Graduate Financial Accounting
Exam Questions
Course Introduction
Graduate Financial Accounting provides an in-depth exploration of the principles and practices underlying the preparation and analysis of financial statements in accordance with generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS). The course covers key topics such as revenue recognition, asset and liability valuation, equity measurement, and the impact of different accounting choices on financial analysis. Through case studies and real-world applications, students will develop advanced technical skills in financial reporting, understand ethical and regulatory issues, and gain the ability to critically evaluate and communicate complex accounting information to diverse stakeholders.
Recommended Textbook
Advanced Financial Accounting 9th Edition by Richard Baker
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Page 2
Chapter 1: Intercorporate Acquisitions and Investments in Other Entities
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Sample Questions
Q1) Using the preceding information,what amount would have been expensed if the purchase method of accounting was used?
A)$0
B)$19,000
C)$53,000
D)$72,000
Answer: A
Q2) A business combination in which the acquired company's assets and liabilities are combined with those of the acquiring company into a single entity is defined as:
A)Stock acquisition
B)Leveraged buyout
C)Statutory Merger
D)Reverse statutory rollup
Answer: C
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Chapter 2: Reporting Intercorporate Investments and
Consolidation of Wholly Owned Subsidiaries With No Differential
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Q1) Based on the preceding information,what amount would be reported by William Company as the balance in its investment account on December 31,20X8?
A)$100,000
B)$123,400
C)$120,400
D)$142,000
Answer: B
Q2) Based on the information provided,what amount of retained earnings will be reported in the consolidated balance sheet prepared on December 31,20X4?
A)$235,000
B)$210,000
C)$310,000
D)$225,000
Answer: A
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4
Chapter 3: The Reporting Entity and Consolidation of
Less-Than-Wholly-Owned Subsidiaries With No Differential
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Q1) On January 1,20X9,Gold Rush Company acquires 80 percent ownership in California Corporation for $200,000.The fair value of the noncontrolling interest at that time is determined to be $50,000.It reports net assets with a book value of $200,000 and fair value of $230,000.Gold Rush Company reports net assets with a book value of $600,000 and a fair value of $650,000 at that time,excluding its investment in California.What will be the amount of goodwill that would be reported immediately after the combination under current accounting practice?
A)$50,000
B)$30,000
C)$40,000
D)$20,000
Answer: D
Q2) Based on the preceding information,what amount would be reported as total stockholder's equity in the consolidated balance sheet at December 31,20X9?
A)$412,000
B)$394,000
C)$542,000
D)$348,000
Answer: B
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Chapter 4: Consolidation of Wholly Owned Subsidiaries
Acquired at More Than Book Value
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Q1) Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?
A)$0
B)$21,000
C)$6,000
D)$15,000
Q2) Based on the preceding information,what amount of goodwill will be reported if the acquisition price was $240,000?
A)$0
B)$40,000
C)$15,000
D)$35,000
Q3) Based on the preceding information,what amount of retained earnings will be reported in the consolidated balance sheet prepared immediately after the business combination?
A)$300,000
B)$409,000
C)$259,000
D)$191,000
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Chapter 5: Consolidation of Less-Than-Wholly-Owned
Subsidiaries Acquired at More Than Book Value
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Q1) Based on the preceding information,what amount of land will be included in the consolidated balance sheet immediately following the acquisition?
A)$0
B)$10,000
C)$90,000
D)$100,000
Q2) Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet immediately following the acquisition?
A)$0
B)$70,000
C)$83,750
D)$100,000
Q3) Based on the preceding information,what amount of buildings and equipment (net)will be included in the consolidated balance sheet immediately following the acquisition?
A)$0
B)$50,000
C)$250,000
D)$300,000
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Chapter 6: Intercompany Inventory Transactions
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Q1) Assume Shove sold the inventory to Push. Using the fully adjusted equity method,what journal entry would be recorded by Push to recognize the realization of the 20X1 deferred intercompany profit and to defer the 20X2 unrealized gross profit on inventory sales to Shove?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Based on the information given above,by what amount was unadjusted revenue overstated in the combined income statement for 20X8?
A)$25,000
B)$56,892
C)$31,250
D)$6,250
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Chapter 7: Intercompany Transfers of Services and
Noncurrent Assets
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Q1) Big Company acquired 75 percent of Little Company's stock at underlying book value on January 1,20X8.At that date,the fair value of the noncontrolling interest was equal to 25 percent of the book value of Little Company.Little Company reported shares outstanding of $350,000 and retained earnings of $100,000.During 20X8,Little Company reported net income of $60,000 and paid dividends of $3,000.In 20X9,Little Company reported net income of $90,000 and paid dividends of $15,000.The following transactions occurred between Big Company and Little Company in 20X8 and 20X9: Little Co.sold equipment to Big Co.for a $42,000 gain on December 31,20X8.Little Co.had originally purchased the equipment for $140,000 and it had a carrying value of $28,000 on December 31,20X8.At the time of the purchase,Big Co.estimated that the equipment still had a seven-year remaining useful life. Big sold land costing $90,000 to Old Company on June 28,20X9,for $110,000.
Required:
Give all eliminating entries needed to prepare a consolidation worksheet for 20X9 assuming that Big Co.uses the modified equity method to account for its investment in Old Company.
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Page 9
Chapter 8: Intercompany Indebtedness
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Q1) A loss on the constructive retirement of a parent's bonds by a subsidiary is effectively recognized in the accounting records of the parent and its subsidiary:
I.at the date of constructive retirement.
II.over the remaining term of the bonds.
A)I
B)II
C)Both I and II
D)Neither I nor II
Q2) Based on the information given above,what amount of consolidated net income should be reported for 20X8?
A)$163,750
B)$161,250
C)$146,250
D)$148,750
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10
Chapter 9: Consolidation Ownership Issues
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Q1) Based on the preceding information,the eliminating entry to prepare the consolidated financial statements for Company A as of December 31,20X9 will include a credit to Investment in Company B-Common Stock for:
A)506,000
B)440,000
C)400,000
D)500,000
Q2) Based on the preceding information,what amount of income is attributable to the controlling interest in the consolidated income statement for 20X8?
A)$75,000
B)$105,000
C)$96,000
D)$103,200
Q3) Based on the information provided,what is the book value of the common stock on January 1,20X9?
A)$410,000
B)$360,000
C)$390,000
D)$350,000
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Chapter 10: Additional Consolidation Reporting Issues
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Q1) Based on the preceding information,what amount will be reported in the consolidated cash flow statement as net cash used in investing activities for 20X9?
A)$200,000
B)$142,000
C)$155,000
D)$130,000
Q2) Based on the information provided,what amount was reported as dividends paid in the cash flow from financing activities section of the consolidated statement of cash flows?
A)$25,000
B)$33,000
C)$27,000
D)$8,000
Q3) Based on the information provided,what is the diluted earnings per share for the consolidated entity for 20X8?
A)4.53
B)4.33
C)4.00
D)3.80
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Page 12
Chapter 11: Multinational Accounting: Foreign Currency
Transactions and Financial Instruments
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Q1) 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.
Q2) Based on the preceding information,what is the net gain or loss on the euro speculative contract?
A)$8,000 gain
B)$6,000 gain
C)$3,000 loss
D)$1,000 loss
Q3) Based on the preceding information,which of the following is true of the intrinsic and time values associated with this option.
A)Option A
B)Option B
C)Option C
D)Option D
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Chapter 12: Multinational Accounting: Issues in Financial
Reporting and Translation of Foreign Entity Statements
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Q1) Refer to the above information.Assuming the U.S.dollar is the functional currency,what is Perth's net income for 20X8 in U.S.dollars (include the remeasurement gain or loss in Perth's net income)?
A)$238,000
B)$228,000
C)$219,500
D)$202,000
Q2) Based on the preceding information,what amount of translation adjustment is required for increase in differential?
A)$3,000
B)$5,500
C)$4,500
D)$5,000
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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Q1) Missoula Corporation disposed of one of its segments in the second quarter and incurred a gain from disposal of discontinued segment of $600,000,net of taxes.What is the effect of this gain from disposal of discontinued segment?
A)Increase net income from operations for the year by $600,000.
B)Increase second quarter net income by $600,000.
C)Increase each quarter's net income by $150,000.
D)Increase each of the last three quarters' net income by $200,000.
Q2) Stone Company reported $100,000,000 of revenues on its 20X8 income statement.During the year ended December 31,20X8,Stone made sales of $8,000,000 to external customers in Western Europe.In addition,Stone made sales of $10,000,000 to the U.S.government and $4,000,000 of sales to various state governments.In the footnotes to its financial statements for 20X8,in reporting enterprisewide disclosures,Stone is required to disclose:
A)Option A
B)Option B
C)Option C
D)Option D
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Page 15
Chapter 14: Sec Reporting
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Sample
Questions
Q1) Form 8-K
A) Provides preliminary information to investors about an upcoming issue.
B) Informs investors of an upcoming offering.
C) Required annual filing to the SEC.
D) Discloses unscheduled material events.
E) Includes amendments to the Securities Act, additional disclosure requirements, and other current issues regarding accounting and auditing principles and standards.
F) Results in a thorough examination by the SEC of a registration statement.
G) Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered for sale.
H) Quarterly report to SEC.
I) Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J) Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K) Includes Regulations S-X and S-K.
Q2) Customary Review
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Chapter 15: Partnerships: Formation, operation, and Changes in Membership
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Q1) Which of the following accounts could be found in the PQ partnership's general ledger?
I.Due from P
II.P,Drawing
III.Loan Payable to Q
A)I,II
B)I,III
C)II,III
D)I,II,and III
Q2) The JPB partnership reported net income of $160,000 for the year ended December 31,2008.According to the partnership agreement,partnership profits and losses are to be distributed as follows:
How should partnership net income for 2008 be allocated to J,P,and B?
A)Option A
B)Option B
C)Option C
D)Option D
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Chapter 16: Partnerships: Liquidation
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Q1) On a partner's personal statement of financial condition,how are assets valued?
A)Historical cost
B)Book value
C)Discounted value
D)Estimated current value
Q2) When is a partnership considered to be insolvent?
I.When the total of all partners' capital accounts results in a debit balance.
II.When at least one of the partners is personally insolvent.
A)I only
B)II only
C)Both I and II
D)Neither I nor II
Q3) Refer to the information given above.What amount of cash will each partner receive as a liquidating distribution if the machinery is sold for 33,000 dollars?
A)Option A
B)Option B
C)Option C
D)Option D
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18
Chapter 17: Governmental Entities: Introduction and General Fund Accounting
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Q1) The general fund of Hatteras acquired a fire truck during the fiscal year ended June 30,20X9.The purchase order for the fire truck was recorded on February 15,20X9.Hatteras' acquisition of the fire truck required which of the following sequences of accounting activities?
I.Appropriation
II.Encumbrance
III.Expenditure
A)II,I,III.
B)I,III,II.
C)III,II,I.
D)I,II,III.
Q2) The following information was obtained from the general fund balance sheet of Lima Village on June 30,20X9,the close of its fiscal year:
On June 30,20X9,what was Lima's unassigned fund balance in its general fund?
A)$84,000
B)$44,000
C)$34,000
D)$24,000
Q3) 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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Q1) Which of the following funds report fixed assets on their balance sheets?
A)I,II
B)II,III
C)I,IV
D)III,IV
Q2) Which of the following items is optional information for a special-purpose governmental entity when issuing financial reports?
A)Management's Discussion and Analysis
B)Footnotes to the financial repots
C)Supplementary Information to the financial reports
D)All of the above are required.
Q3) A budgetary comparison schedule presented as required supplementary information for the general fund should report variances for the difference between:
I.Original budget amounts and final budget amounts.
II.Final budget amounts and actual amounts.
A)I only
B)II only
C)Both I and II
D)Neither I nor II
Page 20
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Chapter 19: Not-For-Profit Entities
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Q1) "Financial statement of a private NFP entity" describes which term listed above?
Q2) Transaction: Depreciation expense was recorded for the year.
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.
Q3) "Basis for measuring investments in financial statements" describes which term listed above?
Q4) 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.
Q5) "Classification of an endowment contribution" describes which term listed above?
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Chapter 20: Corporations in Financial Difficulty
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Q1) 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
Q2) What are the conditions necessary for using fresh start reporting in reorganization?
Q3) 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
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