International Accounting Exam Practice Tests
Course Introduction
International Accounting examines the principles, standards, and practices of accounting in a global context. This course explores the diversity in financial reporting and disclosure requirements among various countries, the role of international regulatory bodies such as the International Accounting Standards Board (IASB), and the challenges and opportunities faced by multinational corporations in harmonizing accounting practices across borders. Topics include international financial statement analysis, foreign currency transactions, consolidation of foreign subsidiaries, and the impact of cultural, economic, and legal environments on accounting systems. The course prepares students to navigate and apply international accounting standards and interpret global financial information critically.
Recommended Textbook
Advanced Financial Accounting 11th Edition by Theodore Christensen
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21 Chapters
1386 Verified Questions
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Page 2
Chapter 1: Intercorporate Acquisitions and Investments in Other Entities
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Sample Questions
Q1) Based on the preceding information,what number of shares did Nash issue at the time of the exchange?
A) 3,600
B) 5,000
C) 14,400
D) 18,000
Answer: D
Q2) Based on the preceding information,Selvick Company will report additional paid-in capital of
A) $125,000.
B) $176,000.
C) $220,000.
D) $250,000.
Answer: B
Q3) Based on the preceding information,under the acquisition method
A) $22,000 of stock issue costs are treated as a reduction in the issue price.
B) $22,000 of stock issue costs are expensed.
C) $66,000 of stock issue costs are classified as goodwill.
D) $66,000 of stock issue costs are expensed.
Answer: A
Page 3
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Chapter 2: Reporting Intercorporate Investments and
Consolidation of Wholly Owned Subsidiaries With No Differential
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Sample Questions
Q1) Based on the preceding information,what is the consolidated retained earnings balance on December 31,20X2?
A) $402,000
B) $410,000
C) $430,000
D) $562,000
Answer: C
Q2) Based on the preceding information,what is Sips' post-closing retained earnings balance on December 31,20X2?
A) $108,000
B) $120,000
C) $132,000
D) $140,000
Answer: C
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4
Chapter 3: The Reporting Entity and Consolidation of
Less-Than-Wholly-Owned Subsidiaries With No Differentials
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Sample Questions
Q1) Based on the preceding information,what amount would be reported as retained earnings in the consolidated balance sheet prepared at December 31,20X9?
A) 314,000
B) 294,000
C) 150,000
D) 424,000
Answer: B
Q2) Based on the preceding information,what will be the amount of net income reported by Frazer Corporation in 20X9?
A) $44,000
B) $55,000
C) $66,000
D) $36,000
Answer: B
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5
Chapter 4: Consolidation of Wholly Owned Subsidiaries
Acquired at More Than Book Value
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Sample Questions
Q1) Based on the information given above,goodwill will be reported in the consolidated balance sheet in the amount of:
A) $240,000.
B) $130,000.
C) $150,000.
D) $270,000.
Q2) Based on the information given above,what will be the amount of net assets reported in the consolidated balance sheet,prepared immediately following the combination?
A) $1,150,000
B) $1,550,000
C) $1,700,000
D) $1,830,000
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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Sample Questions
Q1) Based on the preceding information,the increase in the fair value of patents held by Wisden is:
A) $20,000
B) $25,000
C) $15,000
D) $5,000
Q2) Based on the preceding information,what is the amount of comprehensive income attributable to the controlling interest for 20X8?
A) $123,750
B) $118,750
C) $119,000
D) $104,000
Q3) Current liabilities on the January 2,20X6,consolidated balance sheet should be:
A) $49,000
B) $30,000
C) $40,000
D) $50,000
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Page 7
Chapter 6: Intercompany Inventory Transactions
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Sample Questions
Q1) A newly created subsidiary sold all of its inventory to its parent at a profit in its first year of existence.The parent,in turn,sold all but 20 percent of the inventory to unaffiliated companies,recognizing a profit.The parent had no other sales during the year.The amount that should be reported as cost of goods sold in this year's consolidated income statement should be:
A) 80 percent of the amount reported as intercompany sales by the subsidiary.
B) 80 percent of the amount reported as cost of goods sold by the subsidiary.
C) the amount reported as cost of goods sold by the parent minus unrealized profit in the ending inventory of the parent.
D) 80 percent of the amount reported as cost of goods sold by the parent.
Q2) When a parent and its subsidiary use a periodic inventory system rather than a perpetual system,the income and asset balances reported in the consolidated financial statements are:
I.affected only if there are upstream intercompany sales of inventory.
II.affected only if there are downstream intercompany sales of inventory.
A) I
B) II
C) Both I and II
D) Neither I nor II
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Page 8
Chapter 7: Intercompany Transfers of Services and
Noncurrent Assets
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Sample Questions
Q1) Parent Company owns 70% of Son Company's outstanding stock.During 20X1 Son Company sold land to Parent Company for a gain of $25,000.Parent company held the land all of 20X1.The gain on the sale to Parent should be:
A) recorded on Son's books as a gain of $25,000 and then eliminated during the consolidation process.
B) deferred by Son until Parent sells the land to an outside party.
C) recorded on Son's books as a gain of $17,500 and eliminated during the consolidation process.
D) recorded on Parent's book as a gain of $17,500 and eliminated during the consolidation process.
Q2) Based on the preceding information,in the preparation of the 20X8 consolidated financial statements,equipment will be:
A) debited for $50,000.
B) debited for $40,000.
C) credited for $70,000.
D) debited for $25,000.
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Chapter 8: Intercompany Indebtedness
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Q1) Based on the information given above,what amount of interest expense will be eliminated in the preparation of the 20X8 consolidated financial statements?
A) $13,096
B) $13,023
C) $8,730
D) $8,682
Q2) Based on the information given above,what was the carrying amount of the bonds on Daughter's books on the date of purchase by Mom?
A) $300,000
B) $311,902
C) $312,098
D) $324,000
Q3) Based on the information given above,what amount of premium on bonds payable will be eliminated in the preparation of the December 31,20X9 consolidated financial statements?
A) $5,097
B) $3,568
C) $5,614
D) $3,930
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Page 10
Chapter 8: Appendix A: Intercompany Indebtedness
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Sample Questions
Q1) 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
Q2) Based on the information given above,what amount of gain or loss on bond retirement will be reported in the 20X8 consolidated financial statements?
A) $17,000 loss
B) $12,800 loss
C) $18,500 gain
D) $22,200 gain
Q3) Based on the information given above,what amount of premium on bonds payable will be eliminated in the preparation of the 20X8 year-end consolidated financial statements?
A) $3,500
B) $2,800
C) $5,000
D) $2,500
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Chapter 9: Consolidation Ownership Issues
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Sample Questions
Q1) Based on the preceding information,what is the ending balance in noncontrolling interest in the net assets of Siena?
A) $186,000
B) $418,500
C) $523,125
D) $232,500
Q2) Windsor Corporation owns 75 percent of Elven Corporation's outstanding common stock.Elven,in turn,owns 15 percent of Windsor's outstanding common stock.What percent of the dividends paid by Windsor is reported as dividends declared in the consolidated retained earnings statement?
A) None
B) 100 percent
C) 85 percent
D) 75 percent
Q3) Based on the preceding information,what is Pisa's new ownership interest?
A) 84 percent
B) 55 percent
C) 70 percent
D) 64 percent
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Page 12
Chapter 10: Additional Consolidation Reporting Issues
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Q1) Based on the information provided,what is the balance of Ceafoam's investment in Trump Corporation as of December 31,20X4?
A) $360,000
B) $380,000
C) $388,000
D) $395,000
Q2) Based on the preceding information,what amount will be reported by the company as cash payments to suppliers for 20X8?
A) $292,000
B) $305,000
C) $262,000
D) $258,000
Q3) Based on the preceding information,what is the fair value of the noncontrolling interest at the time of acquisition?
A) $47,813
B) $57,500
C) $60,000
D) $45,000
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13
Chapter 11: Multinational Accounting: Foreign Currency
Transactions and Financial Instruments
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Sample Questions
Q1) Company X denominated a December 1,20X9,purchase of goods in a currency other than its functional currency.The transaction resulted in a payable fixed in terms of the amount of foreign currency,and was paid on the settlement date,January 10,2010.Exchange rates moved unfavorably at December 31,20X9,resulting in a loss that should:
A) be included as a separate component of stockholders' equity at Dec. 31, 20X9.
B) be included as a component of income from continuing operations for 20X9.
C) be included as a deferred charge at December 31, 20X9.
D) not be reported until January 10, 2010, the settlement date.
Q2) Based on the preceding information,the journal entry made on December 31,20X8 to record decrease in the time value of the options will include:
A) a debit to Loss on Hedge Activity for $150.
B) a credit to Put Option for $300.
C) a debit to Loss on Hedge Activity for $300.
D) a credit to Put Option for $100.
Q3) Based on the preceding information,the entries on December 31,20X8,include a:
A) Credit to Foreign Currency Payable to Exchange Broker, $4,000.
B) Debit to Foreign Currency Receivable from Exchange Broker, $6,000.
C) Debit to Foreign Currency Receivable from Exchange Broker, $186,000.
D) Debit to Foreign Currency Transaction Gain, $4,000.
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Chapter 12: Multinational Accounting: Issues in Financial
Reporting and Translation of Foreign Entity Statements
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Sample Questions
Q1) All of the following stockholders' equity accounts of a foreign subsidiary are translated at historical exchange rates except:
A) retained earnings.
B) common stock.
C) additional paid-in capital.
D) preferred stock.
Q2) Based on the information provided,in Newsprint's 20X8 consolidated income statement,what amount should be included as foreign exchange loss in computing net income,if the U.S.dollar is the functional currency and the remeasurement method is appropriate?
A) $15,000
B) $10,000
C) $25,000
D) $28,000
Q3) Dividends of a foreign subsidiary are translated at:
A) the average exchange rate for the year.
B) the exchange rate on the date of declaration.
C) the current exchange rate on the date of preparation of the financial statement.
D) the exchange rate on the record date.
Page 15
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Chapter 13: Segment and Interim Reporting
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Sample Questions
Q1) Dragon Company has two reportable segments,A and B. Segment A made $3,000,000 of sales to external customers and $200,000 of sales to other operating segments. Segment B made sales of $5,000,000 to external customers and $1,200,000 of sales to other operating segments. Dragon Company reported $9,600,000 of revenues on its consolidated income statement. What calculation below correctly determines whether Dragon Company's reportable segments satisfy the 75% revenue test?
A) $8,000,000/$9,600,000
B) $8,000,000/$11,000,000
C) $9,400,000/$9,600,000
D) $9,400,000/$11,000,000
Q2) FASB has specified a "75% percent consolidated revenue test".
Required:
a)What is the 75% test?
b)How is the 75% test impacted by the "10% Significance Rule"?
Q3) ASC 280 uses a(n)______ approach to the definition of segments.
A) line of business
B) entity approach
C) portfolio
D) management
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Page 16
Chapter 14: Sec Reporting
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Sample Questions
Q1) According to the provisions of the Sarbanes-Oxley Act,
A) accounting firms can provide both audit and non-audit services to the same company.
B) the auditor should report directly to, and have its work overseen by, the company's management.
C) audit committees should be composed of non-management members of a company's board of directors.
D) both the lead audit partner and the audit review partner for publicly held companies should be rotated at least every two years.
Q2) Which of the following is defined as directly or indirectly having the power to vote the shares or investment power to sell the security?
A) Proxy
B) Significant influence
C) Control
D) Beneficial ownership
Q3) Comment Letter
Q4) "Tombstone ad"
Q5) Accounting and Auditing Enforcement Releases
Q6) Form 10-K
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Chapter 15: Partnerships: Formation,operation,and
Changes in Membership
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Sample Questions
Q1) Refer to the information provided above.Jacob and Katy agree that some of the inventory is obsolete.The inventory account is decreased before Erin is admitted.Erin invests $38,000 for a one-fifth interest.What is the amount of inventory written down?
A) $10,000
B) $20,000
C) $28,000
D) $36,000
Q2) Which of the following statements best describes limited partnerships?
A) In an LLP, there must be at least one general partner that is personally liable for the obligations of the partnership and has management responsibilities.
B) There are no general or limited partners in a LP; each partner has the rights and duties of a general partner, but limited legal liability.
C) The identifier LP or LLP need not be included in the name or identification of a limited partnership.
D) If the presumption of control by the general partner can be overcome, the partner would account for its investment using the equity method of accounting.
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18
Chapter 16: Partnerships: Liquidation
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Q1) Refer to the information provided above.Using a safe payments schedule,how much cash will be distributed to Dennis at the end of the first month?
A) $64,000
B) $60,000
C) $24,000
D) $36,000
Q2) Refer to the above information.If the other assets are sold for $80,000,and all partners are personally insolvent,how much should E receive upon liquidation?
A) $0
B) $6,000
C) $10,000
D) $20,000
Q3) Based on the preceding information,the journal entry on the partnership's books to record distribution of stock to prior partners will include a debit to Mike,Capital for:
A) $38,010.
B) $31,500.
C) $42,000.
D) $44,300.
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19
Chapter 17: Governmental Entities: Introduction and General Fund Accounting
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Sample Questions
Q1) Which of the following funds should use the accrual basis of accounting?
A) Enterprise and private-purpose trust funds.
B) Permanent funds and internal service funds.
C) Debt service and agency funds.
D) Special revenue and capital projects funds.
Q2) Which of the following funds are classified as governmental funds?
A) Internal service and capital projects funds.
B) Internal service and debt service funds.
C) Enterprise and agency funds.
D) The general and special revenue funds.
Q3) The general fund of Gillette levied property taxes of $400,000 on November 1,20X8.However,the property taxes are not collectible until May and August of 20X9.Assume Gillette reports on the calendar year.On Gillette's general fund balance sheet at December 31,20X8,the property taxes levied on November 1 should:
A) be reported as an asset and as a decrease in unassigned fund balance.
B) be reported as an asset and as an increase in unassigned fund balance.
C) be reported as an asset and as a reservation of fund balance.
D) be reported as an asset and as a deferred revenue.
Q4) Briefly discuss the various types of governmental funds and proprietary funds.
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Chapter 18: Governmental Entities: Special Funds and
Government-Wide
Financial Statements
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Q1) The costs of enterprise fund activities are recovered
A) from special tax levies.
B) from federal or state governmental grants.
C) by user charges.
D) by private donations.
Q2) As of May 30,20X9,the debt service fund of Cody had accumulated $52,000 of assets in a debt service fund to pay the principal of its currently maturing serial bonds.On June 1,20X9,$50,000 of serial bonds matured and were paid with the resources accumulated in the debt service fund.In Cody's debt service fund,Matured Bonds Payable was debited for $50,000 and:
A) Cash was credited for $50,000.
B) Due to General Fund was credited for $50,000.
C) Investments was credited for $50,000.
D) Reserve for Encumbrances was credited for $50,000.
Q3) For which of the following long-term debt obligations would payments not be accounted for in a debt service fund?
A) Notes and warrants secured by specific tax revenues.
B) Special assessment bonds sold to acquire enterprise fund assets.
C) Notes and warrants.
D) Special assessment bonds may be used to finance capital projects.
Page 21
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Chapter 19: Not-For-Profit Entities
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Q1) A private not-for-profit university generally must depreciate all tangible fixed assets,except:
I.works of art and other historical treasures.
II.administration buildings.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
Q2) The governing board of a hospital operated by a religious organization designated $3,000,000 of cash to be used for plant expansion.The cash was invested in stocks and bonds which earned $250,000 of dividend and interest income.The income from investments should be reported on the hospital's statement of operations as an increase in:
A) temporarily restricted net assets.
B) operating income.
C) either temporarily restricted net assets or unrestricted net assets, depending upon the nature of the governing board's restrictions.
D) fund balance in the general fund.
Q3) "Classification of an endowment contribution" describes which term listed above?
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Page 22
Chapter 20: Corporations in Financial Difficulty
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Sample Questions
Q1) Based on the preceding information,what is the estimated dividend percentage?
A) 45 percent
B) 55 percent
C) 61 percent
D) 69 percent
Q2) Briefly explain the three classes of creditors specified in the Bankruptcy Code.
Q3) Based on the preceding information,what is the total amount of unsecured claims?
A) $52,000
B) $71,000
C) $75,000
D) $95,000
Q4) To obtain cash quickly,DebCo.sold $750,000 of its receivables to Finco.,with recourse.As the accountant for DebCo.,what issues do you need to resolve in order to determine the appropriate accounting treatment?
Q5) In a statement of realization and liquidation,unusual revenue items are reported under:
A) assets.
B) extraordinary items.
C) supplementary items.
D) These are never reported.
23
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