Gleim questions- Exam 1 - ACCT 7605 Exam I- Practice...

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ACCT 7605 Exam I- Practice Questions Gleim's Exam Questions Test Prep Financial Accounting [1] Gleim #: 25.1.1 -- Source: Publisher A business combination may be structured as a merger, a transfer of equity interests, a direct acquisition of net assets, or a transfer of equity interests or net assets to a newly formed entity. Which of the following describes a business combination that is structured as a merger? A. The surviving entity is one of the two combining entities. B. The surviving entity is neither of the two combining entities. C. An investor-investee relationship is established. D. A parent-subsidiary relationship is established. [2] Gleim #: 25.1.2 -- Source: Publisher Business combinations are accomplished either through acquisition of net assets constituting a business, or acquisition of controlling equity interests of one or more other entities. A parent-subsidiary relationship always arises from a A. Tax-free reorganization. B. Vertical combination. C. Horizontal combination. D. Greater than 50% investment in the voting interests of another entity. [3] Gleim #: 25.1.3 -- Source: Publisher A business combination structured as a merger has one set of books and accounting records (the surviving entity's) to account for the consolidated operations. On the other hand, if the combination is accomplished by a transfer of equity interests, each of the combining entities continues to maintain its own individual books and accounting records. For a transfer of equity interests, the books and accounting records of the consolidated entity are usually A. Maintained by the parent separately from the surviving entity's books. B. Prepared in worksheet form each time consolidated statements are prepared. C. Maintained by each entity in the same manner that branch-home office accounting is accomplished. D. Maintained by the subsidiary. 1
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[4] Gleim #: 25.1.4 -- Source: CPA 593 T-5 When a parent-subsidiary relationship exists, consolidated financial statements are prepared in recognition of the accounting concept of A. Reliability. B. Materiality. C. Legal entity. D. Economic entity. [5] Gleim #: 25.1.6 -- Source: CPA 1192 T-31 Primor, a manufacturer, owns 75% of the voting interests of Sublette, an investment entity. Sublette owns 60% of the voting interests of Minos, an insurer. In Primor's consolidated financial statements, should consolidation accounting or equity method accounting be used for Sublette and Minos? A. Consolidation used for Sublette and equity method used for Minos. B. Consolidation used for both Sublette and Minos. C. Equity method used for Sublette and consolidation used for Minos. D. Equity method used for both Sublette and Minos. [6] Gleim #: 25.1.8 -- Source: CPA 594 F-7 Consolidated financial statements are typically prepared when one entity has a controlling financial interest in another unless A. The subsidiary is a finance entity. B. The fiscal year-ends of the two entities are more than 3 months apart.
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This note was uploaded on 09/16/2008 for the course ACCT 7605 taught by Professor Carpenter during the Spring '07 term at University of Georgia Athens.

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Gleim questions- Exam 1 - ACCT 7605 Exam I- Practice...

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