Chapter 2 - Test Bank
17 Pages

Chapter 2 - Test Bank

Course Number: ACC 4243, Winter 2011

College/University: St. Johns

Word Count: 5137

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ch02 Student: ___________________________________________________________________________ 1. If Push Company owned 51 percent of the outstanding common stock of Shove Company, which reporting method would be appropriate? A. Cost method B. Consolidation C. Equity method D. Merger method 2. Usually, an investment of 20 to 50 percent in another company's voting stock is reported under the: A. cost method. B....

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ch02 Student: ___________________________________________________________________________ 1. If Push Company owned 51 percent of the outstanding common stock of Shove Company, which reporting method would be appropriate? A. Cost method B. Consolidation C. Equity method D. Merger method 2. Usually, an investment of 20 to 50 percent in another company's voting stock is reported under the: A. cost method. B. equity method. C. full consolidation method. D. fair value method. 3. The main pronouncement on equity-method reporting, APB 19 (ASC 323 and 325) requires all of the following except: A. The investor's share of the investee's extraordinary items should be reported. B. The investor's share of the investee's prior-period adjustments should be reported. C. Continued use of the equity-method even if continued losses results in a zero or negative balance in the investment account. D . Preferred dividends of the investee should be deducted from net income before the investor computes its share of investee earnings. On January 1, 20X4, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value. Plimsol uses the cost method in accounting for its investment in Shipping. Shipping's retained earnings was $75,000 on the date of acquisition. On December 31, 20X4, the trial balance data for the two companies are as follows: 4. Based on the information provided, what amount of net income will be reported in the consolidated financial statements prepared on December 31, 20X4? A. $100,000 B. $85,000 C. $110,000 D. $125,000 5. Based on the information provided, what amount of total assets will be reported in the consolidated balance sheet prepared on December 31, 20X4? A. $425,000 B. $525,000 C. $650,000 D. $630,000 6. Based on the information provided, what amount of retained earnings will be reported in the consolidated balance sheet prepared on December 31, 20X4?

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St. Johns - ACC - 4243
ch03Student: _1.Consolidated financial statements tend to be most useful for:A. Creditors of a consolidated subsidiary.B. Investors and long-term creditors of the parent company.C. Short-term creditors of the parent company.D. Stockholders of a con
St. Johns - ACC - 4243
ch04Student: _On July 1, 20X9, Link Corporation paid $340,000 for all of Tinsel Company's outstanding commonstock. On that date, the costs and fair values of Tinsel's recorded assets and liabilities were as follows:1.Based on the preceding informatio
St. Johns - ACC - 4243
ch05Student: _Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 20X8,for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000.Silver's balance sheet immediately b
St. Johns - ACC - 4243
ch06Student: _1.When there are intercompany sales of inventory during the year and a three-part consolidation worksheetis prepared, elimination entries related to the intercompany sales:I. Always are needed.II. Are not needed if the entire inventory
St. Johns - ACC - 4243
ch07Student: _1.Blue Company owns 70 percent of Black Company's outstanding common stock. On December 31,20X8, Black sold equipment to Blue at a price in excess of Black's carrying amount, but less thanits original cost. On a consolidated balance she
St. Johns - ACC - 4243
ch08Student: _1.Cutler Company owns 80 percent of the common stock of Marina Inc. Cutler acquires some of Marina'sbonds from an unrelated party for less than the carrying value on Marina's books and holds them as along-term investment. For consolidat
St. Johns - ACC - 4243
ch09Student: _On January 1, 20X9, Company A acquired 80 percent of the common stock and 60 percent of thepreferred stock of Company B, for $400,000 and $60,000, respectively. At the time of acquisition, the fairvalue of the common shares of Company B
St. Johns - ACC - 4243
ch10Student: _1.Which sections of the cash flow statement are affected by the difference in the direct and indirectapproaches of presenting a cash flow statement?I. Operating activities sectionII. Investing activities sectionIII. Financing activiti
St. Johns - ACC - 4243
ch11Student: _1.If 1 British pound can be exchanged for 180 cents of U.S. currency, what fraction should be used tocompute the indirect quotation of the exchange rate expressed in British pounds?A. 1/180B. 1/.56C. 1.8/1D. 1/1.8Suppose the direct
St. Johns - ACC - 4243
ch12Student: _1.All of the following are benefits the U.S. will gain from the adoption of globally consistent accountingstandards except for:A. Reduction in reporting costs as the need for multiple sets of financial statements decreases.B. Increased
St. Johns - ACC - 4243
ch13Student: _1.Trevor Company discloses supplementary operating segment informationfor its three reportable segments. Data for 20X8 are available asfollows:Additional 20X8 expenses include indirect operating expenses of $200,000. Appropriately sele
St. Johns - ACC - 4243
ch14Student: _1.The Securities and Exchange Commission is responsiblefor:A. Option AB. Option BC. Option CD. Option D2.Which regulation created the Securities and Exchange Commission?A. Securities Act of 1933B. Securities Exchange Act of 1934
St. Johns - ACC - 4243
ch15Student: _1.A partnership is a(n):I. accounting entity.II. taxable entity.A. I onlyB. II onlyC. Neither I nor IID. Both I and II2.Which of the following accounts could be found in the general ledger of a partnership?A.B.C.D.Option AOp
St. Johns - ACC - 4243
ch16Student: _1.On a partner's personal statement of financial condition, how should liabilities be valued?I. Present valueII. Lower of present value or cash settlement amountA. IB . IIC. Both I and IID. Neither I nor II2.On a partner's persona
St. Johns - ACC - 4243
ch17Student: _1.Which organization has the authority to establish generally accepted accounting principles for state andlocal government entities?A. The National Council on Governmental AccountingB. The Governmental Accounting Standards BoardC. The
St. Johns - ACC - 4243
ch18Student: _1.Which of the following funds use the accrual basis of accounting?A. I onlyB. II onlyC. I and III onlyD. I, II, and III2.A special revenue fund should be used in which of the following situations for a state government?A. For sale
St. Johns - ACC - 4243
ch19Student: _1.A not-for-profit organization received a donation temporarily restricted as to use. The donated amountwas later spent in accordance with the restriction. In which category(ies) of net assets should the relatedrevenues and expenses be
St. Johns - ACC - 4243
ch20Student: _1.What is defined as a condition in which a company is unable to meet debts as the debts mature?A. DeficitB. LiabilityC. InsolvencyD. Credit squeeze2.Under a composition agreement,A. creditors agree to accept less than the face amo
St. Johns - ACC - 4243
Chapter 01 - Intercorporate Acquisitions and Investments in Other EntitiesCHAPTER 1INTERCORPORATE ACQUISITIONS AND INVESTMENTS IN OTHER ENTITIESANSWERS TO QUESTIONSQ1-1 Complex organizational structures often result when companies do business in acom
St. Johns - ACC - 4243
Chapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with No DifferentialCHAPTER 2REPORTING INTERCORPORATE INVESTMENTS AND CONSOLIDATION OF WHOLLYOWNED SUBSIDIARIES WITH NO DIFFERENTIALANSWERS TO QUESTIONSQ
St. Johns - ACC - 4243
Chapter 03 - The Reporting Entity and Consolidation of Less-than-Wholly-Owned Subsidiaries with No DifferentialCHAPTER 3THE REPORTING ENTITY AND CONSOLIDATION OF LESS-THAN-WHOLLY-OWNEDSUBSIDIARIES WITH NO DIFFERENTIALANSWERS TO QUESTIONSQ3-1 The basi
St. Johns - ACC - 4243
Chapter 04 - Consolidation of Wholly Owned Subsidiaries Acquired at More than Book ValueCHAPTER 4CONSOLIDATION OF WHOLLY OWNED SUBSIDIARIES ACQUIRED AT MORE THANBOOK VALUEANSWERS TO QUESTIONSQ4-1 The carrying value of the investment is reduced under
St. Johns - ACC - 4243
Chapter 05 - Consolidation of Less-than-Wholly-Owned Subsidiaries Acquired at More than Book ValueCHAPTER 5CONSOLIDATION OF LESS-THAN-WHOLLY-OWNED SUBSIDIARIES ACQUIRED ATMORE THAN BOOK VALUEANSWERS TO QUESTIONSQ5-1 The noncontrolling interest is rep
St. Johns - ACC - 4243
Chapter 06 - Intercompany Inventory TransactionsCHAPTER 6INTERCOMPANY INVENTORY TRANSACTIONSANSWERS TO QUESTIONSQ6-1 All inventory transfers between related companies must be eliminated to avoid anoverstatement of revenue and cost of goods sold in th
St. Johns - ACC - 4243
Chapter 07 - Intercompany Transfers of Services and Noncurrent AssetsCHAPTER 7INTERCOMPANY TRANSFERS OF SERVICES AND NONCURRENT ASSETSANSWERS TO QUESTIONSQ7-1 Profits on intercorporate sales generally are considered to be realized when the affiliatet
St. Johns - ACC - 4243
Chapter 08 - Intercompany IndebtednessCHAPTER 8INTERCOMPANY INDEBTEDNESSANSWERS TO QUESTIONSQ8-1 A gain or loss on bond retirement is reported by the consolidated entity whenever (a) oneof the companies purchases its own bonds from a nonaffiliate at
St. Johns - ACC - 4243
Chapter 09 - Consolidation Ownership IssuesCHAPTER 9CONSOLIDATION OWNERSHIP ISSUESANSWERS TO QUESTIONSQ9-1 Preferred stock of the subsidiary is eliminated in the consolidation process in a mannercomparable to that used in eliminating the common stock
St. Johns - ACC - 4243
Chapter 10 - Additional Consolidation Reporting IssuesCHAPTER 10ADDITIONAL CONSOLIDATION REPORTING ISSUESANSWERS TO QUESTIONSQ10-1 The balance sheet, income statement, and statement of changes in retained earningsare an integrated set and generally n
St. Johns - ACC - 4243
Chapter 11 - Multinational Accounting: Foreign Currency Transactions and Financial InstrumentsCHAPTER 11MULTINATIONAL ACCOUNTING: FOREIGN CURRENCY TRANSACTIONS ANDFINANCIAL INSTRUMENTSANSWERS TO QUESTIONSQ11-1 Indirect and direct exchange rates diffe
St. Johns - ACC - 4243
Chapter 12 - Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity StatementsCHAPTER 12MULTINATIONAL ACCOUNTING: ISSUES IN FINANCIAL REPORTING ANDTRANSLATION OF FOREIGN ENTITY STATEMENTSANSWERS TO QUESTIONSQ12-1 In
St. Johns - ACC - 4243
Chapter 13 - Segment and Interim ReportingCHAPTER 13SEGMENT AND INTERIM REPORTINGANSWERS TO QUESTIONSQ13-1 Information on a company's operations in different industries would be helpful toinvestors in their assessments concerning the different profit
St. Johns - ACC - 4243
Chapter 14 - SEC ReportingCHAPTER 14SEC REPORTINGANSWERS TO QUESTIONSQ14-1 The basis of the SEC's legal authority to regulate accounting principles stemsfrom the Securities Exchange Act of 1934. In the 1934 Act, the SEC was given the legalresponsibi
St. Johns - ACC - 4243
Chapter 15 - Partnerships: Formation, Operation, and Changes in MembershipCHAPTER 15PARTNERSHIPS: FORMATION, OPERATION, AND CHANGES IN MEMBERSHIPANSWERS TO QUESTIONSQ15-1 Partnerships are a popular form of business because they are easy to form(infor
St. Johns - ACC - 4243
Chapter 16 - Partnerships: LiquidationCHAPTER 16PARTNERSHIPS: LIQUIDATIONANSWERS TO QUESTIONSQ16-1 The major causes of a dissolution are:a.b.c.d.e.Withdrawal or death of a partnerThe specified term or task of the partnership has been completed
St. Johns - ACC - 4243
Chapter 17 - Governmental Entities: Introduction and General Fund AccountingCHAPTER 17GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTINGANSWERS TO QUESTIONSQ17-1 A fund is an independent fiscal and accounting entity with a self-balancing
St. Johns - ACC - 4243
Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements1CHAPTER 18GOVERNMENTAL ENTITIES: SPECIAL FUNDS ANDGOVERNMENT-WIDE FINANCIAL STATEMENTSANSWERS TO QUESTIONSQ18-1 A governmental entity would use a special reve
St. Johns - ACC - 4243
Chapter 19 Not-for-Profit EntitiesCHAPTER 19NOT-FOR-PROFIT ENTITIESANSWERS TO QUESTIONSQ19-1 Initially, tuition scholarships are included in revenue for the period in order tomeasure fully the revenue obtainable. If the university requires an employm
St. Johns - ACC - 4243
Chapter 20 Corporations in Financial Difficulty1CHAPTER 20CORPORATIONS IN FINANCIAL DIFFICULTYANSWERS TO QUESTIONSQ20-1 The nonjudicial actions available to a financially distressed company are debtrestructuring arrangements and creditor's committee
Boise State - ECON - 202
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Boise State - ECON - 202
Price1. emerge from individual interactive behaviora. individuals given information on relative scarcity of resourcesb. signals on what is important and what isntc. incentives motivate natured. emerge from people specializingMarket1. Described in m
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