Graduate Financial Accounting
Study Guide Questions
Course Introduction
Graduate Financial Accounting provides an in-depth exploration of the principles and practices underlying the preparation, analysis, and interpretation of financial statements for complex business entities. The course covers advanced topics such as revenue recognition, consolidation, intercompany transactions, foreign currency translations, and accounting for mergers and acquisitions. Emphasizing both conceptual frameworks and practical applications, students engage with real-world financial statements, develop critical thinking and analytical skills, and address emerging issues in international accounting standards. The course is designed for students intending to pursue careers in accounting, finance, or related fields, equipping them with a strong foundation in both theory and practice.
Recommended Textbook
Advanced Financial Accounting 6th Edition by Thomas H. Beechy
Available Study Resources on Quizplus 19 Chapters
491 Verified Questions
491 Flashcards
Source URL: https://quizplus.com/study-set/3384 Page 2
Chapter 1: Setting the Stage
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/67161
Sample Questions
Q1) Which of the following statements about the use of GAAP for private companies is true?
A)Private companies must use IFRS.
B)Private companies must use Accounting Standards for Private Enterprises.
C)Private companies may use either full IFRS or Accounting Standards for Private Enterprises.
D)Private companies may use either modified IFRS or Accounting Standards for Private Enterprises.
Answer: C
Q2) A company has chosen accounting policies that result in minimizing its net income.Which of the following is not a reason for doing this?
A)Income tax deferral
B)Performance evaluation
C)Discourage new competitors
D)For negotiations with unions
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Intercorporate Equity Investments: an Introduction
Available Study Resources on Quizplus for this Chatper
42 Verified Questions
42 Flashcards
Source URL: https://quizplus.com/quiz/67160
Sample Questions
Q1) Carr Co.owns 100% of the common shares of Ice Tops Ltd.Carr records its investment in Ice Tops using the cost method.Carr and Ice Tops have transactions with each other.In preparing Carr's consolidated financial statements,which of the following should be done?
A)Ice Tops' retained earnings should be deducted from Carr's retained earnings.
B)Ice Tops' share capital should be added to Carr's share capital.
C)Dividends received by Carr from Ice Tops should be deducted from Carr's dividend income.
D)Carr's receivable from Ice Tops should be netted with Carr's accounts receivable. Answer: C
Q2) In Canada,what subsidiaries must be included in consolidated financial statements?
A)All subsidiaries
B)All subsidiaries,except for ones in unrelated industries
C)All domestic subsidiaries
D)All subsidiaries,except for ones where control is impaired
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Business Combinations
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/67159
Sample Questions
Q1) Push-down accounting requires ________.
A)fair value adjustments to be recorded on the subsidiary company's books
B)fair value adjustments to be recorded on the parent company's books
C)fair value adjustments to be recorded on the consolidation worksheet only
D)no fair value adjustments
Answer: A
Q2) Perez Co.plans to acquire Roo Co.Roo has substantial depreciable assets that have fair values in excess of their book values.Considering only the income tax impact,which of the following statements is true?
A)Perez would prefer to purchase Roo's assets and Roo would prefer to sell its shares to Perez.
B)Perez would prefer to purchase Roo's shares and Roo would prefer to sell its assets to Perez.
C)Both Perez and Roo would prefer Perez to purchase Roo's shares.
D)Both Perez and Roo would prefer Perez to purchase Roo's assets.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Wholly-Owned Subsidiaries: Reporting
Subsequent to Acquisition
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/67158
Sample Questions
Q1) The goodwill impairment test does not involve ________.
A)allocation of goodwill to reporting units
B)elimination of all goodwill as a consequence
C)estimation and judgement on the part of management
D)an opportunity for a "big bath"
Q2) DC Company purchased 100% of the outstanding common shares of FA Company on December 31,20X3 for $170,000.At that date,FA had $100,000 of outstanding common stock and retained earnings of $30,000.It was agreed that the net assets were fairly valued except that the fair value of the capital assets exceeded their net book value by $20,000 and the carrying value of the inventory exceeded its fair value by $10,000.The capital assets had a remaining useful life of eight years as of the acquisition date and have no salvage value.Inventory turns over four times a year.It is now 20X6 and DC has been very pleased with how profitable its investment in FA has been.On DC's consolidated financial statements at December 31,20X6,what balance should be reported for goodwill?
A)$10,000
B)$30,000
C)$40,000
D)$70,000
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Consolidation of Non-Wholly Owned
Subsidiaries
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/67157
Sample Questions
Q1) Pooke Co.acquired 75% of Finch Ltd.3 years ago.In calculating the balance for the non-controlling interest,Pooke started with the net income from Finch's current year-end single-entity financial statements.Which of the following adjustments must be added to Finch's net income in calculating Finch's adjusted net income?
A)Amortization of fair value increments
B)Unrealized gain on an upstream sale of a capital asset
C)Unrealized profit on upstream sales of inventory in the current year
D)Realized profits in the current year on upstream sales of inventory from the previous year
Q2) Assume that a parent company has 4 subsidiaries.Under IFRS 3,which of the following statements is true?
A)All 4 subsidiaries must be reported using the parent-company extension method.
B)All 4 subsidiaries must be reported using the entity method.
C)Each subsidiary must be reported using either the parent-company extension method or the entity method.Consistency is not required.
D)All 4 subsidiaries must be reported using either the parent-company extension method or the entity method.Consistency is required.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Subsequent-Year Consolidations: General Approach
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/67156
Sample Questions
Q1) Dixon Ltd.owns 60% of the common shares of Kelly Co.Kelly sold a machine with a book value of $350,000 to Dixon for $410,000.When Dixon prepares its consolidated financial statements,it makes an adjustment to reduce the amortization.What is the effect of this adjustment?
A)The total decrease in amortization will flow through to ending retained earnings.
B)The total decrease in amortization will flow through to the ending non-controlling interest.
C)60% of the decrease in amortization will flow through to ending retained earnings and 40% will flow through to the ending non-controlling interest.
D)40% of the decrease in amortization will flow through to ending retained earnings and 60% will flow through to the ending non-controlling interest.
Q2) On the consolidated statement of financial position,which balances differ Between the parent-company extension method and the entity method?
A)Retained earnings and goodwill
B)Retained earnings and non-controlling interest
C)Goodwill and non-controlling interest
D)Common shares and retained earnings
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Segmented and Interim Reporting
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/67155
Sample Questions
Q1) Under the discrete approach to the preparation of interim,which of the following statements is true?
A)Annual expenses are treated as a proportionate part of annual earnings.
B)Income taxes are treated as a cumulative expense.
C)Temporary differences giving rise to future income taxes are allocated to interim periods.
D)Expenses are allocated in a way to show the organization's likely annualized costs.
Q2) In practice,most companies use the discrete approach in preparing their internal interim financial statements.Which of the following costs is usually not included in the financial statements?
A)Insurance
B)Income taxes
C)Maintenance
D)Bonuses to employees
Q3) Explain what entity-wide disclosures are required by a public company.Why is this disclosure required under IFRS8 and how is this information useful?
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Foreign Currency Transactions and Hedges
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/67154
Sample Questions
Q1) What is the exchange rate in effect at the date of the transaction called?
A)Closing rate
B)Spot rate
C)Forward rate
D)Settlement rate
Q2) Under IFRS,a hedging relationship qualifies for special hedge accounting rules,only if it meets five conditions.
Required:
Explain the five conditions that must be met for a derivative to qualify for special hedge accounting.Identify what qualifies as a "hedged item".Identify what qualifies as a "hedging instrument".Outline the conditions required for a hedge to be "highly effective with respect to foreign exchange risk".
Q3) Which of the following items is a non-monetary item?
A)Cash
B)Accounts receivable
C)Inventory
D)Accounts payable
Q4) Compare and contrast accounting for foreign currency transactions and hedges under IFRS and ASPE.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Reporting Foreign Operations
Available Study Resources on Quizplus for this Chatper
43 Verified Questions
43 Flashcards
Source URL: https://quizplus.com/quiz/67153
Sample Questions
Q1) LaSalle Ltd. ,a Canadian company has a subsidiary in Brazil that produces a component used in LaSalle's manufacturing.All of the components that the subsidiary produces is sold to LaSalle.The subsidiary also purchases most of the raw materials used in its production from LaSalle.Both companies use the Canadian dollar as its functional currency.Which of the following statements is true?
A)The current rate method of translation should be used.
B)Nothing needs to be done with the subsidiary's financial statements prior to consolidation.
C)The subsidiary's financial statements need to be re-measured into the functional currency prior to consolidation.
D)The subsidiary is considered to be an extension of the parent company and consolidation is not required.
Q2) Which of the following factors is a primary indicator used to choose a functional currency?
A)Autonomy of the subsidiary
B)Proportion of intercompany transactions
C)Sources of competitive forces and regulations
D)Ability of subsidiary to generate cash flows to service its debts
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/67152
Sample Questions
Q1) For not-for-profit organizations,the CICA Handbook ________.
A)permits disbursement basis accounting
B)permits disbursement or expense basis is accounting
C)requires expenditure basis accounting
D)requires expense basis accounting
Q2) A local ice cream shop pledged 10% of its sales on July 1 to the Children's Clubhouse,a not-for-profit organization.How should the Children's Clubhouse treat this pledge?
A)Accrue the pledge when it is made
B)Accrue the pledge only if the amount can be reasonably estimated
C)Accrue the pledge only if there is reasonable assurance that the ice cream shop will pay
D)Recognize the pledge when it is collected
Q3) The disbursement basis for recognizing resource outflows uses which of the following bases?
A)The full accrual basis
B)The accrual basis only as applied to liabilities
C)The accrual basis only as applied to expenses
D)The cash basis
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Public Sector Financial Reporting
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/67151
Sample Questions
Q1) The CICA's Public Sector Accounting Board (PSAB)identified nine unique characteristics of governments that differentiate them from private sector reporting.List these nine characteristics.
Q2) What is the only item that will appear under the investing section of a government statement of cash flow?
A)Sale and purchase of financial assets
B)Sale and purchase of nonfinancial assets
C)Sale and purchase of tangible capital assets
D)Amortization of tangible capital assets
Q3) According to the recommendations of the Public Sector Accounting Board,when should revenue be recognized related to funds received from external parties who have imposed restrictions that limit the use of the funds?
A)When the funds are pledged
B)When the funds are received
C)When the funds are disbursed
D)When the resources which were purchased with the funds are used
Q4) PSAB defines a government organization as one that is "controlled by the government".Explain what is meant by "control" and how this is assessed for governments.Explain how controlled entities are reported.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Income Tax Allocation
Available Study Resources on Quizplus for this Chatper
4 Verified Questions
4 Flashcards
Source URL: https://quizplus.com/quiz/67168
Sample Questions
Q1) Foster Ltd.acquired 100% of Benson Ltd.The carrying values of Benson's capital assets differed from their fair values and their fair values differ from their adjusted cost bases for tax purposes.Which of the following statements is true?
A)The difference between Benson's carrying values and its fair values creates a deferred tax asset or liability that is part of the allocation of the acquisition cost.
B)The difference between Benson's fair values and its adjusted cost bases for tax purposes creates a deferred tax asset or liability that is part of the allocation of the acquisition cost.
C)The difference between Benson's carrying values and its adjusted cost bases for tax purposes creates a deferred tax asset or liability that is part of the allocation of the acquisition cost.
D)No deferred tax asset or liability arises from the above situation.
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Income Tax Allocation Subsequent to Acquisition
Available Study Resources on Quizplus for this Chatper
4 Verified Questions
4 Flashcards
Source URL: https://quizplus.com/quiz/67167
Sample Questions
Q1) Morin Co.acquired all the shares of Lightfoot Ltd.Lightfoot has a number of amortizable capital assets and has properly recorded the related deferred income taxes on its books.At the time of acquisition,the fair values of these assets were higher than their carrying values and their tax bases.In Morin's consolidation each year,it must adjust for the deferred taxes that resulted from these temporary differences.Which of the following statements is true?
A)The consolidation adjustment will always result in an increase in the deferred tax liability.
B)The consolidation adjustment will always result in a decrease in the deferred tax liability.
C)The consolidation adjustment can result in either an increase or a decrease in the deferred tax liability.
D)The consolidation adjustment is required only if the tax basis changes.
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: Good will Impairment Test
Available Study Resources on Quizplus for this Chatper
6 Verified Questions
6 Flashcards
Source URL: https://quizplus.com/quiz/67166
Sample Questions
Q1) How should goodwill acquired in a business combination be allocated?
A)Proportionately to assets
B)Proportionately to fair-value increments
C)To cash-generating units
D)It is not allocated.
Q2) Proudfoot Ltd.acquired all the shares of Jacob Ltd.several years ago.In conducting its goodwill impairment test for the current year,Proudfoot has determined that there has been an impairment related to revalued assets.On Proudfoot's consolidated financial statements,where should this impairment be reported?
A)As part of profit or loss
B)As part of other comprehensive income
C)As an adjustment to retained earnings
D)As a separate amount under shareholders' equity
Q3) Compare and contrast the goodwill impairment test under IFRS and accounting standards for private enterprises (ASPE).
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: Step Purchases
Available Study Resources on Quizplus for this Chatper
6 Verified Questions
6 Flashcards
Source URL: https://quizplus.com/quiz/67165
Sample Questions
Q1) Frey Ltd.acquired 70% of Sabo Ltd.in 20X4.On January 1,20X8,Frey acquired another 10% of Sabo's common shares for $250,000.Under the entity method,the balance of the non-controlling interest at December 31,20X7 was $660,000.What adjustment should be made to consolidated shareholders' equity to reflect Frey's additional purchase of shares?
A)$30,000
B)$136,667
C)$220,000
D)$250,000
Q2) Husch Ltd.acquired 35% of the common shares of Megia Ltd.on June 30,20X1.Husch uses the equity method to record its investment.On June 30,20X8,Husch acquired another 40% of Megia's common shares.At June 30,20X8,how should the original 35% ownership be treated?
A)The original valuation of the 35% is added to the valuation of the 40%.
B)The original 35% investment is deemed to have been disposed of and reacquired at the fair value at June 30,20X8 and added to the new acquisition.
C)The carrying value of the original 35% at June 30,20X8 is added to the new acquisition.
D)The original 35% is irrelevant to the new acquisition and should be ignored.
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Decreases in Ownership Interest
Available Study Resources on Quizplus for this Chatper
4 Verified Questions
4 Flashcards
Source URL: https://quizplus.com/quiz/67164
Sample Questions
Q1) Gumble Ltd.has owned 65% of the common shares of Lopez for several years.This year,Gumble reduced its interest in Lopez to 10%.Which of the following statements is true?
A)Gumble must change from reporting under consolidation to the equity method.
B)Gumble must change from reporting under consolidation to the cost method.
C)Gumbel must change from reporting under the equity method to the cost method.
D)Gumble is not required to change its reporting method.
Q2) When a subsidiary issues shares,________.
A)no gain or loss is recognized
B)a gain or loss is always recognized
C)this reduces minority interest
D)this may increase minority interest
To view all questions and flashcards with answers, click on the resource link above.
18
Chapter 17: Preferred and Restricted Shares of Investee Corporation
Available Study Resources on Quizplus for this Chatper
5 Verified Questions
5 Flashcards
Source URL: https://quizplus.com/quiz/67163
Sample Questions
Q1) Under IFRS,which of the following statements is true?
A)Preferred shares must be classified as debt.
B)Preferred shares must be classified as equity.
C)Preferred shares can be classified as debt or equity depending on the rights attached to them.
D)Preferred shares can be classified as debt or equity at the option of the issuing company.
Q2) What is a coattail provision?
A)It allows preferred shares to be converted to common shares.
B)It allows restricted shares to become fully voting shares under limited circumstances.
C)It allows common shares to be converted to preferred shares.
D)It allows restricted shares to receive additional dividends.
Q3) Ngo Ltd.'s subsidiary has restricted shares.What must Ngo look at in determining non-controlling interest?
A)Number of shares only
B)Participation in earnings only
C)Participation in dividends only
D)Participation in earnings and dividends
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Intercompany Bond Holdings
Available Study Resources on Quizplus for this Chatper
6 Verified Questions
6 Flashcards
Source URL: https://quizplus.com/quiz/67162
Sample Questions
Q1) Basaraba Ltd.owns 75% of the outstanding common shares of Gill Ltd.Gill purchased all of Basaraba's outstanding bond issue on the open market at a discount.The bonds have an unamortized premium attached.This transaction,in effect,retires the bond and results in a gain.Under the par-value approach to dealing with a gain on elimination of intercompany bond holdings,which of the following statements is true?
A)The gain is allocated all to the purchaser.
B)The gain is allocated all to the issuer.
C)The gain is allocated to both the purchaser and issuer as though they do not have any affiliation with each other.
D)The gain is eliminated on consolidation.
Q2) A subsidiary has purchased some bonds from its parent company.Under the par-value method,the non-controlling interest is allocated its share of the difference between ________.
A)the bond's market value and face value
B)the bond's face value and carrying value
C)the bond's market value and carrying value
D)the bond's par value and carrying value
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Fund Accounting
Available Study Resources on Quizplus for this Chatper
5 Verified Questions
5 Flashcards
Source URL: https://quizplus.com/quiz/67169
Sample Questions
Q1) Which statements are affected by inter-fund loans?
A)Statement of operations and consolidated statements
B)Statement of financial position of the individual funds and consolidated statements
C)Statement of operations and statement of financial position of the individual funds
D)Statement of financial position of the individual funds and statement of changes in net assets
Q2) Sparrow Pension Plan is a not-for-profit organization that administers the pension fund held for the employees of Sparrow Tech Ltd.What type of fund is the pension fund?
A)Reserve fund
B)Self-sustaining fund
C)Fiduciary fund
D)Endowment fund
To view all questions and flashcards with answers, click on the resource link above.