Professional Accountancy Practice
Questions
Course Introduction
Professional Accountancy provides students with a comprehensive understanding of accounting principles, practices, and standards essential for a career in accounting and finance. The course covers key topics such as financial reporting, auditing, taxation, management accounting, and ethical practices within the profession. Emphasis is placed on the application of theoretical knowledge to real-world scenarios, regulatory requirements, and the development of analytical and decision-making skills. This course is designed to prepare students for professional qualifications and to excel in roles that demand robust financial acumen and integrity.
Recommended Textbook
Advanced Accounting Updated 1st Canadian Edition by Gail Fayerman
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10 Chapters
580 Verified Questions
580 Flashcards
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Page 2
Chapter 1: Accounting for Investments
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56 Verified Questions
56 Flashcards
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Sample Questions
Q1) Which of the following is false regarding structured entities?
A) They may take the form of a corporation, trust, partnership, or unincorporated entity.
B) Using the definition of control, these types of arrangements are dealt with in the same manner as other types of strategic investments.
C) As the company may not own shares of the entity, consolidation would not be required.
D)The company may not own any shares of the entity but typically the equity is not sufficient to sustain the entity.
Answer: C
Q2) When a company has control over another company, a parent-subsidiary relationship is said to exist.
A)True
B)False
Answer: True
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Chapter 2: Business Combinations
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55 Flashcards
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Sample Questions
Q1) There are many forms of business combinations that can occur. However, for which of the following are the requirements for accounting for a business combination NOT used?
A)A acquires the assets only of B, and B pays off the liabilities and then liquidates.
B)A acquires all the assets and only some of the liabilities of B, and B pays the remaining liabilities before liquidating.
C)The business combination results in the formation of a joint venture.
D)A acquires a group of net assets of B, the group of net assets constituting a business, such as a division, branch or segment, of B.
Answer: C
Q2) The acquirer is usually the entity that has the largest minority voting interest in an entity that has a widely dispersed ownership.
A)True
B)False
Answer: True
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Chapter 3: Consolidation: Wholly Owned Subsidiaries
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Sample Questions
Q1) Fair value increments on depreciable assets should be amortized in accordance with the subsidiary's depreciation policies.
A)True
B)False
Answer: True
Q2) Fair value adjustments (FVAs)are used to recognize the identifiable assets and liabilities of the subsidiary at fair values and goodwill measured as a residual amount.
A)True
B)False
Answer: True
Q3) When there is a gain on bargain purchase at the acquisition date, the net fair value of the identifiable assets and liabilities of the subsidiary is less than the consideration transferred.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Consolidations: Intragroup Transactions
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Sample Questions
Q1) On June 30, 2013 Tulip Ltd. issued one hundred $1,000 bonds with an interest rate of 7% p.a. payable semi-annually on December 31 and June 30 of each year. Crockus Inc., a wholly-owned subsidiary of Tulip Ltd., acquired 75% of the bonds issued. What are some of the December 31, 2013 adjustments required in preparation for the consolidated financial statements?
A)Decrease Bonds Payable: $100,000, decrease Bond Investment: $100,000, decrease Interest Payable: $7,000, and decrease Interest Receivable: $7,000.
B)Increase Bonds Payable: $100,000, increase Bond Investment: $100,000, increase Interest Payable: $7,000, and increase Interest Receivable: $7,000.
C)Decrease Bonds Payable: $75,000, decrease Bond Investment: $75,000, decrease Interest Payable: $2,625, and decrease Interest Receivable: $2,625.
D)Decrease Bonds Payable: $75,000, decrease Bond Investment: $75,000, decrease Interest Payable: $5,250, and decrease Interest Receivable: $5,250.
Q2) Interest payments result in revenues in one member of the group and expenses in another.
A)True B)False
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Page 6
Chapter 5: Consolidation: Non-Controlling Interest
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Sample Questions
Q1) Norman Ltd. owns 60% of the outstanding common shares of Arnie Ltd. During 2013, sales from Arnie to Norman were $200,000. Merchandise was priced to provide Arnie with a gross margin of 20%. Norman's inventories contained $40,000 at December 31, 2012 and $15,000 at December 31, 2013 of merchandise purchased from Arnie. Cost of goods sold for Norman and Arnie for 2013 on their separate-entity income statements were as follows: \(\begin{array}{|l|r|r|}
\hline& \text { Norman } & \text { Arnie } \\
\hline \text { Beginning inventory } & \$ 100,000 & \$ 50,000 \\
\hline \text { Purchases } & 700,000 & 200,000 \\
\hline \text { Ending inventory } & (110,000) & (55,000) \\
\hline \text { Cost of goods sold } & \$ 690,000 & \$ 195,000 \\
\hline
\end{array}\) How much is the non-controlling interest adjusted for its share of the consolidated net income for the year ended December 31, 2013?
A)$3,000.
B)$5,000.
C)$1,250.
D)$2,000.
Q2) Describe the key characteristics of the entity concept of consolidation.
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7
Chapter 6: Accounting for Investments in Associates and Joint Ventures
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Sample Questions
Q1) Which methods will result in the same income and shareholders' equity?
A)Cost and consolidation.
B)Cost and equity.
C)Equity and consolidation.
D)Each method may result in different income and shareholder's equity amounts.
Q2) If an associate or joint venture has outstanding cumulative preference shares that are held by parties other than the entity and classified as ____________, the entity computes its share of profits or losses after adjusting for the dividends on such shares, whether or not the dividends have been declared.
A)debt or equity
B)debt
C)equity
D)earnings.
Q3) Where dividends are paid/declared by an associate or joint venture and the entity receiving the dividend prepares consolidated financial statements, the dividend revenue recognized in the entity's accounts is eliminated on consolidation.
A)True
B)False
Q4) Describe how to account for losses incurred by associate and joint venturers.
Page 8
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Chapter 7: Accounting for Foreign Currency
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57 Verified Questions
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Sample Questions
Q1) What is a currency swap an example of?
A)A futures contract.
B)A call option.
C)A forward contract.
D)A derivative instrument.
Q2) What are the steps involved in the translation of the financial statements into a presentation currency?
Q3) Using a _________ rate of exchange for all items appearing on the statement of financial position maintains the relationship in the retranslated financial statements (into the presentation currency)as that that existed in the foreign operation's financial statements (using the functional currency).
A)fluctuating
B)constant
C)spot
D)closing
Q4) Exchange gains and losses on accounts receivable/payable that are denominated in a foreign currency are deferred and reported upon settlement.
A)True
B)False
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Chapter 8: Accounting for Foreign Investments
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Sample Questions
Q1) Monetary items are restated at the spot rate and any gain or loss is recorded in income.
A)True
B)False
Q2) When translating foreign currency financial statements for a company whose functional currency is the Canadian dollar, into a group financial statement presented in Canadian dollars, which of the following accounts is translated using historical exchange rates? Notes Payable Equipment
A)Yes Yes
B) Yes No
C) No No
D) No Yes
Q3) How is the translation of the financial statements into a presentation currency completed?
Q4) Intracompany transactions are eliminated at the rate when the transaction occurred.
A)True
B)False
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Page 10
Chapter 9: Reporting for Not-For-Profit Organizations
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Sample Questions
Q1) Not for profit organizations cannot be incorporated.
A)True
B)False
Q2) A restricted fund is a segregation of funds which are externally or internally restricted for a particular purpose.
A)True
B)False
Q3) When budgetary control accounts are first set up, ________.
A)budgeted revenues are debited and budgeted expenditures are credited.
B)budgeted revenues are credited and budgeted expenditures are debited.
C)actual revenues are credited and actual expenditures are debited.
D)actual revenues are debited and actual expenditures are credited.
Q4) What is a restricted fund?
Q5) The reader of the financial statements of a not-for-profit organization needs to be able to Review section if:
A)They have made a profit for the period.
B)The return on investments is positive.
C)Its mission has been fulfilled in the most cost efficient way.
D)All of the above.
Q6) What is Encumbrance Accounting?
Page 11
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Chapter 10: Reporting for Public Sector Entities
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Sample Questions
Q1) Which of the following is NOT a suggested objective for financial statements for public sector entities?
A)To determine if programs are economical, efficient, and effective.
B)To provide an accounting of financial affairs and resources.
C)To enable evaluation of compliance with legislation.
D)To provide information on financing and investing activities.
Q2) The CICA PSA Handbook defines a public sector entity's ________________ as assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal course of operations.
A)current assets
B)non-financial assets
C)financial assets
D)tangible capital assets.
Q3) Why is a public sector financial reporting framework needed?
Q4) Many view the presence of multiple objectives as the overriding characteristic of public sector entities.
A)True
B)False
Q5) What are the qualitative characteristics of public sector financial reports?
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