.In
20X1,Greenpath reported net income of $90,000 and paid dividends of $20,000.In 20X2,Greenpath reported net income of $110,000 and paid dividends of $50,000.If the equity method is being applied to this investment,what is the reported balance for the investment account at the end of 20X2?
A) $311,000
B) $302,000
C) $323,000 D $317,500
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Consolidation
of Less-Than-Wholly-Owned
Subsidiaries Acquired at More Than Book Value
Available Study Resources on Quizplus for this Chatper
58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/71191
Sample Questions
Q1) Based on the preceding information,what balance would Ephraim report as its investment in Lilac at January 1,20X5?
A) $236,000
B) $248,000
C) $260,000
D) $300,000
Q2) Based on the information given,what was the fair value of Y Company as a whole at the date of acquisition?
A) $155,000
B) $110,000
C) $115,000
D) $135,000
Q3) Based on the information given,what balance in accounts receivable did Y Company report at December 31,20X8?
A) $28,000
B) $48,000
C) $40,000
D) $38,000
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Intercompany Inventory Transactions
Available Study Resources on Quizplus for this Chatper
68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/71192
Sample Questions
Q1) Based on the information given above,what balance will be reported for inventory in the consolidated balance sheet for December 31,20X8?
A) $56,573
B) $23,846
C) $32,727
D) $67,000
Q2) Based on the information given above,what amount of cost of goods sold must be eliminated from the consolidated income statement for 20X8?
A) $117,000
B) $120,000
C) $150,000
D) $128,000
Q3) Based on the information given above,what will be the consolidated net income for 20X6?
A) $357,500
B) $375,000
C) $490,000
D) $317,750
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Intercompany Transfers of Services and
Noncurrent Assets
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/71193
Sample Questions
Q1) Any intercompany gain or loss on a downstream sale of land should be recognized in consolidated net income:
I.in the year of the downstream sale.
II.over the period of time the subsidiary uses the land.
III.in the year the subsidiary sells the land to an unrelated party.
A) I
B) II
C) III
D) I or II
Q2) Based on the preceding information,in the preparation of the 20X8 consolidated financial statements,equipment will be:
A) debited for $1,000.
B) debited for $10,000.
C) credited for $15,000.
D) debited for $25,000.
Q3) Based on the preceding information,consolidated net income for 20X9 will be:
A) $150,000.
B) $100,000.
C) $148,000.
D) $130,000.
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Intercompany Indebtedness
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/71194
Sample Questions
Q1) Based on the information given above,what amount of gain or loss on constructive bond retirement will be reported in the December 31,20X8 consolidated financial statements?
A) $8,892 loss
B) $81,108 loss
C) $19,276 gain
D) $81,108 gain
Q2) Based on the information given above,what amount of investment in bonds will be eliminated in the preparation of the 20X3 consolidated financial statements?
A) $257,248
B) $300,000
C) $395,766
D) $400,784
Q3) Based on the information given above,in the preparation of the 20X3 consolidated financial statements,premium on bonds payable will be
A) credited for $95,766 in the consolidation entries.
B) debited for $95,766 in the consolidation entries.
C) credited for $100,784 in the consolidation entries.
D) debited for $100,784 in the consolidation entries.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 8: Appendix A: Intercompany Indebtedness
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/71207
Sample Questions
Q1) Based on the information given above,what amount of interest income 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 interest expense will be eliminated in the preparation of the 20X8 consolidated financial statements?
A) $13,000
B) $13,500
C) $10,000
D) $15,000
Q3) Based on the information given above,what amount of investment in bonds will be eliminated in the preparation of the 20X8 consolidated financial statements?
A) $240,500
B) $200,000
C) $245,000
D) $211,500
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 9: Consolidation Ownership Issues
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/71195
Sample Questions
Q1) Based on the preceding information,in the journal entry recorded by Autumn for the sale of shares
A) Cash will be credited for $90,000.
B) Investment in Spring Stock will be credited for $90,000.
C) Investment in Spring Stock will be credited for $75,000.
D) Additional Paid-in Capital will be credited for $9,000.
Q2) Based on the preceding information,in the consolidation entries to complete a consolidation worksheet at January 1,20X4 (after the sale of the 3,000 shares of Spring stock),Investment in Spring Stock will be credited for
A) $360,000.
B) $375,000.
C) $405,000.
D) $450,000.
Q3) Based on the preceding information,what is the total noncontrolling interest reported in the consolidated balance sheet as of January 1,20X8?
A) $80,000
B) $40,000
C) $50,000
D) $60,000
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 10: Additional Consolidation Reporting Issues
Available Study Resources on Quizplus for this Chatper
58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/71196
Sample Questions
Q1) Use the information given,but also assume that Company A holds the land at the end of 20X9.The consolidating entry relating to the intercorporate sale of land to be entered in the consolidation worksheet prepared at the end of 20X9 will include a debit to Investment in Company B for:
A) $4,500.
B) $7,500.
C) $15,000.
D) $10,500.
Q2) Based on the preceding information,what is the fair value of the noncontrolling interest at the time of acquisition?
A) $47,813
B) $57,500
C) $60,000
D) $45,000
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 11: Multinational Accounting: Foreign Currency
Transactions and Financial Instruments
Available Study Resources on Quizplus for this Chatper
74 Verified Questions
74 Flashcards
Source URL: https://quizplus.com/quiz/71197
Sample Questions
Q1) Based on the preceding information,what is the market price of Linked Corporation stock on February 20,20X9?
A) $35
B) $37
C) $36
D) $40
Q2) Company X denominated a December 1,20X9,purchase of goods in a currency other than its functional currency.The transaction resulted in a payable fixed in terms of the amount of foreign currency,and was paid on the settlement date,January 10,2010.Exchange rates moved unfavorably at December 31,20X9,resulting in a loss that should:
A) be included as a separate component of stockholders' equity at Dec. 31, 20X9.
B) be included as a component of income from continuing operations for 20X9.
C) be included as a deferred charge at December 31, 20X9.
D) not be reported until January 10, 2010, the settlement date.
Q3) Based on the preceding information,the entries on December 31,20X8,include a:
A) Credit to Foreign Currency Payable to Exchange Broker, $4,000.
B) Debit to Foreign Currency Receivable from Exchange Broker, $6,000.
C) Debit to Foreign Currency Receivable from Exchange Broker, $186,000.
D) Debit to Foreign Currency Transaction Gain, $4,000.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 12: Multinational Accounting: Issues in Financial
Reporting and Translation of Foreign Entity Statements
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/71198
Sample Questions
Q1) Based on the preceding information,in the journal entry to record parent's share of subsidiary's translation adjustment:
A) Other Comprehensive Income - Translation Adjustment will be debited for $8,000.
B) Other Comprehensive Income - Translation Adjustment will be credited for $6,000.
C) Investment in Steamship Company will be credited for $6,000.
D) Investment in Steamship Company will be debited for $8,000.
Q2) Based on the information provided,in Newsprint's 20X8 consolidated income statement,what amount should be included as foreign exchange loss in computing net income,if the U.S.dollar is the functional currency and the remeasurement method is appropriate?
A) $15,000
B) $10,000
C) $25,000
D) $28,000
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Segment and Interim Reporting
Available Study Resources on Quizplus for this Chatper
76 Verified Questions
76 Flashcards
Source URL: https://quizplus.com/quiz/71199
Sample Questions
Q1) Estimated gross profit rates may be used to estimate a company's cost of goods sold and its ending inventory for:
A) quarterly but not for annual financial statements.
B) both quarterly and annual financial statements.
C) neither quarterly nor annual financial statements.
D) annual but not for quarterly financial statements.
Q2) Reportable segments are not required to disclose which of the following:
A) Amortization expense
B) Intersegment sales
C) Capital expenditures
D) Long-term debt
Q3) On June 30,20X8,String Corporation incurred a $220,000 net loss from disposal of a business component.Also,on June 30,20X8,String paid $60,000 for property taxes assessed for the calendar year 20X8.What amount of the preceding items should be included in the determination of String's net income or loss for the six-month interim period ended June 30,20X8?
A) $250,000
B) $220,000
C) $140,000
D) $280,000
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 14: Sec Reporting
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/71200
Sample Questions
Q1) Schedule 13D is filed
A) by entities that acquire a beneficial ownership of more than 5 percent of a class of registered equity securities.
B) to broadly report material information that is being provided to securities analysts, selected institutional investors, or others.
C) to disclose material items related to asset-backed securities such as a bond issue.
D) by management to report the existence and effectiveness of the company's internal control over financial reporting.
Q2) Form 8-K
Q3) Which of the following acts helps businesses raise funds in public capital markets by minimizing regulatory requirements?
A) Dodd-Frank Wall Street Reform and Consumer Protection Act
B) Foreign Corrupt Practices Act
C) Jumpstart Our Business Startups (JOBS) Act
D) Sarbanes-Oxley Act
Q4) Form 10-K
Q5) Comment Letter
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 15: Partnerships: Formation,operation,and
Changes in Membership
Available Study Resources on Quizplus for this Chatper
77 Verified Questions
77 Flashcards
Source URL: https://quizplus.com/quiz/71201
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) Refer to the information provided above.Allen and Daniel agree that some of the inventory is obsolete.The inventory account is decreased before David is admitted.David invests $40,000 for a one-fifth interest.What is the amount of inventory written down?
A) $4,000
B) $20,000
C) $15,000
D) $10,000
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 16: Partnerships: Liquidation
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/71202
Sample Questions
Q1) On a partner's personal statement of changes in net worth,what type(s)of income is (are)recognized?
I.Realized
II.Unrealized
A) I only
B) II only
C) Both I and II
D) Neither I nor II
Q2) The JKL partnership liquidated its business in 20X9.Due to an expected long liquidation period,a cash distribution plan was developed.The initial sale and realization of cash from noncash assets resulted in partner K properly getting $24,000.No other partners received cash along with K.Based upon this information,which of the following statements is correct?
I.K's loss absorption power (LAP)was higher than J's LAP and L's LAP.
II.K's capital balance was substantially larger than the balances of J and L.
A) I only
B) II only
C) Either I or II
D) Neither I nor II
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 17: Governmental Entities: Introduction and General
Fund Accounting
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/71203
Sample Questions
Q1) In a town's general fund operating budget for the year,the amount of its estimated revenues exceeded the amount of its appropriations.This excess should be:
A) credited to Budgetary Fund Balance-Unassigned.
B) debited to Budgetary Fund Balance-Unassigned.
C) credited to Fund Balance-Unassigned.
D) debited to Fund Balance-Unassigned.
Q2) Identify the legal term that allows the general fund to make expenditures.
A) Exceptions
B) Appropriations
C) Encumbrances
D) Consumption
Q3) Which of the following funds are classified as fiduciary funds?
A) Agency and Special revenue funds.
B) Internal service and Enterprise funds.
C) Private-purpose trust and Agency funds.
D) Capital projects and Debt service funds.
Q4) Briefly discuss the various types of governmental funds and proprietary funds.
Q5) Accounting processes differ between a for-profit entity and a governmental entity.Discuss three differences between a governmental entity and a for-profit entity.
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 18: Governmental Entities: Special Funds and Government-Wide Financial Statements
Available Study Resources on Quizplus for this Chatper
84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/71204
Sample Questions
Q1) For which of the following long-term debt obligations would payments not be accounted for in a debt service fund?
A) Notes and warrants secured by specific tax revenues.
B) Special assessment bonds sold to acquire enterprise fund assets.
C) Notes and warrants.
D) Special assessment bonds may be used to finance capital projects.
Q2) Which of the following financial statements would not be prepared for an enterprise fund?
A) A statement of cash flows.
B) A statement of revenues, expenses, and changes in fund net assets.
C) A balance sheet.
D) A statement of revenues, expenditures, and changes in fund balance.
Q3) Revenue and expense on a government-wide statement of activities for a municipality should be measured on a(n)
A) cash basis.
B) modified accrual basis.
C) accrual basis.
D) reconciliation basis.
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 19: Not-For-Profit Entities
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/71205
Sample Questions
Q1) Transaction: Received cash contribution from donor who stipulated the contribution be permanently invested.
Effect on Statement of Operations:
A) Increases operating income.
B) Decreases operating income.
C) The transaction is reported on the statement of operations, but there is no effect on operating income.
D) The transaction is not reported on the statement of operations.
Q2) The disclosure,"net assets released from restrictions," is reported on which of the following financial statements for a voluntary health and welfare organization?
I.The statement of cash flows.
II.The statement of activities.
A) I only
B) II only
C) Both I and II.
D) Neither I nor II.
Q3) "Financial statement of a private NFP entity" describes which term listed above?
Q4) "Classification of contributions restricted by purpose" describes which term listed above?
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 20: Corporations in Financial Difficulty
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/71206
Sample Questions
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) What are the conditions necessary for using fresh start reporting in reorganization?
Q3) A transfer of assets by a company in financial difficulty is considered a sale if:
I.the transfer includes a recourse provision allowing the buyer to return the asset.
II.the transferee obtains the right to pledge or exchange the transferred assets.
III.the transferred assets have been isolated from the transferor.
IV.the transferor does not maintain effective control over the transferred assets.
A) I, II, and IV
B) Both I and III
C) Both I and II
D) II, III, and IV
To view all questions and flashcards with answers, click on the resource link above.
23