Governmental and Not-for-Profit Accounting Test Preparation - 892 Verified Questions
Governmental and Not-for-Profit Accounting Test Preparation
Course Introduction
Governmental and Not-for-Profit Accounting introduces students to the principles and practices unique to accounting for governmental entities and nonprofit organizations. The course covers topics such as fund accounting, budgeting, financial reporting, regulatory requirements, and the use of special funds. Emphasis is placed on the standards set by the Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB) as they pertain to public sector and nonprofit financial activities. Students will develop practical skills in preparing, analyzing, and interpreting financial statements, while also understanding the fiscal constraints and public accountability inherent in managing public and not-for-profit resources.
Recommended Textbook
Advanced Accounting 11th Edition by Floyd A. Beams
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Page 2
Chapter 1: Business Combinations
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Sample Questions
Q1) Durer Inc.acquired Sea Corporation in a business combination and Sea Corp went out of existence.Sea Corp developed a patent listed as an asset on Sea Corp's books at the patent office filing cost.In recording the combination,
A) fair value is not assigned to the patent because the research and development costs have been expensed by Sea Corp.
B) Sea Corp's prior expenses to develop the patent are recorded as an asset by Durer at purchase.
C) the patent is recorded as an asset at fair market value.
D) the patent's market value increases goodwill.
Answer: C
Q2) Following the accounting concept of a business combination, a business combination occurs when a company acquires an equity interest in another entity and has
A) at least 20% ownership in the entity.
B) more than 50% ownership in the entity.
C) 100% ownership in the entity.
D) control over the entity, irrespective of the percentage owned.
Answer: D
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Chapter 2: Stock Investments Investor Accounting and Reporting
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Sample Questions
Q1) In reference to intercompany transactions between an investor and an investee, when the investor can significantly influence the investee, which of the following statements is correct, assuming that the investor is using the equity method?
A) There is the presumption of arms-length bargaining between the related parties.
B) As long as the investor recognizes the effects of the transaction in its financial statements, it is not required to provide any additional disclosures.
C) In reporting its share of earnings and losses of an investee, the investor must eliminate the effect of profits and losses on the intercompany transactions until they are realized.
D) None of the above is correct.
Answer: C
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Chapter 3: An Introduction to Consolidated Financial Statements
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Sample Questions
Q1) A subsidiary can be excluded from consolidation if
A) control does not rest with the majority owner.
B) the subsidiary is in legal reorganization.
C) the subsidiary is operating under severe foreign-exchange restrictions.
D) All of the above are correct.
Answer: D
Q2) Pregler Inc.has 70% ownership of Sach Company, but should exclude Sach from its consolidated financial statements if
A) Sach is in a regulated industry.
B) Pregler uses the equity method for Sach.
C) Sach is in legal reorganization.
D) Sach is in a foreign country and records its books in a foreign currency.
Answer: C
Q3) Subsequent to an acquisition, the parent company and consolidated financial statement amounts would not be the same for
A) investments in unconsolidated subsidiaries.
B) investments in consolidated subsidiaries.
C) capital stock.
D) ending retained earnings.
Answer: B
Page 5
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Chapter 4: Consolidated Techniques and Procedures
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Sample Questions
Q1) What is the amount of total assets?
A) $1,380,000
B) $1,402,000
C) $1,470,000
D) $1,875,000
Q2) What amount of Inventory will be reported?
A) $170,000
B) $169,000
C) $186,500
D) $192,000
Q3) What is the reported amount for the noncontrolling interest?
A) $80,000
B) $84,400
C) $98,000
D) $122,500
Q4) What is the amount of consolidated Retained Earnings?
A) $224,000
B) $259,200
C) $304,000
D) $324,000
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Sample Questions
Q1) Phast Corporation owns a 80% interest in Stechno Company, acquired several years ago at a cost equal to book value and fair value.Stechno sells merchandise to Phast for the first time in 2011, and some is unsold at December 31, 2011.In computing income from the investee for 2011 under the equity method, Phast uses which equation?
A) 80% of Stechno's income less 100% of the unrealized profit in Phast's ending inventory
B) 80% of Stechno's income plus 100% of the unrealized profit in Phast's ending inventory
C) 80% of Stechno's income less 80% of the unrealized profit in Phast's ending inventory
D) 80% of Stechno's income plus 80% of the unrealized profit in Phast's ending inventory
Q2) For 2011, consolidated net income will be what amount if the intercompany sale was downstream?
A) $180,000
B) $253,000
C) $256,000
D) $259,000
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Q1) What was the amount of gain or (loss)from the intercompany purchase of Plenty's bonds on January 2, 2012?
A) $(56,250)
B) $(75,000)
C) $ 75,000
D) $ 56,250
Q2) Bonds Payable appeared in the December 31, 2011 consolidated balance sheet of Pfadt Corporation and Subsidiary in the amount of
A) $398,925.
B) $441,000.
C) $443,250.
D) $450,000.
Q3) Consolidated Interest Expense and consolidated Interest Income, respectively, that appeared on the consolidated income statement for the year ended December 31, 2010 was
A) $10,800 and $0.
B) $10,800 and $6,600.
C) $0 and $0.
D) $16,200 and $6,600.
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Chapter 8: Consolidations - Changes in Ownership
Interests
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Sample Questions
Q1) The acquisition of treasury stock by a subsidiary from noncontrolling shareholders at a price above book value
A) decreases the parent's share of subsidiary book value and decreases the parent's ownership percentage.
B) decreases the parent's share of subsidiary book value and increases the parent's ownership percentage.
C) increases the parent's share of subsidiary book value and decreases the parent's ownership percentage.
D) increases the parent's share of subsidiary book value and increases the parent's ownership percentage.
Q2) On January 1, 2011, assume the fair values of Savannah's identifiable assets and liabilities equal book values.What is the change in the amount of goodwill associated with the issuance of 80,000 additional shares to Goldberg? (Use four decimal places.)
A) Increase goodwill $38,176.
B) Decrease goodwill $38,176.
C) Increase goodwill $384,000.
D) Decrease goodwill $384,000.
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Page 10
Chapter 9: Indirect and Mutual Holdings
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Sample Questions
Q1) Packer Corporation owns 100% of Abel Corporation, Abel Corporation owns 95% of Bacon Corporation and Bacon Corporation owns 80% of Cab Corporation.The separate net incomes (excluding investment income)of Packer, Abel, Bacon, and Cab are $300,000, $100,000, $200,000, and $300,000, respectively.All of the investments were made at times when the investee's book values were equal to their fair values.There were no cost/book value differentials for each investment.
Required:
Determine the controlling interest share of consolidated net income and noncontrolling interest shares for Packer Corporation and Subsidiaries for the current year.
Q2) The amount of income for the current year assigned to the noncontrolling shareholders of Badock Corporation is A) $100,000.
B) $104,000.
C) $120,000.
D) $140,000.
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Q1) A subsidiary has dilutive securities outstanding that include convertible bonds payable.The bonds are convertible into the parent's common stock.When calculating consolidated diluted earnings per share, the convertible bonds will affect
A) the numerator of consolidated diluted EPS only.
B) the denominator of consolidated diluted EPS only.
C) the numerator and denominator of consolidated diluted EPS.
D) None of the above will be affected.
Q2) For the year ending December 31, 2011, the amount of Pamplin's income from Sage (associated with the common stock investment in Sage)is
A) $32,400.
B) $36,000.
C) $60,000.
D) $90,000.
Q3) How much should the Parminter's Investment in Sanchez-Common Stock, change during 2011?
A) $5,000
B) $20,000
C) $25,000
D) $30,000
Page 12
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Chapter 11: Consolidation Theories, Push-Down Accounting, and Corporate Joint Ventures
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Sample Questions
Q1) Under the entity theory, a consolidated balance sheet prepared immediately after the business combination will show noncontrolling interest of
A) $5,000.
B) $7,500.
C) $9,000.
D) $10,000.
Q2) Pascoe's income from Sarabet under the equity method for 2011 was
A) $72,000.
B) $87,500.
C) $90,000.
D) $100,000.
Q3) Anthony and Cleopatra create a joint venture to distribute artifacts.Anthony contributes 70% and Cleopatra 30% of the cash for assets purchased from Tomb Company.How would Anthony report information about Cleopatra on Anthony's financial statements?
A) Not at all
B) In a footnote
C) As a liability
D) As a noncontrolling interest
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Chapter 12: Derivatives and Foreign Currency: Concepts and Common Transactions
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Sample Questions
Q1) When the billing for a U.S.company's sale to a company in a foreign country is denominated in U.S.dollars, ________ is required when preparing journal entries for the sale.
A) translation to a foreign currency
B) conversion to a foreign currency
C) translation to U.S. dollars
D) no translation
Q2) On May 1, 2011, Deerfield Corporation purchased merchandise from a German firm for 78,000 euros when the spot rate for the euro was 1.48 euro per dollar.The account payable was denominated in the euro.Deerfield settled the account on August 1 when the spot rate for the euro was 1.39 euro per dollar.How much cash will Deerfield have to disburse to settle the account?
A) $ 52,702.72
B) $ 56,115.11
C) $108,420.00
D) $115,440.00
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14
Chapter 13: Accounting for Derivatives and Hedging
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Q1) Taydus Corporation, a U.S.corporation, sold goods on December 2 to a company overseas, and is now carrying a receivable denominated in euros.Taydus signed a 60-day forward contract on that same date to sell euros.The spot rate was $1.40 on the date they signed the contract and the 60-day forward rate was $1.36.At the end of that month when they closed the books at their fiscal year-end, the spot rate was $1.42 and the 30-day forward rate was $1.40.Assume this is a fair value hedge.The forward contract will not be settled net.What would be reported by Taydus for the year ending December 31?
A) Net exchange gain
B) Net exchange loss
C) Deferred exchange gain
D) Deferred exchange loss
Q2) A forward contract used as a cash flow hedge will be recorded as an asset if
A) the holder is expecting to receive a payment as a result of the contract.
B) the holder is accounting for the hedged instrument as a fair value hedge.
C) the holder is hedging the net investment in a foreign entity.
D) the holder is using the alternate accounting method and deferring all gains or losses from the hedge.
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Chapter 14: Foreign Currency Financial Statements
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Sample Questions
Q1) Exchange gains or losses from remeasurement appear
A) in the continuing operations section of the consolidated income statement.
B) as an extraordinary item on the consolidated income statement.
C) as other comprehensive income typically reported in a statement of stockholders' equity.
D) as an adjustment to the beginning balance of retained earnings on the consolidated Statement of retained earnings.
Q2) A U.S.parent corporation loans funds to a foreign subsidiary to be used to purchase equipment.The loan is denominated in U.S.dollars and the functional currency of the subsidiary is the euro.This intercompany transaction is a foreign currency transaction of A) neither the subsidiary nor the parent, as it is eliminated as part of the consolidation procedure.
B) the subsidiary but not the parent.
C) both the subsidiary and the parent.
D) the parent but not the subsidiary.
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16
Chapter 15: Segment and Interim Financial Reporting
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Sample Questions
Q1) GAAP requires that segment information be reported
A) by geographics, without regard to size of the segment.
B) by geographics, without regard to industry or product-line.
C) however management organizes the enterprise into units for internal decision-making and performance-evaluation purposes.
D) by industry or product-line, without regard to geographics.
Q2) For an operating segment to be considered a reporting segment under the revenue threshold, its reported revenue must be 10% or more of
A) the combined enterprise revenues, eliminating all relevant intracompany transfers and balances.
B) the combined revenues, excluding intersegment revenues, of all operating segments.
C) the combined revenues, including intersegment revenues, of all operating segments.
D) the consolidated revenue of all operating segments.
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17
Chapter 17: Partnership Liquidation
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Q1) Gains and losses incurred at liquidation are distributed to the partners using the residual profit and loss sharing ratios because
A) using ownership percentages would permit solvent partners to not share profits with insolvent partners.
B) the residual profit and loss ratios represent the ownership percentages.
C) these amounts represent profits and losses from prior periods that would have been shared using the residual profit and loss ratios.
D) using the established profit and loss sharing ratios is not permitted.
Q2) If all partners are included in the first installment of an installment liquidation, then in future installments
A) cash will be distributed according to the residual profit and loss sharing ratios.
B) cash should not be distributed until all non-cash assets are converted into cash.
C) vulnerability rankings for each partner should be prepared.
D) a cash distribution plan must be prepared so that partners will know when they will be included in cash distributions.
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19
Chapter 22: Accounting for Not-For-Profit Organizations
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Sample Questions
Q1) Voluntary health and welfare organizations
A) may not have paid executives or staff.
B) are governed by separate GASB statements.
C) use fund accounting, following the rules for proprietary fund reporting.
D) are supported by, and provide voluntary services to, the public.
Q2) General Hospital is a private, not-for-profit hospital.The following information is available about the operations.
