Advanced Financial Accounting
Mock Exam
Course Introduction
Advanced Financial Accounting explores complex accounting concepts and practices relevant to multinational corporations, partnerships, and other business entities. This course covers topics such as consolidated financial statements, foreign currency transactions, segment and interim reporting, and accounting for mergers and acquisitions. Students will analyze real-world cases and financial reports, learning how to apply advanced accounting standards and regulations in diverse contexts. Emphasis is placed on interpretation of financial data, ethical considerations, and compliance with International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). Upon completion, students will have the expertise to address advanced accounting challenges and to prepare and analyze financial statements for complex business organizations.
Recommended Textbook
Intermediate Accounting 9th Edition by J. David Spiceland
Available Study Resources on Quizplus
21 Chapters
4034 Verified Questions
4034 Flashcards
Source URL: https://quizplus.com/study-set/3992
Page 2
Chapter 1: Environment and Theoretical Structure of Financial Accounting
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/80190
Sample Questions
Q1) When there is agreement between a measure or description and the phenomenon it purports to represent, information possesses which characteristic?
A) Verifiability.
B) Predictive value.
C) Faithful representation.
D) Timeliness.
Answer: C
Q2) The most political issue in the FASB's most recent deliberations and amendments to GAAP on stock options was:
A) The negative effects on earnings of companies in the tech industry if they had to recognize expenses associated with stock compensation.
B) The negative effects on assets of recognizing stock options in equity.
C) The disclosure of stock compensation expense in the notes.
D) Accounting for stock options that have not yet been granted to employees.
Answer: A
Q3) Compute Amazon's total liabilities at the end of the year.
Answer: Total assets = Total liabilities + Total stockholders' equity
Therefore, Total liabilities = Total assets - Total stockholders' equity = $4,363 - 431 = $3,932
Page 3
To view all questions and flashcards with answers, click on the resource link above.
Chapter 2: Review of the Accounting Process
Available Study Resources on Quizplus for this Chatper
139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/180068
Sample Questions
Q1) Sold inventory on account.
Answer: \[\begin{array} { | c | c | c | c | }
\hline \text { TRANSACTION } & \begin{array} { c }
\text { Account(s) } \\
\text { debited }
\end{array} & \begin{array} { c }
\text { Account(s) } \\
\text { credited }
\end{array} & \begin{array} { c }
\text { Transaction } \\
\text { type }
\end{array} \\
\hline \text { Sold inventory on account. } & 1140,6000 & 5000,1200 & 1 \\
\hline \end{array}\]
Q2) Based on the information presented above, prepare the Income Statement for Krafty Foods for the year ended December 31, 2018.
Answer: 11ea937b_366c_29c7_a419_034b0dec2329_TB2599_00
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: The Balance Sheet and Financial Disclosures
Available Study Resources on Quizplus for this Chatper
168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/80188
Sample Questions
Q1) Proxy statement
A)Management's views on its operations, liquidity, and capital resources.
B)Independent and professional opinion about the fairness of the financial statements.
C)Occurs after the fiscal year-end, but before the statements are issued.
D)Information about the company's choices from among various alternative accounting methods.
E)Includes disclosures of executive compensation.
Answer: E
Q2) A company that borrows funds at 6% and then generates a return on those funds of 9% typically has:
A) Greater default risk.
B) Favorable financial leverage.
C) Higher return on equity.
D) All of the other answers are true.
Answer: D
Q3) Compute the times interest earned ratio for Marjoram Company. Round your answer to two decimal places.
Answer: ($73,080 + 31,320 + 11,000) /$11,000 = 10.49 Times interest earned ratio
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: The Income Statement, Comprehensive
and the Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/80187
Sample Questions
Q1) Hulkster's 2018 average days in inventory is (rounded):
A) 61 days.
B) 92 days.
C) 101 days.
D) 90 days.
Q2) Its profit margin on sales for 2018. Round your answer to one decimal place, e.g., 0.1234 as 12.3%.
Q3) Nevada Boot Co. reported net income of $216,000 for its year ended December 31, 2018. Purchases totaled $152,000. Accounts payable balances at the beginning and end of the year were $36,000 and $33,000, respectively. Beginning and ending inventory balances were $44,000 and $46,000, respectively. Assuming that all relevant information has been presented, Nevada Boot would report operating cash flows of:
A) $155,000.
B) $221,000.
C) $211,000.
D) $151,000.
Q4) Using the information provided above, use the DuPont framework to briefly summarize the operating performance of McDonald's relative to its benchmark competitors.
Page 6
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Revenue Recognition
Available Study Resources on Quizplus for this Chatper
316 Verified Questions
316 Flashcards
Source URL: https://quizplus.com/quiz/80186
Sample Questions
Q1) In its December 31, 2018, balance sheet, Lake would report:
A) Deferred gross profit of $700,000.
B) Deferred gross profit of $1,050,000.
C) Installment receivables (net) of $750,000.
D) Installment receivables (net) of $900,000.
Q2) Which of the following is not one of the five steps for recognizing revenue?
A) Recognize revenue when (or as) each performance obligation is satisfied.
B) Determine the transaction price.
C) Allocate the transaction price to each performance obligation.
D) Estimate variable consideration.
Q3) In a bill-and-hold arrangement, revenue only can be recognized after the sale of the goods to the end user.
A)True
B)False
Q4) If the seller is an agent, the seller typically is vulnerable to risk associated with delivering the product or service.
A)True
B)False
Q5) Prepare Portelli's April 30 journal entry to account for the revenue earned in April.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Time Value of Money Concepts
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/180069
Sample Questions
Q1) Hillsdale is considering two options for comparable computer software. Option A will cost $25,000 plus annual license renewals of $1,000 for three years, which includes technical support. Option B will cost $20,000 with technical support being an add-on charge. The estimated cost of technical support is $4,000 the first year, $3,000 the second year, and $2,000 the third year. Assume the software is purchased and paid for at the beginning of year one, but that technical support is paid for at the end of each year. Interest is at 8%. Ignore income taxes.
Required: Determine which option should be chosen based on present value considerations.
Q2) Briefly explain how you would arrive at the monthly payment for a 48-month loan where the first payment is due one month from the loan date. In your explanation, include the use of present or future value tables.
Q3) Briefly describe the differences between an ordinary annuity, an annuity due, and a deferred annuity.
Q4) Provide two examples of the use of present value techniques in accounting.
Q5) Prepare a time diagram for the future value of an annuity due with three payments of $400. Be sure to indicate the periods in which interest is added.
Q6) Briefly describe the difference between simple interest and compound interest.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Cash and Receivables
Available Study Resources on Quizplus for this Chatper
187 Verified Questions
187 Flashcards
Source URL: https://quizplus.com/quiz/80184
Sample Questions
Q1) Cash equivalents would include investments in marketable equity securities as long as management intends to sell the securities in the next three months.
A)True
B)False
Q2) On June 14, 2018, Rumsfeld Company sold 100 air-conditioning units to Powell Heating and Cooling. The units list for $600 each, but Powell was granted a 25% trade discount. All of Rumfeld's sales are subject to terms 2/10, n/30. Rumsfeld uses the gross method of accounting for sales discounts.
Required:
1. Prepare the journal entry to record the sale.
2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 22, 2018.
3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on July 10, 2018.
Q3) If Winchester is using the balance sheet approach to determining loan losses and the Allowance account balance, what percentage did it use in 2018?
Q4) Describe some key elements of an internal control system for cash.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Inventories: Measurement
Available Study Resources on Quizplus for this Chatper
182 Verified Questions
182 Flashcards
Source URL: https://quizplus.com/quiz/180070
Sample Questions
Q1) What is Nu's gross profit ratio if it elects LIFO?
A) 80%.
B) 49%.
C) 40%.
D) 5%.
Q2) LIFO liquidation
A)Units grouped according to similarities.
B)Captured by FIFO for perishable products.
C)Considered a product cost.
D)Reduces the quality of current period earnings information.
E)Continuously records changes in inventory.
Q3) During periods when costs are rising and inventory quantities are stable, ending inventory will be:
A) Higher under LIFO than FIFO.
B) Lower under average cost than LIFO.
C) Higher under average cost than FIFO.
D) Higher under FIFO than LIFO.
Q4) Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses average cost and a perpetual inventory system.
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Inventories: Additional Issues
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/80182
Sample Questions
Q1) Briefly explain what is meant by "market" in the lower of cost or market (LCM) approach to valuing inventory at the end of a reporting period.
Q2) Under the dollar-value LIFO retail method, to determine the value of a LIFO layer:
A) Divide the LIFO layer by the layer-year price index and multiply by the layer-year cost-to-retail percentage.
B) Multiply the LIFO layer by the base year price index and the current year cost-to-retail percentage.
C) Multiply the LIFO layer by the layer-year price index and by the layer-year cost-to-retail percentage.
D) Divide the LIFO layer by the layer-year cost-to-retail percentage and multiply by the layer-year price index.
Q3) \[\begin{array} { | c | c | c | }
\hline \text { Error } & \text { Cost of goods sold } & \text { Retained earnings } \\ \hline \text { Double counted items in ending inventory } & & \\ \hline \end{array}\]
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Property, Plant, and Equipment and Intangible
Assets: Acquisition
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/80181
Sample Questions
Q1) Liddy Corp. began constructing a new warehouse for its operations during the current year. In the year Liddy incurred interest of $30,000 on a working capital loan, and interest on a construction loan for the warehouse of $60,000. Interest computed on the average accumulated expenditures for the warehouse construction was $50,000. What amount of interest should Liddy expense for the year?
A) $30,000.
B) $40,000.
C) $90,000.
D) $140,000.
Q2) Research and development expense for a given period includes:
A) The full cost of newly acquired equipment that has an alternative future use.
B) Depreciation on a research and development facility.
C) Research and development conducted on a contract basis for another entity.
D) Patent filing and legal costs.
Q3) The average accumulated expenditures for 2019 by the end of the construction period was:
A) $1,950,000.
B) $1,554,000.
C) $1,254,000.
D) $975,000.
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Property, Plant, and Equipment and Intangible
Assets: Utilization and Disposition
Available Study Resources on Quizplus for this Chatper
223 Verified Questions
223 Flashcards
Source URL: https://quizplus.com/quiz/180996
Sample Questions
Q1) Improvements
A)Cost allocation for an intangible asset.
B)Adding a new major component to existing plant and equipment.
C)Can be expressed in units of time or in units of activity.
D)Cost allocation for natural resources.
E)The amount the company expects to receive for the asset at the end of its life.
F)The replacement of a major component of plant and equipment asset.
G)Allocates an equal amount of depreciable base to each period.
H)Estimates service life in terms of a measure of activity.
I)The difference between cost and residual value.
J)Multiplies book value by twice the straight-line rate.
Q2) The overriding principle for all depreciation methods is that the method must be:
A) Conservative and economic.
B) Systematic and rational.
C) Consistent and conservative.
D) Significant and material.
Q3) Prepare the journal entry to record Plank's disposal of the property, plant, and equipment during 2018.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Investments
Available Study Resources on Quizplus for this Chatper
183 Verified Questions
183 Flashcards
Source URL: https://quizplus.com/quiz/80179
Sample Questions
Q1) Krogstad Corporation bought 1,000 shares of Cole Inc. common stock for $90 per share Three months later, the shares were sold for $110 per share.
Required:
(1.) Prepare the appropriate journal entry to record the purchase of the stock.
(2.) Prepare the appropriate journal entry to record the sale of the stock.
Q2) When an impairment of an investment that is classified as available for sale occurs for a reason that is judged to be "other than temporary," the investment is written down to its fair value and the amount of the write-down is:
A) Recorded as a deferred credit.
B) Included in net income.
C) Recorded as deferred asset.
D) Treated as unrealized.
Q3) Routine transfers of debt investments among the trading, available for sale, and held to maturity portfolios need not be disclosed in the financial statements.
A)True
B)False
Q4) How much did Cold Cat actually receive from the sale of available-for-sale securities during 20X5?
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Current Liabilities and Contingencies
Available Study Resources on Quizplus for this Chatper
155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/180991
Sample Questions
Q1) Mozart Music Co. began operations in December of 2018. The company sold gift certificates during December in various amounts totaling $1,600. The gift certificates are redeemable for merchandise within three years of the purchase date. However, experience within the industry predicts that 90% of gift certificates will be redeemed within one year. Certificates totaling $500 were presented for redemption during 2018 as part of merchandise purchases having a total retail price of $750.
Required:
1. Determine the liability for gift certificates to be reported in the December 31, 2018, balance sheet.
2. What is the appropriate classification (current or noncurrent) of the liabilities at December 31, 2018? Show calculations.
Q2) How are customer advances and refundable deposits similar and yet different?
Q3) Revenue is recognized upon sale of gift cards, rather than being deferred. A)True B)False
Q4) Indicate how TinyPart would disclose or account for the lawsuit described in part (b) under U.S. GAAP and under IFRS in the financial statements for the year ended December 31, 2018.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Bonds and Long-Term Notes
Available Study Resources on Quizplus for this Chatper
256 Verified Questions
256 Flashcards
Source URL: https://quizplus.com/quiz/180992
Sample Questions
Q1) What is the annual stated interest rate on the bonds?
A) 3.5%
B) 6%
C) 7%
D) None of the answer choices is correct.
Q2) Required: What will Morton Sales Co. report on these bonds in its December 31, 2018, balance sheet?
Q3) On January 1, 2018, for $18 million, Monument Company purchased 10% bonds, dated January 1, 2018, with a face amount of $20 million. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. Required:
1. Prepare the journal entry to record interest on June 30, 2018, using the straight-line method.
2. Prepare the journal entry to record interest on December 31, 2018, using the straight-line method.
Q4) How are bonds and notes the same? How do they differ?
Q5) Why do companies find the issuance of convertible bonds to be an attractive form of financing?
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Leases
Available Study Resources on Quizplus for this Chatper
262 Verified Questions
262 Flashcards
Source URL: https://quizplus.com/quiz/197555
Sample Questions
Q1) Python Company leased equipment from Hope Leasing on January 1, 2018. Hope recently purchased the equipment at a cost of $222,664.
Other information:
\[\begin{array} { l l }
\text { Lease term } & 3 \text { years } \\
\text { Annual payments } & \$ 80,000 \text { on January } 1 \text { each year } \\
\text { Life of asset } & 3 \text { years } \\
\text { Fair value of asset } & \$ 222,664 \\
\text { Implicit interest rate } & 8 \% \\
\text { Incremental rate } & 8 \%
\end{array}\]
There is no expected residual value.
Required: Prepare appropriate journal entries for Python for 2018. Assume straight-line depreciation and a December 31 year-end. Round your answers to the nearest whole dollar amounts.
Q2) Compare the way a purchase option that is reasonably certain to be exercised and a lessee-guaranteed residual value are treated by the lessee and lessor when determining lease payments.
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Accounting for Income Taxes
Available Study Resources on Quizplus for this Chatper
176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/181040
Sample Questions
Q1) Operating loss carryforward
A)Is usually a revenue or expense item that is excluded or not deductible in determining taxable income.
B)Is reduced by a valuation allowance if realization of future tax benefit is not more likely than not.
C)Arises when future taxable amounts are created by temporary differences.
D)Is the process of allocating income taxes among two or more reporting periods.
E)Will always create a deferred tax asset.
Q2) Which of the following causes a permanent difference between taxable income and pretax accounting income?
A) Investment expenses incurred to obtain tax-exempt income.
B) Unrealized gains from recording investments at fair value.
C) Rent collected in advance.
D) Prepaid expenses.
Q3) An operating loss carryforward.
Q4) What is a valuation allowance for deferred tax assets and when is it used?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Pensions and Other Postretirement Benefits
Available Study Resources on Quizplus for this Chatper
246 Verified Questions
246 Flashcards
Source URL: https://quizplus.com/quiz/80174
Sample Questions
Q1) An underfunded pension plan means that the:
A) PBO is less than plan assets.
B) PBO exceeds plan assets.
C) ABO is less than plan assets.
D) ABO exceeds plan assets.
Q2) When the service method is used for amortizing prior service costs, the amount recognized each year is:
A) In proportion to the fraction of the total remaining service years worked during the year.
B) A constant amount or fixed amount.
C) Prior service cost divided by the average remaining service life of the active employee group.
D) Prior service cost divided by the average estimated retirement age of the currently enrolled employee group.
Q3) Pension plans typically require some minimum period of employment before benefits vest. What is the 1974 federal law governing vesting (as well as other aspects of pensions)? What are the vesting rules?
Q4) Discuss the key quantitative elements of accounting for a defined benefit pension plan.
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Shareholders Equity
Available Study Resources on Quizplus for this Chatper
179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/181036
Sample Questions
Q1) Cash dividends become a binding liability as of the record date.
A)True
B)False
Q2) How many of Levi's common shares were outstanding on 12/31/2017?
A) 14 million.
B) 9 million.
C) 5 million.
D) None of these answer choices are correct.
Q3) A statement of comprehensive income does not include:
A) Net income.
B) Losses resulting from the return on pension assets exceeding expectations.
C) Losses from changes in estimates regarding the PBO.
D) Prior service cost.
Q4) The Model Business Corporation Act:
A) Uses the words "common" and "preferred" in describing distinguishing characteristics of stock.
B) Defines legal capital as the amount of net assets not available for distribution to shareholders.
C) Provides guidance for choosing an appropriate par for new issues of stock.
D) Has affected the laws of most states.
20
To view all questions and flashcards with answers, click on the resource link above.
Chapter 19: Share-Based Compensation and Earnings Per Share
Available Study Resources on Quizplus for this Chatper
231 Verified Questions
231 Flashcards
Source URL: https://quizplus.com/quiz/181037
Sample Questions
Q1) On December 31, 2017, Belair Corporation had 100,000 shares of common stock outstanding and 30,000 shares of 7%, $50 par, cumulative preferred stock outstanding. On February 28, 2018, Belair purchased 24,000 shares of common stock on the open market as treasury stock paying $20 per share. On June 30, 2018, Belair declared and issued a 2-for-1 stock split on outstanding common stock. Belair sold 6,000 treasury shares on September 30, 2018, for $15 per share. Net income for 2018 was $180,905.
Required:
Compute Belair's basic earnings per share for 2018.
Q2) Antidilutive security
A)Decrease in the EPS numerator.
B)Time-weighted increase in the basic EPS denominator.
C)Does not affect and is not affected by EPS calculations.
D)Potentially dilutive debt.
E)Time-weighted decrease in the basic EPS denominator.
Q3) What is the number of shares to be used in computing basic EPS?
A) 2,000,000.
B) 2,205,000.
C) 2,307,500.
D) 2,335,000.
Page 21
To view all questions and flashcards with answers, click on the resource link above.
Chapter 20: Accounting Changes and Error Corrections
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/181038
Sample Questions
Q1) Which of the following changes would not be accounted for using the prospective approach?
A) A change to LIFO from average costing for inventories.
B) A change from application of the LCNRV rule from individual item costing to an aggregate costing approach.
C) A change from straight-line to double-declining balance depreciation.
D) A change from double-declining balance to straight-line depreciation.
Q2) C Co. reported a retained earnings balance of $200,000 at December 31, 2017. In September 2018, C determined that insurance premiums of $30,000 for the three-year period beginning January 1, 2017, had been paid and fully expensed in 2017. C has a 30% income tax rate. What amount should C report as adjusted beginning retained earnings in its 2018 statement of retained earnings?
A) $210,000.
B) $214,000.
C) $220,000.
D) $221,000.
Q3) Name and briefly describe the three categories of accounting changes.
Q4) Describe in detail the way companies report most voluntary changes in accounting principle.
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: The Statement of Cash Flows Revisited
Available Study Resources on Quizplus for this Chatper
188 Verified Questions
188 Flashcards
Source URL: https://quizplus.com/quiz/80170
Sample Questions
Q1) Which of the following is reported as a financing activity in the statement of cash flows?
A) The sale of securities classified as available for sale.
B) The acquisition of stock for the purpose of retiring it.
C) The payment of interest on bonds payable.
D) The receipt of dividend revenue.
Q2) Which one of the following financial statements does not report amounts primarily on an accrual basis?
A) Income statement.
B) Balance sheet.
C) Statement of cash flows.
D) Statement of shareholders' equity.
Q3) Which of the following is always reported as an outflow of cash?
A) The accrual of warranty expense.
B) The declaration of a cash dividend.
C) The purchase of equipment for cash.
D) Amortization expense.
Q4) Why is the statement of cash flows required as part of the set of external financial statements?
Q5) Did accounts receivable increase or decrease during 2018? Explain.
Page 23
To view all questions and flashcards with answers, click on the resource link above.