Financial Reporting
Solved Exam Questions
Course Introduction
Financial Reporting is a course designed to introduce students to the principles, standards, and practices involved in preparing and interpreting financial statements for external users. The course covers key topics such as the conceptual framework of accounting, the accounting cycle, recognition and measurement of assets and liabilities, and the preparation and analysis of income statements, balance sheets, and cash flow statements. Emphasis is placed on understanding the regulatory environment, ethical considerations, and the use of financial reports in decision-making by investors, creditors, and other stakeholders. Students will develop skills in applying accounting standards to real-world scenarios and analyzing the impact of financial reporting decisions on business performance.
Recommended Textbook
Advanced Accounting 13th Edition By
Joe Ben Hoyle
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Chapter 1: The Equity Method of Accounting for Investments
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Q1) Jager Inc.holds 30% of the outstanding voting shares of Kinson Co.and appropriately applies the equity method of accounting.Amortization associated with this investment equals $11,000 per year.For 2018, Kinson reported earnings of $100,000 and paid cash dividends of $40,000.During 2018, Kinson acquired inventory for $62,400, which was then sold to Jager for $96,000.At the end of 2018, Jager still held some of this inventory at its intra-entity selling price of $50,000.
Required:
Determine the amount of Equity in Investee Income that Jager should have reported for 2018.
Answer: 11ea7e46_dc4e_bf4d_ab1f_6f29c1c29e96_TB2563_00
Q2) What is the amount of the excess of purchase price over book value?
A) $(1,000,000.)
B) $ 400,000.
C) $ 800,000.
D) $ 1,000,000.
E) $ 1,100,000.
Answer: E
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Page 3
Chapter 1: A: the Equity Method of Accounting for Investments
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Q1) What was the reported balance of Harley's Investment in Bike Co.at December 31, 2017?
A) $880,000.
B) $2,400,000.
C) $2,480,000.
D) $2,600,000.
E) $2,900,000.
Answer: C
Q2) How would a change be made from the fair value method to the equity method of accounting for investments?
Answer: According to GAAP, when there is a change from the fair value method to the equity method for investments, the change should be incorporated prospectively.
Q3) Aqua Corp.purchased 30% of the common stock of Marcus Co.by paying $500,000.Of this amount, $50,000 is associated with goodwill. Required:
Prepare the journal entry to record Aqua's investment.
Answer: 11ea7e46_dcee_5a6f_ab1f_e7c131e668ff_TB2563_00
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Chapter 2: Consolidation of Financial Information
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Sample Questions
Q1) Compute consolidated retained earnings as a result of this acquisition.
A) $1,160.
B) $1,170.
C) $1,265.
D) $1,280.
E) $1,650.
Answer: D
Q2) Compute the amount of consolidated buildings (net) at date of acquisition.
A) $1,700.
B) $1,760.
C) $1,640.
D) $1,320.
E) $ 500.
Answer: B
Q3) What is the difference in consolidated results between a business combination whereby the acquired company is dissolved, and a business combination whereby separate incorporation is maintained?
Answer: There is no difference in consolidated results.
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Chapter 2: A: Consolidation of Financial Information
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Q1) With respect to recognizing and measuring the fair value of a business combination in accordance with the acquisition method of accounting, which of the following should the acquirer consider when determining fair value?
A) Only assets received by the acquirer.
B) Only consideration transferred by the acquirer.
C) The consideration transferred by the acquirer plus the fair value of assets received less liabilities assumed.
D) The par value of stock transferred by the acquirer, and the book value of identifiable assets transferred by the entity acquired.
E) The book value of identifiable assets transferred to the acquirer as part of the business combination less any liabilities assumed.
Q2) What will be the consolidated additional paid-in capital as a result of this acquisition?
A) $440,000.
B) $740,000.
C) $750,000.
D) $940,000.
E) $950,000.
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Chapter 3: Consolidations - Subsequent to the Date of Acquisition
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Q1) Compute the December 31, 2020, consolidated trademark.
A) $50,000.
B) $46,875.
C) $ 0.
D) $34,375.
E) $37,500.
Q2) All of the following are acceptable methods to account for a majority-owned investment in subsidiary except
A) The equity method.
B) The initial value method.
C) The partial equity method.
D) The fair-value method.
E) Book value method.
Q3) For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping gives the most accurate portrayal of the accounting results for the entire business combination?
Q4) For recognized intangible assets that are considered to possess indefinite lives, what is the accounting treatment for purposes of income recognition?
Q5) What is the basic objective of all consolidations?
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Chapter 3: A: Consolidations - Subsequent to the Date of Acquisition
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Q1) One company acquires another company in a combination accounted for under the acquisition method.The acquiring company decides to apply the equity method in accounting for the combination.What is one reason the acquiring company might have made this decision?
A) It is the only method allowed by the SEC.
B) It is relatively easy to apply.
C) It is the only internal reporting method allowed by generally accepted accounting principles.
D) Operating results on the parent's financial records reflect consolidated totals.
E) When the equity method is used, no worksheet entries are required in the consolidation process.
Q2) If Cale Corp.had net income of $444,000 in 2017, exclusive of the investment, what is the amount of consolidated net income?
A) $569,000.
B) $570,000.
C) $571,000.
D) $566,400.
E) $444,000.
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Page 8
Chapter 4: Consolidated Financial Statements and Outside Ownership
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Q1) Compute Pell's investment account balance in Demers at December 31, 2020.
A) $577,200.
B) $604,000.
C) $592,800.
D) $632,800.
E) $572,000.
Q2) Compute the noncontrolling interest in Demers at December 31, 2020.
A) $126,000.
B) $106,000.
C) $109,200.
D) $149,600.
E) $148,200.
Q3) What is the total amount of goodwill recognized at the date of acquisition?
A) $150,000.
B) $250,000.
C) $ 0.
D) $120,000.
E) $170,000.
Q4) Determine the amount of goodwill to be recognized in this acquisition.
Page 9
Q5) Where should a noncontrolling interest appear on a consolidated balance sheet?
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Chapter 4: A: Consolidated Financial Statements and Outside Ownership
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Q1) In consolidation at December 31, 2019, what net adjustment is necessary for Hogan's Patent account?
A) $5,600.
B) $8,800.
C) $7,000.
D) $7,700.
E) No adjustment is necessary.
Q2) Compute the noncontrolling interest in the net income of Demers at December 31, 2019.
A) $12,000.
B) $10,600.
C) $18,600.
D) $20,000.
E) $14,400.
Q3) Compute the noncontrolling interest in Demers at December 31, 2021.
A) $107,800.
B) $140,000.
C) $ 80,000.
D) $160,800.
E) $146,800.
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Chapter 5: Consolidated Financial Statements Intra-Entity
Asset Transactions
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Q1) Assume that Polar sold inventory to Icecap at a markup equal to 25% of cost.Intra-entity transfers were $130,000 in 2017 and $165,000 in 2018.Of this inventory, $39,000 of the 2017 transfers were retained and then sold by Icecap in 2018, while $55,000 of the 2018 transfers was held until 2019.
Required:
For the consolidated financial statements for 2018, determine the balances that would appear for the following accounts: (i) Cost of Goods Sold; (ii) Inventory; and (iii) Net income attributable to the noncontrolling interest.
Q2) Compute the equity in earnings of Gargiulo reported on Posito's books for 2017.
A) $63,000.
B) $62,730.
C) $63,270.
D) $70,000.
E) $62,700.
Q3) Why do intra-entity transfers between the component companies of a business combination occur so frequently?
Q4) Prepare the consolidation entries that should be made at the end of 2017.
Q5) How is the gain on an intra-entity transfer of a depreciable asset recognized?
Q6) What is consolidated net income for 2018?
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Chapter 5: A: Consolidated Financial Statements
Intra-Entity Asset Transactions
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Q1) Compute Parker's reported gain or loss on its internal accounting records prior to consolidation relating to the land for 2019.
A) $12,000 gain.
B) $ 5,000 loss.
C) $12,000 loss.
D) $ 7,000 gain.
E) $ 7,000 loss.
Q2) Norek Corp.owned 70% of the voting common stock of Thelma Co.On January 2, 2017, Thelma sold a parcel of land to Norek.The land had a book value of $32,000 and was sold to Norek for $45,000.Thelma's reported net income for 2017 was $119,000.Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, what is net income attributable to the noncontrolling interest?
A) $35,700.
B) $31,800.
C) $39,600.
D) $22,200.
E) $26,100.
Q3) Prepare the consolidation entries that should be made at the end of 2017.
Q4) How is the gain on an intra-entity transfer of a depreciable asset recognized?
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Chapter 6: Variable Interest Entities, Intra-Entity Debt,
Consolidated Cash Flows, and Other Issues
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Q1) How is the loss on sale of land reported on the consolidated statement of cash flows?
A) $20,000 added to net income as an operating activity.
B) $20,000 deducted from net income as an operating activity.
C) $15,000 deducted from net income as an operating activity.
D) $5,000 added to net income as an operating activity.
E) $5,000 deducted from net income as an operating activity.
Q2) Net cash flow from operating activities was:
A) $43,000.
B) $44,800.
C) $46,200.
D) $50,000.
E) $25,000.
Q3) Prepare Panton's journal entry to recognize the impact of this transaction.
Q4) During 2018, Parent Corporation purchased at carrying value some of the outstanding bonds of its subsidiary.How would this acquisition have been reflected in the consolidated statement of cash flows?
Q5) What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2021?
Q6) Describe how this transaction would affect Panton's books.
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Chapter 6: A: Variable Interest Entities, Intra-Entity Debt,
Consolidated Cash Flows, and Other Issues
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Q1) Prepare Panton's journal entry to recognize the impact of this transaction.
Q2) What would Knight Co.report as consolidated basic earnings per share (rounded)?
A) $6.37
B) $6.40
C) $7.00
D) $5.68
E) $6.00
Q3) After acquiring the additional shares, what adjustment is needed for Ryan's investment in Chase account?
A) $70,000 increase.
B) $70,000 decrease.
C) $12,188 decrease.
D) $12,188 increase.
E) No adjustment is necessary.
Q4) What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2021?
Q5) What was the noncontrolling interest's share of consolidated net income for the year 2018?
Q7) Describe how this transaction would affect Panton's books. Page 14
Q6) What is the amount of goodwill resulting from this acquisition?
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Page 15
Chapter 7: Consolidated Financial Statements - Ownership
Patterns and Income Taxes
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Q1) Jastoon Co.acquired all of Wedner Co.for $588,000 cash in a tax-free transaction.On that date, the subsidiary had net assets with a $560,000 fair value but a $420,000 book value and income tax basis.The income tax rate was 30%.What amount of goodwill should have been recognized on the date of the acquisition?
A) $ 70,000.
B) $ 28,000.
C) $ (14,000).
D) $ 19,600.
E) $ 65,000.
Q2) The accrual-based net income of West Corp.is calculated to be
A) $ 734,000.
B) $1,261,000.
C) $1,123,900.
D) $1,140,700.
E) $1,149,700.
Q3) Required: Prepare a schedule to show consolidated net income.
Q4) Explain how the treasury stock approach treats shares of the parent's common stock that are owned by the subsidiary and the rationale behind the approach.
Page 16
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Chapter 7: A: Consolidated Financial Statements -
Ownership Patterns and Income Taxes
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Q1) What amount of dividends should West Corp.recognize in its consolidated net income with respect to dividends received from Compass Co.?
A) $ -0-
B) $25,200.
C) $36,000.
D) $42,000.
E) $90,000.
Q2) What will be reported as the net income attributable to the noncontrolling interest of Stance?
A) $6,500.
B) $8,000.
C) $9,000.
D) $7,500.
E) $1,000.
Q3) The accrual-based net income of Jade Co.is calculated to be
A) $193,000.
B) $189,000.
C) $196,000.
D) $201,000.
E) $144,000.
Page 17
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Chapter 8: Segment and Interim Reporting
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Q1) What is the major objective of segment reporting?
Q2) Which of the following costs require similar treatment to Property Tax Expense in an interim financial report? 1) Annual major repairs.
2) Advertising expense.
3) Bonus expense, if estimable.
4) Quantity discounts based on annual sales.
A) 1 and 2
B) 1, 2, and 3
C) 1, 2, and 4
D) 2, 3, and 4
E) 1, 2, 3, and 4
Q3) What is the minimum amount of revenue that each of these segments must earn to be considered separately reportable?
A) $4,343,684.
B) $4,826,316.
C) $5,067,632.
D) $4,585,000.
E) $4,705,658.
Q4) What is meant by the term: disaggregated financial information?
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Chapter 8: A: Segment and Interim Reporting
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Q1) The following items are required to be disclosed for each operating segment except:
A) Factors used to allocate company-wide pension expense.
B) Revenues from transactions with other operating segments.
C) Interest revenue and interest expense.
D) Depreciation, depletion, and amortization expense.
E) Revenues from external customers.
Q2) Which of the segments are separately reportable?
A) DVDs only.
B) DVDs and MP3s.
C) DVDs and VCRs.
D) VCRs and MP3s.
E) DVDs, VCRs, and MP3s.
Q3) Which two items of information must be reported for: (1) the domestic country; (2) all foreign countries in which the enterprise derives revenues or holds assets; and (3) each foreign country in which a material amount of revenues is earned?
Q4) What related items need to be disclosed in regard to total segment assets?
Q5) What two disclosure guidelines for operating segment information are designed to ensure the consistency of data reported from year to year?
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Chapter 9: Foreign Currency Transactions and Hedging
Foreign Exchange Risk
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Q1) A U.S.company buys merchandise from a foreign company denominated in the foreign currency.Which of the following statements is true?
A) If the foreign currency appreciates, a foreign exchange gain will result.
B) If the foreign currency depreciates, a foreign exchange loss will result.
C) No foreign exchange gain or loss will result.
D) If the foreign currency appreciates, a foreign exchange loss will result.
E) Any gain or loss will be included in comprehensive income.
Q2) Authoritative literature provides guidance for hedges of the following sources of foreign exchange risk. I.Recognized foreign currency denominated assets and liabilities.
II.Unrecognized foreign currency firm commitments.
III.Forecasted foreign currency denominated transactions.
A) I only
B) I and II
C) II only
D) II and III
E) I, II, and III
Q3) What amount will Coyote Corp.report in its 2018 income statement for Cost of goods sold?
Q4) How is the fair value of a Forward Contract determined by U.S.GAAP?
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Chapter 9: A: Foreign Currency Transactions and Hedging
Foreign Exchange Risk
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Q1) For speculative derivatives, the change in the fair value of the derivative must be:
A) Utilized to adjust the derivative asset.
B) Recognized immediately as a gain or loss in net income.
C) Recognized as a loss in other comprehensive income.
D) Recognized as a gain in other comprehensive income.
E) Recognized as a gain or loss in net income at a later date.
Q2) How does a foreign currency forward contract differ from a foreign currency option?
Q3) Mills Inc.had a receivable from a foreign customer that is due in the local currency of the customer (stickles).On December 31, 2018, this receivable for §200,000 was correctly included in Mills' balance sheet at $132,000.When the receivable was collected on February 15, 2019, the U.S.dollar equivalent was $144,000.In Mills' 2019 consolidated income statement, how much should have been reported as a foreign exchange gain?
A) $ 0.
B) $36,000.
C) $48,000.
D) $10,000.
E) $12,000.
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Chapter 10: Translation of Foreign Currency Financial Statements
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Q1) A net asset balance sheet exposure exists and the foreign currency depreciates.Which of the following statements is true?
A) There is no translation adjustment.
B) There is a transaction loss.
C) There is a transaction gain.
D) There is a negative translation adjustment.
E) There is a positive translation adjustment.
Q2) What amount would have been reported for cost of goods sold on Porter's consolidated income statement at December 31, 2018?
A) $24,000.
B) $26,400.
C) $22,800.
D) $27,600.
E) $28,800.
Q3) What exchange rate would be used to translate the asset and liability account balances of a foreign subsidiary when the local currency is the functional currency? What justification can be given for using this exchange rate?
Q4) Contrast the purpose of remeasurement with the purpose of translation.
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Chapter 10: A: Translation of Foreign Currency Financial Statements
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Q1) In translating a foreign subsidiary's financial statements, which exchange rate does the current method require for the subsidiary's assets and liabilities?
A) The exchange rate in effect when each asset or liability was acquired.
B) The average exchange rate for the current year.
C) A calculated exchange rate based on market value.
D) The exchange rate in effect as of the balance sheet date.
E) The exchange rate in effect at the start of the current year.
Q2) The financial statements for Perez are remeasured by its U.S.parent.What amount of gain or loss would be reported in its translated income statement?
A) $1,530.
B) $1,575.
C) $1,590.
D) $1,090.
E) $1,650.
Q3) What is the justification for the remeasurement of foreign currency transactions?
Q4) How can a parent corporation determine the functional currency for a foreign subsidiary that conducts business in more than one country?
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Chapter 11: Worldwide Accounting Diversity and International Accounting Standards
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Q1) Which of the following is not a way for a country to use IFRS?
A) Require foreign companies listed on that country's stock exchange to use IFRS for consolidated financial statements.
B) Allow foreign companies listed on that country's stock exchange to use IFRS.
C) Permit its domestic companies listed on that country's stock exchange to use IFRS.
D) Adopt IFRS as that country's national GAAP.
E) All of these answer choices are correct.
Q2) What is the IOSCO?
Q3) A U.S.company has many foreign subsidiaries and wants to convert its consolidated financial statements from U.S.GAAP to IFRS.Which of the following items is not one of the likely accounting issues to resolve for the opening IFRS balance sheet?
A) Inventory valuation.
B) Capitalizing development costs.
C) Bank overdrafts that are integral to cash management.
D) Goodwill calculation from acquisition of a subsidiary.
E) Liability for restructuring charges.
Q4) Why do countries have their own unique set of financial reporting practices?
Q5) What two reconciliations are required by IFRS 1 for first-time IFRS Adopters?
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Chapter 11: A: Worldwide Accounting Diversity and International Accounting Standards
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Q1) What are the four types of authoritative pronouncements that make up the International Financial Reporting Standards (IFRS)?
Q2) What are some examples of accounting treatments under IFRS for SMEs for recognizing and measuring assets, liabilities, income, and expenses?
Q3) The most relevant factor in determining the purpose of financial reporting is:
A) The nature of the country's financing system
B) The country's current economic conditions
C) The ability to control inflation
D) A strong equity financing system which is more conservative, minimal disclosures, and tight tax laws.
E) A weak equity financing system which is less conservative, extensive disclosures and loose tax laws.
Q4) Prepare the journal entry for the 2017 depreciation expense for Ide Corp.based on U.S.GAAP.
Q5) What are the steps to be taken in preparing IFRS financial statements for the first time?
Q6) What are recognition differences in financial reporting and what would be an example of a recognition difference between IFRS and U.S.GAAP?
Page 25
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Chapter 12: Financial Reporting and the Securities and Exchange Commission
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Q1) What is the purpose of the SEC's Regulation S-K?
Q2) When must Form 8-K be filed with the SEC?
A) Within forty-five days of the end of any quarter other than the fourth quarter of the fiscal year.
B) Within ninety days of the end of the fiscal year.
C) Within fifteen days of the occurrence of certain significant events.
D) Within sixty days of the end of the fiscal year.
E) When a relatively small company intends to issue securities.
Q3) What is a primary focus of the Sarbanes-Oxley Act of 2002?
Q4) What is a primary focus of the Sarbanes-Oxley Act?
A) Accounting standards and the registration of securities.
B) Regulation of the continuous reporting by publicly owned companies.
C) Accounting standards and registration of investment companies that engage in investing and trading in securities.
D) Accounting standards and penalties against persons who profit from illegal use of inside information.
E) Regulation of independent audit firms and audit standards.
Q5) What was the purpose of the Securities Act of 1933?
Q6) Name five securities offerings exempt from registration with the SEC.
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Chapter 12: A: Financial Reporting and the Securities and Exchange Commission
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Q1) What is a primary focus of the Sarbanes-Oxley Act?
A) Accounting standards and the registration of securities.
B) Regulation of the continuous reporting by publicly owned companies.
C) Accounting standards and registration of investment companies that engage in investing and trading in securities.
D) Accounting standards and penalties against persons who profit from illegal use of inside information.
E) Regulation of independent audit firms and audit standards.
Q2) Overruling the FASB.
A) 1 and 4.
B) 1, 3, and 4.
C) 1 and 3.
D) 1, 2, and 4.
E) 1, 2, 3, and 4.
Q3) What is a primary focus of the Sarbanes-Oxley Act of 2002?
Q4) What is the purpose of Regulation S-K? Briefly describe requirements of Regulation S-K.
Q5) What is blue sky legislation?
Q7) Describe the two parts of the SEC registration statement. Page 27
Q6) What was the purpose of the Securities Exchange Act of 1934?
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Chapter 13: Accounting for Legal Reorganizations and Liquidations
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Q1) What are free assets?
A) Assets for which net realizable value is greater than historical cost.
B) Assets for which no market exists.
C) Assets for which replacement cost is greater than historical cost.
D) Assets available to be distributed for liabilities with priority and for other unsecured obligations.
E) Assets available to be distributed to stockholders.
Q2) What is meant by a "partially secured liability"?
Q3) What is meant by a "fully secured liability"?
Q4) What is an order for relief?
Q5) How is the presentation of a balance sheet during a reorganization different from a normal balance sheet?
Q6) Lawyer's fees incurred during a reorganization are accounted for as:
A) An expense.
B) An intangible asset, Reorganization Cost, which would normally be amortized over a five-year period.
C) Additional paid-in capital.
D) Retained earnings.
E) A prepaid asset until the entity emerges from reorganization.
Q7) What are the three categories of assets in a Statement of Financial Affairs? Page 29
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Chapter 13: A: Accounting for Legal Reorganizations and Liquidations
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78 Verified Questions
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Sample Questions
Q1) How is the presentation of a balance sheet during a reorganization different from a normal balance sheet?
Q2) Prepare a schedule to show the amount of assets available for unsecured creditors after payment of liabilities with priority.
Q3) How is the presentation of an income statement during a reorganization different from a normal income statement?
Q4) How should liabilities (except for deferred income taxes) be reported by a company using fresh start accounting?
A) At the undiscounted sum of future cash payments.
B) At book value prior to the reorganization.
C) As partially secured liabilities.
D) At the present value of future cash payments.
E) As unsecured liabilities.
Q5) AChapter 7 bankruptcy is a(n)
A) Involuntary reorganization.
B) Bankruptcy forced by a company's creditors.
C) Liquidation.
D) Bankruptcy in which all creditors receive payment in full.
E) Voluntary reorganization.
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Chapter 14: Partnerships: Formation and Operation
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89 Verified Questions
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Sample Questions
Q1) What is the balance of Donald's capital account after the new partnership is created?
A) $ 84,000.
B) $100,000.
C) $140,000.
D) $176,000.
E) $200,000.
Q2) What was Young's total share of net loss for the first year?
A) $ 3,900 loss.
B) $11,700 loss.
C) $10,400 loss.
D) $24,700 loss.
E) $ 9,100 loss.
Q3) Why are the terms of the Articles of Partnership important to partners?
Q4) What was the balance in Thurman's Capital account at the end of the second year?
A) $133,380.
B) $ 84,760.
C) $105,690.
D) $132,860.
E) $ 71,760.
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Chapter 14: A: Partnerships: Formation and Operation
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89 Verified Questions
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Sample Questions
Q1) Eden contributed $124,000 in cash to the business to receive a 20% interest in the partnership.Goodwill was to be recorded.The four original partners shared all profits and losses equally.After Eden made his investment, what were the individual capital balances?
Q2) Jipsom and Klark were partners with capital account balances of $80,000 and $100,000, respectively.Looney directly paid $32,000 to Jipsom and $40,000 to Klark for 30% of their interests in the partnership.Jipsom and Klark shared income in the ratio of 2:3.They believed that revaluation of the partnership was appropriate when a new partner was admitted.
Required:
Prepare the journal entries to record the admission of Looney to the partnership.
Q3) What was Eaton's total share of net loss for the first year?
A) $ 3,900 loss.
B) $11,700 loss.
C) $10,400 loss.
D) $24,700 loss.
E) $ 9,100 loss.
Q4) Record the journal entry for the admission of Noris.Goodwill is not to be recorded.
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Page 33
Chapter 15: Partnerships: Termination and Liquidation
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69 Verified Questions
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Sample Questions
Q1) How much of the existing cash balance could be distributed safely to partners at this time?
Q2) If the assets could be sold for $228,000 and there are no liquidation expenses, what is the minimum amount that Ezzard would receive from the liquidation?
A) $36,000.
B) $ 0.
C) $ 2,500.
D) $38,250.
E) $67,250.
Q3) Prepare a schedule to calculate the safe payments to be made to the partners at the end of March.
Q4) Compute safe cash payments after the noncash assets have been sold and the liquidation expenses have been paid.
Q5) Prepare a schedule to calculate the safe installment payments to be made to the partners at the end of February.
Q6) How much cash should each partner receive at this time, pursuant to a proposed schedule of liquidation?
Q7) Why is a preliminary distribution of partnership assets prepared?
Page 34
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Chapter 15: A: Partnerships: Termination and Liquidation
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69 Verified Questions
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Sample Questions
Q1) Why is a preliminary distribution of partnership assets prepared?
Q2) If the noncash assets are sold for $105,000, what would be the maximum amount of cash that Canton could expect to receive?
Q3) Prepare the schedule to compute the cash payments to the partners.
Q4) Gonda, Herron, and Morse is considering possible liquidation because partner Morse is personally insolvent.The partners have the following capital account balances: $60,000, $70,000, and $40,000, respectively, and share profits and losses 30%, 45%, and 25%, respectively.The partnership has $200,000 in noncash assets that can be sold for $150,000.The partnership has $10,000 cash on hand, and $40,000 in liabilities.What is the minimum that partner Morse's creditors would receive if they have filed a claim for $50,000?
A) $ 0.
B) $27,500.
C) $45,000.
D) $47,500.
E) $50,000.
Q5) Record the journal entry for the cash distribution to the partners.
Q6) What is the purpose of a predistribution plan?
Q7) Record the journal entry for the sale of the noncash assets.
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Chapter 16: Accounting for State and Local Governments,
Part I
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83 Verified Questions
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Sample Questions
Q1) Under modified accrual accounting, when should revenues be recognized by a governmental-type fund?
Q2) What is the primary difference between monies accounted for in the general fund and monies accounted for in the special revenue fund?
Q3) Under modified accrual accounting, revenues should be recognized when they are
A) Collected.
B) Realizable and estimable.
C) Reasonably estimable.
D) Measurable and available to be used.
E) Earned and collected.
Q4) The reporting of the fund balance of governmental funds will result in a maximum of how many categories:
A) One
B) Two
C) Three
D) Four
E) Five
Q5) Under modified accrual accounting, when are expenditures recorded?
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Q6) When should property taxes be recognized under modified accrual accounting?
Chapter 16: A: Accounting for State and Local Governments,
Part I
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Sample Questions
Q1) For a government, what kinds of operations are accounted for using a proprietary fund? Give three examples.
Q2) Salaries and wages that have been earned by governmental employees that have not yet been paid are recorded in the general fund as:
A) An expenditure.
B) An encumbrance.
C) An appropriation.
D) An expense.
E) An investment.
Q3) What are the four fiduciary fund types?
Q4) The City of Kamen collected $17,000 from parking meters that must be transferred to the county government in the next thirty days.
Required: For fund financial statements, prepare the journal entry for the collection of the $17,000 from parking meters, including the fund type in which the entry would have been recorded.
Q5) Under modified accrual accounting, when are expenditures recorded?
Q6) What are the two proprietary fund types?
Page 37
Q7) What is the purpose of government-wide financial statements?
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Chapter 17: Accounting for State and Local Governments,
Part II
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Q1) Which of the following is not a step in reporting a pension liability?
A) The pension benefit payments that will ultimately be required are estimated by an actuary.
B) The portion of those payments that are attributable to past periods of employee service is calculated.
C) The present value of amounts attributable to past periods of employee service is determined in order to arrive at the government's obligation at the present time.
D) Excess liability balance is shown in the government-wide financial statements as a net pension asset.
E) Excess liability balance is shown in the government-wide financial statements as a net pension liability.
Q2) The modified approach to accounting for infrastructure assets may be utilized by a state or local government if:
A) i and ii.
B) i, ii, and iv.
C) ii and iii.
D) i, ii, and iii.
E) i, ii, iii, and iv.
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Chapter 17: A: Accounting for State and Local Governments,
Part II
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47 Verified Questions
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Sample Questions
Q1) What is meant by the term legally independent?
Q2) Which information must be disclosed regarding tax abatement agreements? i) The purpose of the tax abatement program.
ii. The dollar amount of abatement and the names of recipients.
iii. The type of tax being abated.
A) i and iii.
B) i only.
C) ii only.
D) iii only.
E) i, ii, and iii.
Q3) If the landfill is judged to be a governmental fund, what liability is reported on the fund financial statements at the end of 2018?
A) $ 0.
B) $300,000.
C) $375,000.
D) $600,000.
E) $675,000.
Q4) Prepare a Statement of Activities for the year ended December 31, 2018.
Q5) What is meant by the term fiscally independent?
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Chapter 18: Accounting for Not-For-Profit Entities
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Sample Questions
Q1) $520,000 of the $2,720,000 was expected to be uncollectible.
Required:
Prepare the necessary journal entry to record the anticipated uncollectible amount.
Q2) On a statement of functional expenses for a voluntary health and welfare entity, how are expenses classified?
A) Health services expenses and operating expenses.
B) Program services expenses and administrative services expenses.
C) Program services expenses and supporting services expenses.
D) Operating expenses and supporting services expenses.
E) Operating expenses and administrative expenses.
Q3) The hospital estimated that contractual adjustments would reduce the amount collected from third-party payors to $1,710,000.
Required:
Prepare the necessary journal entry to record the contractual adjustments.
Q4) What are the objectives of accounting for a not-for-profit entity?
Q5) A not-for-profit entity receives a computer as a donation (valued at $2,000).Prepare the journal entry for the transaction.
Q6) Prepare the necessary journal entry to record the revenue and receivables.
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Chapter 18: A: Accounting for Not-For-Profit Entities
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Sample Questions
Q1) Assume that the donor retains the right to revoke or redirect the gift. Prepare the journal entries for Charity A and Charity B.The entries should be for the gift when received by Charity A, and when the gift is distributed for Charity B.
Q2) What should Dura Foundation report as supporting service expenses?
Q3) Which of the following topics are not included in the Form 990 which tax-exempt entities file to maintain their tax-exempt status?
A) Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees and Independent Contractors.
B) Donor Disclosure: Identification of Every Donor by Name, Contribution Value & Contribution Type.
C) Statement of Revenue.
D) Balance Sheet.
E) Statement of Functional Expenses.
Q4) How does a recipient not-for-profit entity record the receipt of a gift that will be transferred without restriction to another charitable entity? What if the donor retains the right to revoke or redirect the gift?
Q5) Prepare the necessary journal entry to record the revenue and receivables.
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Page 41
Chapter 19: Accounting for Estates and Trusts
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81 Verified Questions
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Sample Questions
Q1) In an executor's accounting for an estate, debts and other obligations are recorded
A) At book value.
B) As a reduction of income.
C) On the date of payment.
D) As soon as discovered.
E) Only if they are past due.
Q2) Prepare the journal entry to record the property of the estate.
Q3) Under what circumstance does an estate have an executor?
A) When there is no valid will.
B) When the estate exceeds the dollar amount of the estate tax exemption.
C) When the will establishes a trust fund.
D) When the will is contested.
E) When the will names a specific person to administer the estate.
Q4) The life insurance policy was collected.Prepare the journal entry to record the transaction.
Q5) For the Estate of Kate Tweed, a total amount of interest of $9,100 was collected. Prepare the journal entry to record the collection.
Q6) In settling an estate, what is the meaning of the term devise?
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Chapter 19: A: Accounting for Estates and Trusts
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81 Verified Questions
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Source URL: https://quizplus.com/quiz/66034
Sample Questions
Q1) The estate of Bobbi Jones has the following provisions: total value of estate assets
$2,000,000, amount specified to convey to a spouse $1,000,000, amount specified to convey to children $200,000, total debts 400,000, administrative expenses $50,000, and funeral expenses of $30,000.What is the value of the taxable estate?
A) $ 320,000.
B) $ 520,000.
C) $ 550,000.
D) $1,480,000.
E) $1,520,000.
Q2) Which type of trust requires that income generated from its assets be recognized, for federal income tax purposes, by the grantor during his or her lifetime, and reported in his or her individual income tax return?
A) Inter vivos trust.
B) Grantor trust.
C) Revocable living trust.
D) Family trust.
E) Irrevocable life insurance trust.
Q3) Prepare the journal entry to record ordinary repairs to the rental property of $5,000.
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