Intermediate Accounting
Mock Exam
Course Introduction
Intermediate Accounting delves deeper into the principles and practices underlying the preparation and analysis of financial statements, building on concepts introduced in introductory courses. This course emphasizes a thorough understanding of accounting standards, valuation of assets and liabilities, revenue recognition, and the measurement of income, with a focus on Generally Accepted Accounting Principles (GAAP). Students will analyze complex transactions, explore the conceptual framework underlying financial reporting, and develop skills in interpreting and applying regulations to real-world scenarios. The course prepares students for advanced accounting coursework and equips them with essential tools for professional accounting roles.
Recommended Textbook
Advanced Accounting 12th Edition by Paul
M. Fischer
Available Study Resources on Quizplus
24 Chapters
1159 Verified Questions
1159 Flashcards
Source URL: https://quizplus.com/study-set/3584
Page 2
Chapter 1: Business Combinations: New Rules for a
Long-Standing Business Practice
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/71172
Sample Questions
Q1) Vibe Company purchased the net assets of Atlantic Company in a business combination accounted for as a purchase.As a result, goodwill was recorded.For tax purposes, this combination was considered to be a tax-free merger.Included in the assets is a building with an appraised value of $210,000 on the date of the business combination.This asset had a net book value of $70,000.The building had an adjusted tax basis to Atlantic (and to Vibe as a result of the merger) of $120,000.Assuming a 40% income tax rate, at what amount should Vibe record this building on its books after the purchase?
\( \begin{array}{lc} & \text { Deferred Tax } \\ \text { Building } & \text { Liability }\end{array} \)
A)?$174,000\(\quad \)\(\quad \)\(\quad \)\(\quad \) $ 0
B)?$140,000 \(\quad \)\(\quad \)\(\quad \)\(\quad \)$36,000
C)?$210,000 \(\quad \)\(\quad \)\(\quad \)\(\quad \)$90,000
D)?$210,000 \(\quad \)\(\quad \)\(\quad \)\(\quad \)$36,000
Answer: D
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Consolidated Statements: Date of Acquisition
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/71171
Sample Questions
Q1) A subsidiary was acquired for cash in a business combination on December 31, 2016.The purchase price exceeded the fair value of identifiable net assets.The acquired company owned equipment with a fair value in excess of the book value as of the date of the combination.A consolidated balance sheet prepared on December 31, 2016, would A)report the excess of the fair value over the book value of the equipment as part of goodwill.
B)report the excess of the fair value over the book value of the equipment as part of the plant and equipment account.
C)reduce retained earnings for the excess of the fair value of the equipment over its book value.
D)make no adjustment for the excess of the fair value of the equipment over book value.Instead, it is an adjustment to expense over the life of the equipment.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Consolidated Statements: Subsequent to Acquisition
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/71170
Sample Questions
Q1) On January 1, 2016, Piston, Inc.acquired Spur Corp.While recording the acquisition, Piston established a deferred tax liability.It is most likely that this account was created because
A)The transaction was a tax-free exchange to Piston.
B)Piston had not paid all of the income taxes due the government when acquiring Spur.
C)The transaction was a tax-free exchange to Spur.
D)Spur had not paid all of the income taxes due the government prior to the acquisition by Piston.
Answer: A
Q2) The method of accounting for subsidiaries that is required for influential investments is the
A)cost method.
B)simple equity method.
C)investment method.
D)sophisticated equity method.
Answer: D
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Intercompany Transactions: Merchandise, Plant
Assets, and Notes
Available Study Resources on Quizplus for this Chatper
43 Verified Questions
43 Flashcards
Source URL: https://quizplus.com/quiz/71169
Sample Questions
Q1) On January 1, 2016 Bullock, Inc.sells land to its 80%-owned subsidiary, Humphrey Corporation, at a $20,000 gain.The land is sold by Humphrey to an outside party in 2018.What is the effect of the intercompany sale of land on 2016 consolidated net income?
A)Consolidated net income will be the same as it would have been had the sale not occurred.
B)Consolidated net income will be $20,000 less than it would have been had the sale not occurred.
C)Consolidated net income will be $16,000 less than it would have been had the sale not occurred.
D)Consolidated net income will be $20,000 greater than it would have been had the sale not occurred.
Q2) Which of the following should appear in consolidated financial statements?
A)All intercompany transactions properly recorded on each affiliate's books.
B)Transactions between the consolidated company and outside parties.
C)Transactions not accounted for by the simple equity method.
D)Lease transactions between a parent and subsidiary.
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Intercompany Transactions: Bonds and Leases
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/71168
Sample Questions
Q1) Leasing subsidiaries are formed to achieve centralized asset management through leasing to affiliated firms, and when they are consolidated with the parent, they are consolidated
A)only if the parent controls at least 20% of the leasing subsidiary.
B)only if the parent controls at least 50% of the leasing subsidiary.
C)only if the parent controls at least 90% of the leasing subsidiary.
D)regardless of the ownership percentage of the parent.
Q2) Consolidation procedures for sales-type leases:
A)allow for the recognition of the profit or loss from the lease by the lessee at the inception of the lease.
B)allow for the recognition of the profit or loss from the lease by the lessor at the inception of the lease.
C)defer the profit or loss and then amortize it over the lessee's period of usage.
D)defer the profit or loss and then amortize it over the lessor's period of usage.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Cash Flow, Eps, and Taxation
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/71167
Sample Questions
Q1) When there is an excess of fair value over cost relative to an identifiable asset,
A)the recording of a deferred tax liability is required for the excess.
B)the recording of a deferred tax liability is necessary for the amount of the tax rate times the excess.
C)no amortization of a deferred tax liability is necessary
D)this excess does not create a deferred tax liability that needs to be recorded.
Q2) Investor has a 40% ownership interest in the common stock of Investee.Investor paid $10,000 more than book value for its 40% interest and regards the excess as attributable to goodwill.If Investee reports income of $200,000 and pays dividends of $50,000, the operating activities of the consolidated statement of cash flows (indirect method) will reflect an adjustment of
A)$80,000
B)$70,000
C)$60,000
D)$20,000
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Special Issues in Accounting for an Investment
in a Subsidiary
Available Study Resources on Quizplus for this Chatper
42 Verified Questions
42 Flashcards
Source URL: https://quizplus.com/quiz/71166
Sample Questions
Q1) Page Company purchased an 80% interest in the common stock of the Seed Company for $600,000 on January 1, 2019, when Seed Company had the following stockholders' equity:
\[\begin{array} { l r }
\text { Common stock, } \$ 10 \text { par } & \$ 300,000 \\
\text { Cumulative preferred stock, } 10 \% , \$ 10 \text { par } & 100,000 \\
\text { Paid-in capital in excess of par, common } & 50,000 \\
\text { Retained earnings } & 200,000
\end{array}\] Any excess of cost over book value on the common stock purchase was attributed to goodwill.Page does not hold any of Seed's preferred stock.Seed had net income of $40,000 during 2019 and paid no dividends.
The preferred stock is one year in arrears on January 1, 2019.The goodwill that will appear on the consolidated balance sheet prepared on January 1, 2019, is ____.
A)$80,000
B)$88,000
C)$210,000
D)$168,000
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Subsidiary Equity Transactions, Indirect
Subsidiary Ownership, and Subsidiary Ownership of Parent Shares
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/71165
Sample Questions
Q1) Pepper Company owned 60,000 of Salt Company's 100,000 outstanding shares.On January 2, 2018, Salt purchased 20,000 of its outstanding shares from the NCI for $70,000.Pepper purchased its shares on January 1, 2016, at which time the fair value of Salt exceeded its book value by $50,000.This difference was due to machinery that was undervalued and had a remaining life of 5 years.On December 31, 2017, Salt Company had the following stockholders' equity: ?
\(\begin{array}{lr}
\text { Common stock, } \$ 1 \text { par } & \$ 100,000 \\
\text { Paid-in capital in excess of par } & 50,000 \\
\text { Retained earnings } & 270,000
\end{array}\)
Assuming Pepper uses the equity method to account for its investment in Salt, the adjustment to the Pepper's books would include:
A)a credit to Retained Earnings
B)a credit to Paid-in Capital in Excess of Par
C)a credit to Investment of
D)a debit to Paid-in Capital in Excess of Par
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: The International Accounting Environment
Available Study Resources on Quizplus for this Chatper
17 Verified Questions
17 Flashcards
Source URL: https://quizplus.com/quiz/71164
Sample Questions
Q1) Forward Contracts:
Calculate the gain or loss to the holder and to the writer of the forward contract who agrees to buy foreign currencies at a specific price.Assume that on May 1, the writer of the forward contract agrees to sell 3,000,000 foreign currencies at a specific price of $0.22 per foreign currency (FC) with delivery in 30 days (May 31).Assume the spot rate at the end of the forward period is $0.20.
What is the entry to the holder on May 1.
Explain how the value of the forward contract changes over time.
Q2) Which of the following is not a responsibility of the International Accounting Standards Board (IASB)?
A)To advise political bodies to enact legislation regulating international business.
B)To establish a single set of international financial reporting standards.
C)To achieve convergence of national accounting standards and IFRS.
D)All are objectives of the IASB.
Q3) Describe the complexities stemming from U.S.-based companies operating in an international environment.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Foreign Currency Transactions
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/71163
Sample Questions
Q1) Which of the following is not true concerning the accounting for hedges of forecasted transactions using an option?
A)An intrinsic value must be calculated throughout the hedge period
B)The accounting requires revaluing the market value of the option
C)The option fixes the value of the transaction to the date of the commitment.
D)All of these statements are true.
Q2) A transaction involving foreign currency will most likely result in gains and losses to the reporting entity if the
A)forward exchange contract is selling at a premium.
B)transaction is denominated and measured in the reporting entity's currency.
C)transaction takes place in a country with a tiered monetary system.
D)transaction is denominated in a foreign currency and measured in the reporting entity's currency.
Q3) The two distinguishing characteristics of a derivative are
A)one or more options and one or more exchange rates.
B)one or more underlying and one or more notional amounts.
C)cash flows and economic exchange.
D)a per share price and a quantity.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Translation of Foreign Financial Statements
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/71162
Sample Questions
Q1) Which of the following best describes the accounting for a foreign entity requiring translation or re-measurere-measurement if the local economy is classified as highly inflationary?
A)The entity's financial statements are first adjusted for inflation and then translated into the domestic currency.
B)The entity's financial statements are first adjusted for inflation and then re-measurere-measured into the domestic currency.
C)The unadjusted trial balance is translated if the functional currency is the local currency.
D)The unadjusted trial balance is re-measurere-measured regardless of the functional currency.
Q2) If the translation process is sound, it should:
A)provide information that is compatible with the expected economic effects of rate changes.
B)reflect in the financial statements the financial results of the company in conformity to the accounting principles of the country in which the subsidiary is located.
C)result in translation adjustments that are relatively consistent in amount.
D)None of the above is correct.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Interim Reporting and Disclosures About
Segments of an Enterprise
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/71161
Sample Questions
Q1) Ansfield, Inc.has several potentially reportable segments.The following financial information has been determined for the current fiscal year: ?
\[\begin{array} { l r }
\text { Consolidated net income } & \$ 1,000,000 \\
\text { Operating income before taxes } & 1,500,000 \\
\text { Net operating income of all segments } & 1,350,000 \\
\text { Total consolidated revenue } & 8,000,000 \\
\text { Total revenue of all segments, } & \\
\text { excluding intersegment sales } & 7,000,000 \\
\text { Total intersegment sales } & 1,200,000 \\
\text { Consolidated total assets } & 50,000,000 \\
\text { Total assets of all segments } & 45,000,000
\end{array}\] The minimum amount of profit or loss a segment must have to qualify as reported is ____.
A)$100,000
B)$135,000
C)$150,000
D)The answer cannot be determined from the information given.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Partnerships: Characteristics, Formation, and
Accounting for Activities
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/71160
Sample Questions
Q1) In the absence of a partnership agreement, RUPA would indicate profit and losses are to be:
A)Divided in a ratio according to capital
B)Divided in a ration according to initial investment
C)Divided in a ratio according to ending capital investment
D)Dividend equally
Q2) Characteristics of a partnership that emphasize that the entity is viewed as the individual owners include the following:
A)Salaries to partners are viewed as distribution of income rather than a component of income.
B)Limited liability of general partners extends beyond the entity to the individual partners.
C)Income of the partnership is not taxed at the partnership level but, rather, is included as part of the partners' individual taxable income.
D)A & C
E)All of above
Q3) Record the entry for the partnership of E & R assuming a net loss of $15,000.The agreement calls for profit and loss to be distributed equally.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Partnerships: Ownership Changes and Liquidations
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/71173
Sample Questions
Q1) Although the admission of new partner does not result in the dissolution and winding up of the previous partnership, the goodwill method views the admission of a new partner as an opportunity to: revalue net assets as though a new entity had been create
A)Increase the Goodwill account
B)Increase the cash account
C)Decrease Expense of the new partnership
D)revalue net assets
Q2) If objective evidence supports the write-down of existing assets, the previous partners' capital balances would be reduced accordingly in proportion to
A)Capital investment
B)Profit and loss ratio
C)Amount of Drawing
D)Amount of Expense
Q3) The propriety theory of partnership, which views this form of entity as:
A)Individuals acting separate
B)Group of individual investors
C)One primary managing partner
D)One partner on salary
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Government and Not for Profit Accounting
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/71159
Sample Questions
Q1) The primary financial Reporting standard setting board for the federal government is likely to be:
A)SEC
B)IRS
C)CMA
D)GAO
Q2) Which of the following accounts is a budgetary account?
A)Property tax receivable
B)Property tax payable
C)Appropriations
D)Vouchers payable
Q3) Identify the three fund types used in government accounting and their relevance:
Q4) Record the following journal entries: ?
Vouchers were approved for nonencumbered items on December 31.
Salaries $50,000
Other expenses $100,000
Vouchers totaling $500,000 were paid
Transfer of $20,000 is made to the debt service fund
?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Governmental Accounting: Other
Governmental Funds, Proprietary Funds, and Fiduciary Funds
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/71158
Sample Questions
Q1) A Nonexpendable Trust Fund was established to help pay for Little League baseball.A total of $100,000 was donated to Babe City.The earnings, not the principal, from the donation could be used to fund baseball.
Required:
Make the entries and identify the fund into which the following transactions should be made:
a.The donation is received and invested immediately in a mutual stock fund.
b.Cash dividends of $8,500 were received from the mutual fund and made available for spending.
c.During the first baseball season, $8,300 was spent from the fund.
d.The closing entries were made.
Q2) What is escheat property and how do we account for it?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Q3) What reporting is required for the accounting for employee Pension Trust Funds.
Chapter 17: Financial Reporting Issues
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/71157
Sample Questions
Q1) The statement of net assets also includes general long-term liabilities accounted for at face value.
A)True
B)False
Q2) The statement of Cash Flows includes only a section for operating cash flows, and investing cash flows.
A)True
B)False
Q3) The Management Discussion and Analysis gives a detailed overview of pension cost calculations for governmental units.
A)True
B)False
Q4) Major funds are described as
A)the general fund and enterprise funds
B)at least 5% of all government and enterprise funds combined
C)those in which assets, liabilities, revenues, or expenditures are at least 10% of all funds in that type.
D)all of the above
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Accounting for Private Not-For-Profit Organizations
Available Study Resources on Quizplus for this Chatper
61 Verified Questions
61 Flashcards
Source URL: https://quizplus.com/quiz/71156
Sample Questions
Q1) Hargett Heart Association has received donated services from several members of the community.The controller must determine which should be recorded as contribution revenue.The services and their values follow: 1) A retired biology professor conducted two small research projects, which resulted in the organization receiving a major grant, but did not accept a stipend for either.The stipend is usually $2,000 per project.
2) Local high school students participated in "Clean Up the Neighborhood" Day and provided 100 hours of labor trimming hedges and raking leaves on the property.The controller estimates the going rate for such work is $8 per hour.
3) An architect donated plans for a renovation to one of the research labs.The association paid $5,000 for plans for a similar renovation two years ago.
How much contribution revenue should be recognized from donated services?
A)$9,800
B)$9,000
C)$5,800
D)$5,000
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Accounting for Not-For-Profit Colleges and Universities and Health Care Organizations
Available Study Resources on Quizplus for this Chatper
83 Verified Questions
83 Flashcards
Source URL: https://quizplus.com/quiz/71155
Sample Questions
Q1) In which of the plant fund subgroups would you find the following transaction: A bond principal payment is made on a bond that was issued with the proceeds being designated for construction of a new athletic facility?
A)Unexpended plant fund
B)Investment in plant asset
C)Plant fund for retirement of indebtedness
D)Plant fund for renewals
Q2) A private not-for-profit college or university would provide which of the following combinations of financial statements to their users?
A)Statement of Activities; Statement of Financial Position; Statement of Cash Flows
B)Statement of Net Assets; Statement of Revenue, Expenses, and Change in Net Assets; Statement of Cash Flows
C)Statement of Activities; Statement of Financial Position; Statement of Cash Flows.
D)Statement of Net Assets; Statement of Functional Expenses; Statement of Cash Flows
Q3) Are not-for-profit universities required to use fund accounting?
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Estates and Trusts: Their Nature and the
Accountants Role
Available Study Resources on Quizplus for this Chatper
56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/71154
Sample
Questions
Q1) When assets are discovered after the initial accounting for estate principal, the fiduciary will credit:
A)Investments found.
B)Estate Principal: Assets Subsequently Discovered
C)Estate Income: Assets Subsequently Discovered
D)Gain on Realization of Principal Asset
Q2) Define what makes up the corpus or principal of an estate and list several examples.Also, list the potential claims or deductions from the principal.
Q3) A trust created through a will is called a testamentary trust.
A)True
B)False
Q4) Which of the following would not be included in the corpus or principal of an estate?
A)accrued interest and declared dividends on investments held by decedent
B)personal valuables
C)life insurance proceeds where designated beneficiary is the estate
D)all of the above are included
Q5) What are some of the tax planning strategies which may be employed to reduce the tax on the decedent's gross estate?
Page 22
To view all questions and flashcards with answers, click on the resource link above.
Chapter 21: Debt Restructuring, Corporate Reorganizations, and Liquidations
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/71153
Sample Questions
Q1) The primary purpose of the Statement of Affairs is to approximate the estimated amount available to each class of claims.
A)True
B)False
Q2) The Accounting Statement of Affairs is a report on the activities of the trustee made periodically to the bankruptcy court.
A)True
B)False
Q3) In the accounting statement of affairs, the book value of the assets should be greater than the assets' estimated realizable value plus the estimated gain on liquidation.
A)True
B)False
Q4) The Statement of Realization and Liquidation reports estimated realizable values rather than actual liquidation results.
A)True
B)False
Q5) Describe the duties of the trustee in a Chapter 7 liquidation.
Page 23
To view all questions and flashcards with answers, click on the resource link above.
Chapter 22: Derivatives and Related Accounting Issues
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/71152
Sample Questions
Q1) Interest rate swaps
A)are a type of Futures Contract.
B)are traded on the over-the-counter market.
C)required an initial cash flow in the form of a margin.
D)are customized to meet the needs of the specific parties.
Q2) Which of the following is true about options?
A)Generally, higher volatility of the underlying increases the value of the option.
B)The value of an option is realized only through its being exercised.
C)An American option is exercisable at its maturity date.
D)An option premium is refundable if the option becomes unfavorable.
Q3) The FASB requires entities that hold or issue derivative instruments that are designated and qualify as hedging instruments to disclose information that allows users to understand in the case of both fair value and cash flow hedges, how the derivative instruments and the related hedged items affect the reporting entity's financial position, financial performance and cash flows.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Equity Method for Unconsolidated Investments
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71151
Sample Questions
Q1) If the market value of an equity method investment falls below its book value, it is written down if the decline is considered permanent with no subsequent increase in value other than regular equity method adjustments.
A)True
B)False
Q2) The market value of an investment is not a required disclosure for equity method investors.
A)True
B)False
Q3) Under the equity method, investee dividends are recorded as a reduction of the investment account.
A)True
B)False
Q4) Under the fair value option, the investor's share of dividends received from the investee and fair value adjustments are recorded as income.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 24: Variable Interest Entities
Available Study Resources on Quizplus for this Chatper
10 Verified Questions
10 Flashcards
Source URL: https://quizplus.com/quiz/71150
Sample Questions
Q1) The entity having control of a VIE is referred to as the parent company.
A)True
B)False
Q2) If the VIE was not a business as de ned by ASC 819-10-20 which means it is likely a not for pro t entity, there is no goodwill recorded.
A)True
B)False
Q3) The consolidation process for VIE's includes the elimination of all inter-entity transactions as would be the case for control based on stock ownership
A)True
B)False
Q4) The primary bene ciary has control of the variable interest entity (VIE) based on its power to control the activities of the VIE and the obligation to absorb losses and receive bene ts from the VIE.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.