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1) Porter Corporation acquired 70% of the outstanding voting common stock of Sherman Inc. in 2004 . On January 1, 2005, Sherman Inc. purchased a depreciable machine for $120,000 cash with an estimated useful life of 10 years that was […]

1) A parent corporation owns 55% of the outstanding voting common stock of one domestic subsidiary. The parent has control over the subsidiary. Which of the following statements is correct? A) The parent corporation must prepare consolidated financial statements for […]

1) Pachelor Corporation owns 70% of the outstanding stock of Stabb Company. On January 1, 2010, Stabb issued $1,000,000 in 7% bonds that matured on January 1, 2015 . At the time of issuance, the bonds were sold at a […]

1) How does GAAP view interim accounting periods? A) As discrete units for which net income may be separately determined B) As integral units of the entire year for which each interim period is an essential part of an annual […]

1) Preen Corporation acquired a 60% interest in Shino Corporation at a cost equal to 60% of the book value of Shino’s net assets in 2010 . At the time of acquisition, the book value and fair value of Shino’s […]

1) On December 31, 2010, Parminter Corporation owns an 80% interest in the common stock of Sanchez Corporation and an 80% interest in Sanchez’s preferred stock. On December 31, 2010, Sanchez’s stockholders’ equity was as follows: 10% preferred stock, cumulative, […]

1) The town of Mayberry receives a gift of $500,000 in bonds. The contributor instructs that the principal should remain intact, but the annual interest income of $50,000 can be used for the maintenance of the zoo animals. What type […]

1) The ________ of the term structure of interest rates states that the interest rate on a long-term bond will equal the average of short-term interest rates that individuals expect to occur over the life of the long-term bond, and […]

1) The steeply upward sloping yield curve in the figure above indicates that ________ interest rates are expected to ________ in the future A) short-term; rise B) short-term; fall moderately C) short-term; remain unchanged D) long-term; fall moderately 2) If […]

1) Anthony and Cleopatra create a joint venture to distribute artifacts. Anthony contributes 70% and Cleopatra 30% of the cash for assets purchased from Tomb Company. How would Anthony report information about Cleopatra on Anthony’s financial statements? A) Not at […]

1) Pardo Corporation paid $140,000 for a 70% interest in Spedeal Inc. on January 1, 2011, when Spedeal had Capital Stock of $50,000 and Retained Earnings of $100,000. Fair values of identifiable net assets were the same as recorded book […]

1) According to the liquidity premium theory of the term structure, a downward sloping yield curve indicates that short-term interest rates are expected to A) rise in the future B) remain unchanged in the future C) decline moderately in the […]

1) In reference to the probate process, which of the following statements is correct? A) The personal representative of the deceased can file a petition with the appropriate probate court requesting that an existing will be probated B) The Uniform […]

1) GAAP requires that segment information be reported A) by geographics, without regard to size of the segment B) by geographics, without regard to industry or product-line C) however management organizes the enterprise into units for internal decision-making and performance-evaluation […]

1) Under parent company theory, noncontrolling interest is classified on the consolidated balance sheet as ________. Under entity theory, noncontrolling interest is classified on the consolidated balance sheet as ________. A) stockholders’ equity; stockholders’ equity B) stockholders’ equity; liability C) […]

1) Jeff Corporation owns 90% of the common stock of Subsidiary Jordan. The following data is available: JeffJordan Net income for 2011$250,000$150,000 Preferred dividends for 2011$20,000 Common dividends for 2011$25,000 Number of common shares outstanding 200,00020,000 10% Preferred Stock, $100 […]

1) Pahm Corporation owns 80% of the outstanding voting common stock of Abussi Corporation, which was purchased for $60,000 over Abussi’s book value. The excess purchase price was attributable to goodwill. Abussi Corporation owns 60% of the outstanding common stock […]

1) Polka Corporation exchanges 100,000 shares of newly issued $1 par value common stock with a fair market value of $20 per share for all of the outstanding $5 par value common stock of Spot Inc. and Spot is then […]

1) Which of the following phrases is frequently used to refer to estate or trust accounting? A) Non-profit accounting B) Testamentary accounting C) Fiduciary accounting D) All of the above phrases are used to refer to estate or trust accounting. […]

1) Oscar Lloyd is serving as the executor for the estate of Dixie Cooper, who passed away on January 28, 2011, at the age of 98. Dixie’s estate consisted of Treasury bonds with a maturity value and fair market value […]

1) The financial statements of a proprietary fund are similar to those of a business enterprise except for A) proprietary funds do not report income taxes on the operating statement B) proprietary funds do not have paid-in capital or capital […]

1) The following are transactions for the city of Greenville. a.Issued $50,000 10-year bonds. b.Used $30,000 of the cash to buy a truck. c.Sold the truck that was replaced which had cost $28,000, for $2,000. The old truck was fully […]

1) Earth Company, Fire Incorporated, and Wind Incorporated created a joint venture to market their products on the internet. Earth owns 40% of the stock, Fire owns 45% of the stock and Wind owns the remaining 15%. Which firms should […]

1) According to the liquidity premium theory, a yield curve that is flat means that A) bond purchasers expect interest rates to rise in the future B) bond purchasers expect interest rates to stay the same C) bond purchasers expect […]

1) The trust fund for a school library is required to prepare financial statements that include A) Balance Sheet and Income Statement B) Statement of Revenues, Expenses and Changes in Fiduciary Net Assets C) Statement of Fund Balance and Statement […]

1) Bonds issued by a company remain on their books as a liability, but are considered constructively retired when A) the company borrows money from unaffiliated entities to re-purchase its own bonds at a gain B) The company borrows money […]

1) Paglia Corporation owns 80% of Aburn Corporation and has separate net income of $200,000 for 2010 . Aburn Corporation has separate net income of $100,000 and owns 70% of the outstanding stock of Badley Corporation. Badley Corporation has separate […]

1) Raymond Company owns 90% of Rachel Company. Rachel Company owns 10% of Raymond Company. The treasury stock method is used. On the books of Rachel Company, we maintain the Investment in Raymond using the ________ method. The ending balance […]

1) An investor uses the cost method of accounting for its investment in common stock. During the current year, the investor received $25,000 in dividends, an amount that exceeded the investor’s share of the investee company’s undistributed income since the […]

1) On January 1, 2012, Packaging International purchased 90% of Shipaway Corporation’s outstanding shares for $135,000 when the fair value of Shipaway’s net assets were equal to the book values. The balance sheets of Packaging and Shipaway Corporations at year-end […]

1) Kline Corporation incurred major losses in 2011 and entered into voluntary Chapter 7 bankruptcy in the early part of 2012 . By July 1, all assets were converted into cash, the secured creditors were paid, and $122,700 in cash […]

1) During a “flight to quality” A) the spread between Treasury bonds and Baa bonds increases B) the spread between Treasury bonds and Baa bonds decreases C) the spread between Treasury bonds and Baa bonds is not affected D) the […]

1) The following are transactions for the city of Greenville. a.Issued $50,000 10-year bonds. b.Used $30,000 of the cash to buy a truck. c.Sold the truck that was replaced which had cost $28,000, for $2,000. The old truck was fully […]

1) Pahm Corporation owns 80% of the outstanding voting common stock of Abussi Corporation, which was purchased for $60,000 over Abussi’s book value. The excess purchase price was attributable to goodwill. Abussi Corporation owns 60% of the outstanding common stock […]

1) The steeply upward sloping yield curve in the figure above indicates that A) short-term interest rates are expected to rise in the future B) short-term interest rates are expected to fall moderately in the future C) short-term interest rates […]

1) Paggle Corporation owns 80% of Spillway Inc.’s common stock that was purchased at its underlying book value. At the time of purchase, the book value and fair value of Spillway’s net assets were equal. The two companies report the […]

1) The accounting equation for an agency fund is A) Current assets – Current liabilities = Fund Balance B) Assets – Liabilities = Equity C) Assets = Equity + Liabilities D) Assets = Liabilities 2) Paris Corporation purchased 80% of […]

1) If all partners are included in the first installment of an installment liquidation, then in future installments A) cash will be distributed according to the residual profit and loss sharing ratios B) cash should not be distributed until all […]

1) An inverted yield curve predicts that short-term interest rates A) are expected to rise in the future B) will rise and then fall in the future C) will remain unchanged in the future D) will fall in the future […]

1) What method of accounting will generally be used when one company purchases less than 20% of the outstanding stock of another company? A) Only the fair value method may be used B) Only the equity method may be used […]

1) For a Voluntary Health and Welfare Organization, what entry is prepared when the restriction on a cash donation is met? A) Debit Unrestricted Net Assets, Credit Restricted Net Assets B) Debit Unrestricted Fund Balance, Credit Restricted Fund Balance C) […]

1) The following are transactions for the city of Franklin. a.Borrowed $20,000 by issuing a two-year note. b.Purchased equipment for $6,000 cash. c.Licenses for $700 were billed on account. d.Accrued employee salary costs of $7,000. e.Depreciation expense on equipment for […]

1) The U-shaped yield curve in the figure above indicates that short-term interest rates are expected to A) rise in the near-term and fall later on B) fall sharply in the near-term and rise later on C) fall moderately in […]

1) On January 1, 2011, Pardy Corporation acquired a 70% interest in the common stock of Salter Corporation for $7,000,000 when Salter’s stockholders’ equity was as follows: 10% cumulative, nonparticipating preferred stock, $100 par, with a $105 liquidation preference, callable […]

1) At December 31, 2011, an Enterprise Fund has the following adjusted accounts outstanding: Insurance Expense$2,000 Depreciation Expense3,000 Supplies Expense10,000 Salaries Expense100,000 Service Revenues123,000 When preparing the closing entry for the temporary accounts at December 31, 2011, the Enterprise Fund’s […]

1) Pregler Inc. has 70% ownership of Sach Company, but should exclude Sach from its consolidated financial statements if A) Sach is in a regulated industry B) Pregler uses the equity method for Sach C) Sach is in legal reorganization […]

1) Jabiru Corporation purchased a 20% interest in Fish Company common stock on January 1, 2008 for $300,000. This investment was accounted for using the complete equity method and the correct balance in the Investment in Fish account on December […]

1) Buddy, a dog, is cared for by a trust set up by his owner’s will. The following transactions occurred for the trust. 1>The trust was established with $100,000 from his owner’s estate, by deposit to a savings account. 2>A […]