Advanced Accounting Test Preparation
Course Introduction
Advanced Accounting delves into complex financial reporting and consolidation issues faced by businesses. This course covers topics such as intercompany transactions, mergers and acquisitions, consolidated financial statements, foreign currency transactions, partnerships, segment and interim reporting, and accounting for not-for-profit organizations and governmental entities. Emphasis is placed on interpretation of accounting standards, problem-solving, and critical analysis of advanced topics, preparing students for professional certification exams and higher-level accounting roles.
Recommended Textbook
Advanced Accounting Updated 1st Canadian Edition by Gail Fayerman
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10 Chapters
580 Verified Questions
580 Flashcards
Source URL: https://quizplus.com/study-set/3370 Page 2
Chapter 1: Accounting for Investments
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56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/66911
Sample Questions
Q1) What is a joint operation?
Answer: In a joint operation, the investor has a contractual right or obligation to the assets and liabilities of the operation. A joint arrangement that is not structured as a separate entity is a joint operation. However, a separate entity could still be a joint operation. A joint operation is usually a joint arrangement that involves the use of the assets and other resources of the parties, often to manufacture and sell joint products.
Q2) There is a presumption that control exists where the company owns more than 50% of the voting shares of the investee.
A)True
B)False
Answer: True
Q3) When reflecting an investment using the cost method, the investment is initially recorded at cost and the balance is not adjusted in subsequent periods unless there is an impairment.
A)True
B)False
Answer: True
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3
Chapter 2: Business Combinations
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55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/66910
Sample Questions
Q1) At the acquisition date, the contingent consideration is:
A)Measured at book value.
B)Classified either as equity or as a liability.
C)Classified as equity.
D)Classified as a liability.
Answer: B
Q2) Which of the following statements regarding step acquisitions is FALSE?
A)An acquirer can obtain its controlling interest in the acquiree by acquiring further shares and thereby adding to its previously held equity interest.
B)There may be a number of step purchases of shares in the acquiree prior to the obtaining of control.
C)The acquirer will recognize an investment in the acquiree with each step acquisition being measured at book value.
D)In a business combination achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss.
Answer: C
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4
Chapter 3: Consolidation: Wholly Owned Subsidiaries
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56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/66909
Sample Questions
Q1) Which of the following statements regarding the acquisition analysis is FALSE?
A)The acquisition analysis may include the recognition of assets and liabilities not recognized in the records of the subsidiary.
B)Differences between carrying amounts and fair values of the identifiable assets and liabilities of the subsidiary at acquisition date are recognized using fair value adjustments.
C)The acquisition analysis will determine whether any goodwill or gain on bargain purchase has arisen as a part of the business combination.
D)Where at acquisition date the parent holds shares in the subsidiary that it has previously acquired before it was a parent, this investment must not be revalued.
Answer: D
Q2) The starting point for the preparation of the consolidated financial statements is:
A)The individual company statements at that date.
B)The previous year's consolidated financial statements.
C) The parent company's individual statements at year end.
D)The subsidiary company's individual statements at that date.
Answer: A
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Page 5
Chapter 4: Consolidations: Intragroup Transactions
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66 Verified Questions
66 Flashcards
Source URL: https://quizplus.com/quiz/66908
Sample Questions
Q1) Interest payments on bonds within a group of companies do not require adjustments to revenues and expenses in the respective entities.
A)True
B)False
Q2) Why are adjustments made for intragroup borrowings on consolidation?
Q3) Dither Co. owns 100% of the common shares of Franklin Ltd. Dither records its investment in Franklin using the cost method. Dither and Franklin have transactions with each other. In preparing Dither's consolidated financial statements, which of the following should be done?
A)Dividends received by Dither from Franklin should be deducted from Dither's dividend income.
B)Franklin's retained earnings should be deducted from Dither's retained earnings.
C)Dither's receivable from Franklin should be netted with Dither's accounts receivable.
D)Franklin's share capital should be added to Dither's share capital.
Q4) Why are adjustments required for intragroup services such as management fees?
Q5) Why are intragroup transactions eliminated?
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6
Chapter 5: Consolidation: Non-Controlling Interest
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61 Verified Questions
61 Flashcards
Source URL: https://quizplus.com/quiz/66907
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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58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/66906
Sample Questions
Q1) 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.
Q2) Describe how investments in associates and joint ventures are accounted for by a parent entity, which will and will not prepare consolidated financial statements.
Q3) Adjustments to the entity's share of the equity of the associate or joint venture are made for the effects of both upstream and downstream transactions even though a downstream transaction does not affect the equity of the associate or joint venture.
A)True
B)False
Q4) Describe how dividends from a subsidiary, associate and joint venture are accounted for by a parent (entity).
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Chapter 7: Accounting for Foreign Currency
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57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/66905
Sample Questions
Q1) What is the effect of fluctuations in exchange rates on accounts payable?
A)Deferred and amortized.
B)Recognized immediately in income.
C)Recognized if losses, deferred if gains.
D)Deferred to maturity.
Q2) Which of the following statements regarding the translation of financial statements from the "functional currency" to the "presentation currency" is FALSE?
A)Entities may choose to present their financial statements in any currency.
B)Given the rising trend towards globalization, management may like to present their financial statements in a currency different from their functional currency in order to attract investors or because it is required by local law or other regulation.
C)A company may display its statements in a language more relatable to a global marketplace used to viewing financial information denominated in a currency not functional to the entity.
D)Any gain or loss on translation is considered part of income.
Q3) Hedge accounting is applicable only if a receivable is being hedged.
A)True
B)False
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9
Chapter 8: Accounting for Foreign Investments
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56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/66904
Sample Questions
Q1) Which of the following statements relating to a functional currency is FALSE?
A)Functional currency is determined on an entity by entity basis
B)Functional currency is a reflection of the primary economic environment in which an entity operates.
C)The primary economic environment is the one in which an entity primarily generates and expends cash.
D)In order to determine what is considered to be a "functional currency," it is imperative that a "foreign currency" be first identified.
Q2) A parent company may lend money to a foreign subsidiary where the settlement terms are neither planned nor likely to occur in the foreseeable future. This loan would likely be denominated on the individual company's financial statements in:
A)Either the parent company's functional currency or that of the subsidiary.
B)The parent company's functional currency.
C)The subsidiary company's functional currency.
D)The parent company's presentation currency.
Q3) Consolidation adjustments must be restated to the presentation currency.
A)True
B)False
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Chapter 9: Reporting for Not-For-Profit Organizations
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57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/66903
Sample Questions
Q1) Which of the following statements is FALSE?
A)Not-for-profit organizations may follow IFRS (Part I)or Part III of the CICA handbook.
B)All not-for-profit organizations should apply similar accounting treatments to like transactions when the needs of the users in the private and public sector are aligned.
C)Not-for-profit revenue recognition criteria mirror those of profit-oriented entities except for contributions.
D)A not-for-profit organization may not disaggregate its financial statements into funds based on legal, contractual or voluntary actions of the entity.
Q2) Not for profit organizations cannot be incorporated.
A)True
B)False
Q3) What is Encumbrance Accounting?
Q4) What is a restricted fund?
Q5) What are contributions?
Q6) What are the financial statements of a not-for-profit organization?
Q7) Discuss the recognition and measurement of tangible capital assets and intangibles in non-for-profit organization.
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Chapter 10: Reporting for Public Sector Entities
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58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/66902
Sample Questions
Q1) Which of the following statements regarding governments is FALSE?
A)Governments are dependent on the profitable sales of goods and services to finance their operations.
B)Governments have the right to tax.
C)As long as they are fiscally responsible, governments have the opportunity to issue significant amounts of debt in the capital markets at preferential interest rates.
D)Governments and their agencies finance their operations by levying fees and incurring liabilities.
Q2) The measure of net debt is an indicator of a public sector entity's financial position.
A)True
B)False
Q3) A public sector entity's future revenue requirements are not constrained by obligations associated with past decisions and events.
A)True
B)False
Q4) What is a portfolio investment with concessionary terms?
Q5) Why is a public sector financial reporting framework needed?
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