Archives: Quiz

1) An FI with DA< kDL may choose to enter into a long-term swap in which it pays a fixed rate of interest and receives a variable rate in order to effectively reduce the duration gap. 2) The primary asset […]

1) A company sells a building to a bank in 2013 at a gain of $100,000 and immediately leases the building back for period of five years. The lease is accounted for as an operating lease. The building was originally […]

1) Pot Co. holds 90% of the common stock of Skillet Co. During 2013, Pot reported sales of $1,120,000 and cost of goods sold of $840,000. For this same period, Skillet had sales of $420,000 and cost of goods sold […]

1) When a company applies the initial method in accounting for its investment in a subsidiary and the subsidiary reports income in excess of dividends paid, what entry would be made for a consolidation worksheet? A) A above B) B […]

1) Natarajan, Inc. had the following operating segments, with the indicated amounts of segment revenues and segment expenses: For purposes of the profit or loss test, segment C’s operating profit or (loss) is A.$1,300,000 B.$700,000 C.$2,000,000 D.$200,000 E.$(200,000) 2) Bullen […]

1) A new truck was ordered for the sanitation department at a cost of $122,200 on September 3, 2013. Required: (A) Prepare the required journal entry in the General Fund for the Fund Financial Statements. (B) Prepare the required journal […]

1) The following information pertains to inventory held by a company at December 31, 2013. What amount of inventory should be reported under U.S. GAAP? A.$25,000. B.$21,000. C.$20,000. D.$16,800. E.$16,000. 2) Cleary, Wasser, and Nolan formed a partnership on January […]

1) The Fratilo Co. had three operating segments with the following information: In addition, revenues generated at corporate headquarters are $1,400 What is the minimum amount of revenue that each of these segments must earn to be considered separately reportable? […]

2) Kaycee Corporation’s revenues for the year ended December 31, 2012, were as follows: Consolidated Revenue per the Income Statement: $1,200,000 Upstream Intersegment Sales: $180,000 Downstream Intersegment Sales: $60,000 For purposes of the Revenue Test, what amount will be used […]

1) West Corp. owned 70% of the voting common stock of East Co. East owned 60% of Compass Co. West and East both used the initial value method to account for their investments. The following information was available from the […]

1) On January 1, 2013, Riley Corp. acquired some of the outstanding bonds of one of its subsidiaries. The bonds had a carrying value of $421,620, and Riley paid $401,937 for them. How should you account for the difference between […]

1) Bullen Inc. acquired 100% of the voting common stock of Vicker Inc. on January 1, 2013. The book value and fair value of Vicker’s accounts on that date (prior to creating the combination) follow, along with the book value […]

2) On January 3, 2013, Austin Corp. purchased 25% of the voting common stock of Gainsville Co., paying $2,500,000. Austin decided to use the equity method to account for this investment. At the time of the investment, Gainsville’s total stockholders’ […]

1) Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2012. At that date, Glen owns only three assets and has no liabilities: If Watkins pays $450,000 in cash for Glen, at what amount would […]

1) On January 1, 2013, Riney Co. owned 80% of the common stock of Garvin Co. On that date, Garvin’s stockholders’ equity accounts had the following balances: The balance in Riney’s Investment in Garvin Co. account was $552,000, and the […]

1) The following information pertains to inventory held by a company at December 31, 2013. As a result of inventory loss, what is the difference in income between reporting using U.S. GAAP and IFRS? A.U.S. GAAP income is $1,000 higher. […]

1) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each […]

1) Mills Inc. had a receivable from a foreign customer that is due in the local currency of the customer (stickles). On December 31, 2012, this receivable for §200,000 was correctly included in Mills’ balance sheet at $132,000. When the […]

1) On January 1, 2013, Deuce Inc. acquired 15% of Wiz Co.’s outstanding common stock for $62,400 and categorized the investment as an available-for-sale security. Wiz earned net income of $96,000 in 2013 and paid dividends of $36,000. On January […]

1) Campbell Inc. owned all of Gordon Corp. For 2013, Campbell reported net income (without consideration of its investment in Gordon) of $280,000 while the subsidiary reported $112,000. The subsidiary had bonds payable outstanding on January 1, 2013, with a […]

1) A company incurs research and development costs of $200,000 in 2013 of which $50,000 of these costs relate to development activities because certain criteria have been met which suggest that an intangible asset has been created. As a result […]

1) Certain balance sheet accounts of a foreign subsidiary of Parker Company at December 31, 2013, have been restated into U.S. dollars as follows: Assuming the functional currency of the subsidiary is the local currency, what total should be included […]

1) White Company owns 60% of Cody Company. Separate tax returns are required. For 2012, White’s operating income (excluding taxes and any income from Cody) was $300,000 while Cody reported a pretax income of $125,000. During the period, Cody paid […]

1) On May 1, 2013, Mosby Company received an order to sell a machine to a customer in Canada at a price of 2,000,000 Mexican pesos. The machine was shipped and payment was received on March 1, 2014. On May […]

1) On January 1, 2013, Riney Co. owned 80% of the common stock of Garvin Co. On that date, Garvin’s stockholders’ equity accounts had the following balances: The balance in Riney’s Investment in Garvin Co. account was $552,000, and the […]

1) Which entry would be the correct entry on the donor’s books when the donor relinquishes control of an asset that it contributes to a not-for-profit organization? A.Option A B.Option B C.Option C D.Option D E.Option E 2) The financial […]

1) Presented below are the financial balances for the Atwood Company and the Franz Company as of December 31, 2012, immediately before Atwood acquired Franz. Also included are the fair values for Franz Company’s net assets at that date. Note: […]

1) Keenan Company has had bonds payable of $20,000 outstanding for several years. On January 1, 2013, there was an unamortized premium of $2,000 with a remaining life of 10 years, Keenan’s parent, Ross, Inc., purchased the bonds in the […]

2) Webb Company owns 90% of Jones Company. The original balances presented for Jones and Webb as of January 1, 2013 are as follows: Assume Jones issues 20,000 new shares of its common stock for $15 per share. Of this […]

1) Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2012. Selected account balances are available for the year ended December 31, 2013, and are stated in Euro, the local currency. Assume the functional currency […]

1) Bullen Inc. acquired 100% of the voting common stock of Vicker Inc. on January 1, 2013. The book value and fair value of Vicker’s accounts on that date (prior to creating the combination) follow, along with the book value […]

1) Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2013. Baker has an effective income tax rate of 30 percent and 100,000 shares of common stock issued and outstanding. The following additional information […]

1) Quadros Inc., a Portuguese firm was acquired by a U.S. company on January 1, 2012. Selected account balances are available for the year ended December 31, 2013, and are stated in Euro, the local currency. Assume the functional currency […]

1) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each […]

1) Shaw Corporation reported stockholders’ equity on December 31 of the prior year as follows: The following selected transactions occurred during the current year: Prepare a statement of retained earnings as of December 31 of the current year. Answer: 2) […]

1) A company produces two boat models, Flyer and Skimmer. Both products are being considered for major investment projects next year. Relevant data follow: Required: Use the payback period to evaluate these two investment projects. 2) On January 1, a […]

1) A ____________________ is a signed agreement to pay a specified amount of money either on demand or at a definite future date. 2) ______________________ financial statements show the financial position, results of operations, and cash flows of all entities […]

1) Apply the retail method to the following company information to calculate the cost of the ending inventory for the current period. 2) A company ages its accounts receivables to determine its end of period adjustment for bad debts. At […]

1) Briefly describe both the payback period method and the net present value method of comparing investment alternatives. 2) Explain the difference between a large stock dividend and a small stock dividend. In addition, explain how to record these two […]

1) A company is evaluating the purchase of a machine for $750,000 with a six-year useful life and no salvage value. The company uses straight-line depreciation and it assumes that the annual net cash flow from using the machine will […]

1) What does the days’ sales in raw materials inventory ratio reveal? 2) The investment center return on investment is ________________ divided by ________. Answer: investments center net income; investment center average invested assets answers must appear in this order […]

1) Soo Lin began an Internet Consulting practice and completed these transactions during April of the current year: Show the effects of the above transactions on the accounting equation of Soo Lin, Consultant. Use the following format for your answers. […]

1) An investing company that owns _________ of another (investee) company’s voting stock (but not more than 50%) is presumed to have a significant influence over the investee. 2) The Skyview Company uses a sales journal, purchases journal, cash receipts […]

1) Addams, Inc., is preparing its master budget for the second quarter. The following sales and production data have been forecasted: Finished goods inventory on March 31: 120 units Raw materials inventory on March 31: 450 pounds Desired ending inventory […]

1) A company purchased two new delivery vans for a total of $250,000 on January 1, Year 1. The company paid $40,000 cash and signed a $210,000, 3-year, 8% note for the remaining balance. The note is to be paid […]

1) The production of one unit of Product BJM used $27.50 of direct materials and $21.00 of direct labor. The unit sold for $76.00 and was assigned overhead at a rate of 30% of labor costs. What is the gross […]

1) Based on the following trial balance for Barry€s Automotive Shop, prepare an income statement, statement of owner€s equity, and a balance sheet. Barry made no additional investments in the company during the year. Answer: 2) On January 1, a […]

1) Slate Corporation had the following balances in its stockholders’ equity accounts at December 31, 2015: The following transactions occurred during 2016: Based on the above information, prepare a statement of stockholders’ equity for 2016. Use the form below. Answer: […]

1) Explain the way in which costs flow through the merchandise inventory account to a merchandiser’s income statement. 2) What is the purpose of a good financial statement analysis report? What are the key components? Answer: A good financial statement […]

1) What are the rights generally granted to common stockholders? 2) Forrest’s Cycle Shop uses a perpetual inventory accounting system and had the following transactions during the month of July: Prepare the required journal entries that Forrest’s Cycle Shop must […]