Special Topics in Accounting Final Test Solutions
Course Introduction
This course explores advanced and emerging issues in the field of accounting, offering students the opportunity to study topics that are not typically covered in foundational accounting courses. Emphasis is placed on current trends, recent developments, and specialized subjects such as forensic accounting, sustainability reporting, accounting for digital assets, and regulatory changes. Through case studies, guest lectures, and research projects, students are encouraged to critically analyze and apply accounting principles to complex, real-world situations. The specific topics covered may vary each term, reflecting the dynamic nature of the accounting profession.
Recommended Textbook
Advanced Accounting 9th Edition by
Joe Ben Hoyle
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19 Chapters
1679 Verified Questions
1679 Flashcards
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Page 2
Chapter 1: The Equity Method of Accounting for Investments
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Sample Questions
Q1) The income reported by Dodge for 2008 with regard to the Gates investment is
A)$80,000.
B)$30,000.
C)$50,000.
D)$15,000.
E)$75,000.
Answer: A
Q2) Charlie Co.owns 30% of the voting common stock of Turf Services Inc.Charlie uses the equity method to account for its investment.On January 1,2008,the balance in the investment account was $624,000.During 2008,Turf Services reported net income of $120,000 and paid dividends of $30,000.
What is the balance in the investment account as of December 31,2008?
Answer: SHAPE \* MERGEFORMAT
11ea88ab_df5f_9640_bb89_b1c82277ffde_TB4174_00
Q3) What argument could be made against the equity method?
Answer: An argument could be made against the recognition of income under the equity method.The investor is required to recognize its share of the investee's income even when it is unlikely that the investor will ever receive all of this amount in cash dividends.
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Chapter 2: Consolidation of Financial Information
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Sample Questions
Q1) Assume that Bullen paid a total of $480,000 in cash for all of the shares of Vicker.In addition,Bullen paid $35,000 to a group of attorneys for their work in arranging the combination to be accounted for as a purchase.What will be the balance in consolidated goodwill?
A)$0.
B)$20,000.
C)$35,000.
D)$55,000.
Answer: D
Q2) Compute the amount of consolidated equipment at date of combination.
A)$580.
B)$480.
C)$559.
D)$570.
E)$560.
Answer: C
Q3) What term is used to refer to a business combination in which only one of the original companies continues to exist?
Answer: The appropriate term is statutory merger.
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Page 4
Chapter 3: Consolidations - Subsequent to the Date of Acquisition
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Sample Questions
Q1) Which of the following statements is false regarding push-down accounting?
A)Push-down accounting simplifies the consolidation process.
B)Fewer worksheet entries are necessary when push-down accounting is applied.
C)Push-down accounting provides better information for internal evaluation.
D)Push-down accounting must be applied for combinations under a pooling of interests.
E)Push-down proponents argue that a change in ownership creates a new basis for subsidiary assets and liabilities.
Answer: D
Q2) Racer Corp.purchased all of the common stock of Tangiers Co.several years ago.Tangiers maintained its incorporation.Balances in which of Racer's accounts would vary between the equity method and the initial value method?
A)Goodwill,Investment in Tangiers Co. ,and Retained Earnings.
B)Expenses,Investment in Tangiers Co. ,and Equity in Subsidiary Earnings.
C)Investment in Tangiers Co. ,Equity in Subsidiary Earnings,and Retained Earnings.
D)Common Stock,Goodwill,and Investment in Tangiers Co.
E)Expenses,Goodwill,and Investment in Tangiers Co.
Answer: C
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Page 5
Chapter 4: Consolidated Financial Statements and Outside Ownership
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Sample Questions
Q1) What amount should have been reported for the land on a consolidated balance sheet,assuming the investment was obtained prior to SFAS 141(R)and the purchase method,parent company concept,was used?
A)$70,000
B)$75,000
C)$85,000
D)$92,500
E)$100,000
Q2) What is consolidated current assets as of January 2,2009?
A)$138,600
B)$134,400
C)$126,000
D)$140,000
E)$127,400
Q3) What is consolidated current liabilities as of January 2,2009?
A)$70,000
B)$56,000
C)$64,400
D)$42,000
E)$58,100
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Chapter 5: Consolidated Financial StatementsIntercompany Asset Transactions
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Sample Questions
Q1) Compute the noncontrolling interest in Gargiulo's net income for 2011.
A)$9,400.
B)$9,375.
C)$9,425.
D)$9,325.
E)$8,485.
Q2) Parent sold land to its subsidiary for a gain in 2007.The subsidiary sold the land externally for a gain in 2010.Which of the following statements is true?
A)A gain will be reported on the consolidated income statement in 2007.
B)A gain will be reported on the consolidated income statement in 2010.
C)No gain will be reported on the 2010 consolidated income statement.
D)Only the parent company will report a gain in 2010.
E)The subsidiary will report a gain in 2007.
Q3) Compute the amortization of gain for 2010 for consolidation purposes.
A)$1,950.
B)$1,825.
C)$2,000.
D)$1,500.
E)$7,000.
Q4) How is the gain on an intercompany transfer of land realized?
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Chapter 6: Variable Interest Entities,
intercompany
Debt,
Statement of Cash Flows, and Other Issues
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Sample Questions
Q1) On January 1,2009,Cocker reacquired 8,000 of the outstanding shares of its own common stock for $34 per share.None of these shares belonged to Popper.How would this transaction have affected the additional paid-in capital of the parent company?
A)$0.
B)decrease it by $32,900.
C)decrease it by $45,700.
D)decrease it by $49,400.
E)decrease it by $50,500.
Q2) Stahl Corporation owns 80 percent of the outstanding stock of MacDonald,Inc.During the current year,MacDonald made $125,000 in sales to Stahl.How does this transfer affect the consolidated statement of cash flows?
A)Include 80 percent as a decrease in the investing section.
B)Include 100 percent as a decrease in the investing section.
C)Include 80 percent as a decrease in the operating section.
D)Include 100 percent as an increase in the operating section.
E)Not reported in the consolidated statement of cash flows.
Q3) What consolidation entry would have been recorded in connection with these intercompany bonds on December 31,2010?
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Chapter 7: Consolidated Financial Statements - Ownership
Patterns and Income Taxes
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Sample Questions
Q1) Which of the following statements is true concerning connecting affiliations and mutual ownerships?
A)In a mutual ownership,at least two companies in the consolidated group own portions of a third company.
B)There are at least four companies in a connecting affiliation.
C)In a connecting affiliation,at least one subsidiary owns stock in the parent company.
D)In a mutual ownership,the subsidiary owns a portion of the parent's stock.
E)There are only two companies in a connecting affiliation.
Q2) Which of the following statements is true?
A)Alpha and Beta must file a consolidated income tax return,but must exclude Gamma from the consolidated return.
B)Alpha,Beta,and Gamma must file a consolidated income tax return.
C)Alpha,Beta,and Gamma must file separate income tax returns because the ownership of Beta is less than 100%.
D)Alpha,Beta,and Gamma will probably not file a consolidated income tax return.
E)Alpha,Beta,and Gamma may file separate income tax returns or a consolidated income tax return.
Q3) What are the benefits or advantages of filing a consolidated income tax return?
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Chapter 8: Segment and Interim Reporting
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Sample Questions
Q1) Prepare the journal entry for the payment of property taxes on February 23,2008.
Q2) Which one of the following items must be disclosed for all reportable operating segments in the notes to financial statements?
(I) )Revenue from external customers.
(II) )Total Segment Assets
(III. )Revenues from foreign customers,identified by country.
A)I,II,and III
B)I and III only
C)II and III only
D)I and II only
E)There is no requirement of information to disclose for operating segments.
Q3) When totaling the revenues to use as the basis for the 75% rule,what is the 75% hurdle that must be exceeded by the revenues of the reportable segments?
A)$16,700,000.
B)$20,650,000.
C)$1,670,000.
D)$15,487,500.
E)$12,525,000.
Q4) Compute the after-tax effect of Harrison's change in inventory method.
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Chapter 9: Foreign Currency Transactions and Hedging
Foreign Exchange Risk
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90 Verified Questions
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Sample Questions
Q1) For what amount should Brisco's Accounts Payable be credited on May 8?
A)$2,500,000.
B)$2,440,000.
C)$1,600,000.
D)$1,639,344.
E)$1,666,667.
Q2) Meisner Co.ordered parts costing §100,000 for a foreign supplier on May 12 when the spot rate was $.24 per stickle.A one-month forward contract was signed on that date to purchase §100,000 at a forward rate of $.25 per stickle.On June 12,when the parts were received and payment was made,the spot rate was $.28 per stickle.At what amount should inventory be reported?
A)$0.
B)$28,000.
C)$24,200.
D)$25,000.
E)$2,000.
Q3) How is the fair value of a Forward Contract determined under SFAS 133?
Q4) What happens when a U.S.company sells goods denominated in a foreign currency and the foreign currency appreciates?
Page 11
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Chapter 10: Translation of Foreign Currency Financial Statements
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Sample Questions
Q1) Assume the functional currency is the U.S.dollar,compute the restated amount for sales for 2008.
A)$364,000.
B)$372,000.
C)$380,000.
D)$360,000.
E)$404,000.
Q2) According to SFAS 52,which method is usually required for translating a foreign subsidiary's financial statements into the parent's reporting currency?
A)the temporal method.
B)the current rate method.
C)the current/noncurrent method.
D)the monetary/nonmonetary method.
E)the noncurrent rate method.
Q3) Contrast the purpose of remeasurement with the purpose of translation.
Q4) Under what circumstances would the translation of a foreign subsidiary's financial statements not be required?
Q5) Prepare a statement of cash flows for this subsidiary in stickles and then translate these amounts into U.S.dollars.
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Chapter 11: Worldwide Accounting Diversity and International Accounting Standards
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Sample Questions
Q1) The IASB and FASB are working on several joint projects.What is the purpose of the Performance Reporting Project?
A)to provide guidance on the application of the purchase method.
B)to enhance the usefulness of information in assessing the financial performance of the reporting enterprise.
C)to develop a common comprehensive standard on revenue recognition.
D)to develop a common conceptual framework that both boards can use as a basis of futures standards.
E)to agree upon financial statement titles that will have no differentiation after translation to various languages.
Q2) What amount of inventory should be reported under IFRSs?
A)$25,000
B)$21,000
C)$20,000
D)$4,000
E)$5,000
Q3) How did the early IASs obtain support from a sufficient number of board members?
Q4) What is the IOSCO?
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Q5) Why does each country have its own unique set of financial reporting practices?
Chapter 12: Financial Reporting and the Securities and Exchange Commission
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Sample Questions
Q1) The goals of the SEC include all except which one of the following?
A)prohibiting the dissemination of materially misstated information.
B)controlling the number of companies whose stock is listed on major stock exchanges.
C)regulating the operation of securities markets.
D)ensuring that full and fair information is disclosed to all investors before the securities of a company are allowed to be bought and sold.
E)preventing the misuse of information especially by inside parties.
Q2) When must Form 8-K be filed with the SEC?
Q3) Which one of the following forms is used in connection with registration of securities of small businesses with less than $25 million of annual revenues and of voting securities held by nonaffliates.
A)S-8.
B)S-11.
C)S-4.
D)SB-1.
E)SB-2.
Q4) Describe the two parts of the SEC registration statement.
Q5) What information is required in proxy statements?
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Chapter 13: Accounting for Legal Reorganizations and Liquidations
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Sample Questions
Q1) All of the following items are liabilities with priority except:
A)Obligations arising between the date an order of relief is issued and the date of final realization of assets.
B)Employee claims for contributions to benefit plans earned more than 180 days preceding the filing of a petition,limited to $10,950 per individual.
C)Government claims for unpaid taxes.
D)Claims for the return of deposits made by customers to acquire property or services,which were never delivered or provided by the debtor,limited to $2,425.
E)Claims for administrative expenses in preserving and liquidating the company.
Q2) Total liabilities with priority are calculated to be what amount?
Q3) What occurs in the accounting records for fresh start accounting when a bank agrees to accept less than the debtor's book value of a note payable?
Q4) In a liquidation,total free assets are calculated to be what amount?
Q5) What are the three categories of assets in a Statement of Financial Affairs?
Q6) Total unsecured liabilities are calculated to be what amount?
Q7) What are the four categories of debts in a Statement of Financial Affairs?
Q8) Compute the amount of unsecured liabilities without priority.
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Chapter 14: Partnerships: Formation and Operation
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Sample Questions
Q1) The dissolution of a partnership occurs
A)only when the partnership sells its assets and permanently closes its books.
B)only when a partner leaves the partnership.
C)at the end of each year,when income is allocated to the partners.
D)only when a new partner is admitted to the partnership.
E)when there is any change in the individuals who make up the partnership.
Q2) Roberts retires and is paid $160,000 based on the terms of the original partnership agreement.If the goodwill method is used,what is the capital balance of Peter?
A)$20,000.
B)$60,000.
C)$110,000.
D)$120,000.
E)$230,000.
Q3) How is accounting for a partnership different from accounting for a corporation?
Q4) Record the journal entry to record the net income to the capital accounts
Q5) What theoretical argument could be made against the recognition of goodwill when there is a change in the ownership of a partnership?
Q6) What is the dissolution of a partnership?
Q7) Record the journal entry to allocate the salary of Noris.
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Chapter 15: Partnerships: Termination and Liquidation
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Q1) Which of the following is the proper ranking order of property distributions stipulated by the Uniform Partnership Act?
A)Those owing to partners by way of contribution,those owing to partnership creditors,those owing to separate creditors.
B)Those owing to separate creditors,those owing to partnership creditors,those owing to partners by way of contribution.
C)Those owing to separate creditors,those owing to partners by way of contribution,those owing to partnership creditors.
D)Those owing to partners by way of contribution,those owing to separate creditors,those owing to partnership creditors.
E)Those owing to partnership creditors,those owing to partners by way of contribution,those owing to separate creditors.
Q2) What events or circumstances might force the termination of a partnership and liquidation of its assets?
Q3) Compute safe cash payments after the noncash assets have been sold and the liquidation expenses have been paid.
Q4) What is the purpose of a predistribution plan?
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Chapter 16: Accounting for State and Local Governments,
Part I
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Sample Questions
Q1) Under modified accrual accounting,revenues should be recognized when they are A)collected.
B)realizable.
C)reasonably estimable.
D)measurable and available.
E)earned.
Q2) On January 1,2008,Wakefield City purchased $40,000 office supplies.During the year $35,000 of these supplies were used. Required:
Record the journal entries for these transactions using the purchases method.
Q3) When a city holds pension monies for city employees,the monies should be recorded in
A)the General Fund.
B)an Expendable Trust Fund.
C)a Fiduciary Fund.
D)an Agency Fund.
E)a Special Revenue Fund.
Q4) For a government,what kind of operations are accounted for using a proprietary fund? Give three examples.
Page 18
Q5) Under modified accrual accounting,when are expenditures recorded?
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Chapter 17: Accounting for State and Local Governments,part II
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Q1) For government-wide financial statements,what account is credited when a piece of equipment is leased on a capital lease?
A)Equipment - Capital Lease
B)Encumbrances - Long Term
C)Encumbrances - Lease Obligations
D)Capital Lease Obligation
E)The lease is not recorded.
Q2) Which one of the following is a criterion for identifying a primary government?
A)it has an appointed board of directors.
B)it is fiscally dependent.
C)it is a local government.
D)it has a separately elected governing body.
E)it must prepare financial statements.
Q3) Which of the following must be presented in the MD&A of a government?
A)A brief discussion of the basic financial statements.
B)Total assets.
C)Total liabilities.
D)Net assets.
E)An organization chart of government officials.
Q4) Prepare a Statement of Activities
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Chapter 18: Accounting for Not-For-Profit Organizations
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Sample Questions
Q1) What should Dura Foundation report as program service expenses?
Q2) During 2008,the Garfield Humane Society,a voluntary health and welfare organization,received cash donations of $892,000 and membership dues of $62,000.A member of the Humane Society donated services valued at $8,000 that would otherwise have been performed by a paid staff member.A pet food manufacturer donated dog food valued at $16,400.The Humane Society received a gift of $140,000,to be used in building a new animal shelter.Also during 2008,investments held by the Humane Society earned interest of $2,000.
Required:
Prepare a schedule showing the amount that the Garfield Humane Society should have recorded for public support for 2008.
Q3) What is the main source of financial support for most voluntary health and welfare organizations?
Q4) For May 2008,Carlington Hospital's charges for patient services were $608,000,of which 80% was billed to third-party payors.
Required:
Prepare the journal entry to accrue patient charges for the month.
Q5) What financial statements would normally be prepared by a voluntary health and welfare organization?
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Chapter 19: Accounting for Estates and Trusts
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Sample Questions
Q1) A testamentary trust is a trust
A)intended to protect the assets of a minor.
B)that is managed by the trustor.
C)that is managed by an estate.
D)established by a living person.
E)established by a will.
Q2) What is the difference between an executor and an administrator?
Q3) Prepare the journal entry to record the collection of the life insurance policy.
Q4) In a will,a devise is a
A)gift of personal property that is directly identified.
B)cash gift from a particular source.
C)gift of estate property that remains after carrying out the other provisions of the will.
D)gift of real property.
E)gift of intangible property.
Q5) Prepare a Charge and Discharge Statement for the estate.
Q6) Prepare the journal entry to record ordinary repairs to the rental property of $5,000.
Q7) Debts of $52,000 were discovered. Prepare the journal entry to record the transaction.
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