ACCT
495 Advanced Accounting Midterm Exam
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Midterm Exam Advanced Accounting (30
questions x 9 points each=270)
- Pigskin Co., a U.S. corporation, sold inventory on
credit to a British company on April 8, 2011. Pigskin received payment of
35,000 British pounds on May 8, 2011. The exchange rate was £1 = $1.54 on
April 8 and £1 = 1.43 on May 8. What amount of foreign exchange gain or
loss should be recognized? (round to the nearest dollar)
A. $10,500 loss
B. $10,500 gain
C. $1,750 loss
D. $3,850 loss
E. No gain or loss should be recognized.
Use the following information for
questions 2 and 3
Norton Co., a U.S. corporation, sold
inventory on December 1, 2011, with payment of 10,000 British pounds to be
received in sixty days. The pertinent exchange rates were as follows:
- For what amount should Sales be credited on
December 1?
A. $5,500.
B. $16,949.
C. $18,182.
D. $17,241.
E. $16,667. - What amount of foreign exchange gain or loss
should be recorded on December 31?
A. $300 gain.
B. $300 loss.
C. $0.
D. $941 loss.
E. $941 gain.
Use the following information for
questions 4-6
Brisco Bricks purchases raw material
from its foreign supplier, Bolivian Clay, on May 8. Payment of 2,000,000
foreign currency units (FC) is due in 30 days. May 31 is Brisco’s fiscal
year-end. The pertinent exchange rates were as follows:
- For what amount should Brisco’s Accounts Payable
be credited on May 8?
A. $2,500,000.
B. $2,440,000.
C. $1,600,000.
D. $1,639,344.
E. $1,666,667.
- How much Foreign Exchange Gain or Loss should
Brisco record on May 31?
A. $2,520,000 gain.
B. $20,000 gain.
C. $20,000 loss.
D. $80,000 gain.
E. $80,000 loss.
- How much US $ will it cost Brisco to finally pay the
payable on June 7?
A. $1,666,667.
B. $2,440,000.
C. $2,520,000.
D. $2,500,000.
E. $2,400,000.
Use this information for #7
Darron Co. was formed on January 1,
2011 as a wholly owned foreign subsidiary of a U.S. corporation. Darron’s
functional currency was the stickle (§). The following transactions and events
occurred during 2011:
- What exchange rate should have been used in translating
Darron’s revenues and expenses for 2011?
A. $1 = §.48.
B. $1 = §.44.
C. $1 = §.46.
D. $1 = §.42.
E. $1 = §.45.
Use the following information for #8
Certain balance sheet accounts of a
foreign subsidiary of the Tulip Co. had been stated in U.S. dollars as follows:
- If the subsidiary’s local currency is its functional currency,
what total amount should be included in Tulip’s balance sheet in U.S.
dollars?
A. $609,000.
B. $658,000.
C. $602,000.
D. $630,000.
E. $616,000.
A subsidiary of Porter Inc., a U.S.
company, was located in a foreign country. The functional currency of this
subsidiary was the stickle (§), the local currency where the subsidiary is
located. The subsidiary acquired inventory on credit on November 1, 2010, for
§120,000 that was sold on January 17, 2011 for §156,000. The subsidiary paid
for the inventory on January 31, 2011. Currency exchange rates between the
dollar and the stickle were as follows:
- What amount would have been reported for this inventory
in Porter’s consolidated balance sheet at December 31, 2010?
A. $24,000.
B. $26,400.
C. $22,800.
D. $27,600.
E. $28,800. - Under the temporal method, common stock would be
remeasured at what rate?
A. Beginning of the year rate.
B. Average rate.
C. Current rate.
D. Historical rate.
E. Composite amount.
- Under the current rate method, common stock would be
translated at what rate?
A. Beginning of the year rate.
B. Average rate.
C. Current rate.
D. Historical rate.
E. Composite amount. - Which topic was not covered by FASB under the
short-term convergence project?
A. Inventory costs.
B. Asset exchanges.
C. Liability transfers.
D. Accounting changes.
E. Earnings-per-share.
- The IASB and FASB are working on several joint
projects. What is the purpose of the Financial Statement Presentation
Project?
A. to provide guidance on the application of the acquisition method.
B. to enhance the usefulness of information in assessing the financial performance of the reporting enterprise.
C. to develop a common comprehensive standard on revenue recognition.
D. to develop a common conceptual framework that both boards can use as a basis for future standard-setting.
E. to agree upon financial statement titles that will have no differentiation after translation to various languages. - The IASB and FASB are working on several joint
projects. What is the purpose of the Revenue Recognition Project?
A. to provide guidance on the application of the acquisition method.
B. to enhance the usefulness of information in assessing the financial performance of the reporting enterprise.
C. to develop a common comprehensive standard on revenue recognition.
D. to develop a common conceptual framework that both boards can use as a basis for future standard-setting.
E. to agree upon financial statement titles that will have no differentiation after translation to various languages.
A company incurs research and
development costs of $200,000 in 2011 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.
- What amount should be recognized as research and
development expense in 2011 using U.S. GAAP?
A. $50,000.
B. $150,000.
C. $200,000.
D. $0.
E. $250,000. - What are free assets?
A. Assets for which net realizable value is greater than historical cost.
B. Assets for which no market exists.
C. Assets for which replacement cost is greater than historical cost.
D. Assets available to be distributed for liabilities with priority and for other unsecured obligations.
E. Assets available to be distributed to stockholders.
- On a statement of financial affairs,
a specific liability may be classified as
A. current or long-term.
B. secured or unsecured.
C. monetary or nonmonetary.
D. direct or indirect.
E. past due or not yet due. - How are assets and liabilities valued on a Statement of
Financial Affairs?A. Entry
A.
B. Entry B.
C. Entry C.
D. Entry D.
E. Entry E.
Use the following information
for questions 19 and 20
A company that was to be liquidated
had the following liabilities:
- Total assets, available to pay liabilities with
priority and unsecured creditors, are calculated to be what amount?
A. $ 75,000.
B. $270,000.
C. $275,000.
D. $295,000.
E. $370,000.
- Total liabilities with priority are calculated to be
what amount?
A. $19,000.
B. $37,950.
C. $42,950.
D. $44,000.
E. $144,000.
Use this information for 21-24
The capital account balances for
Donald & Hanes LLP on January 1, 2011, were as follows:
Donald and Hanes shared net income
and losses in the ratio of 3:2, respectively. The partners agreed to admit May
to the partnership with a 35% interest in partnership capital and net income.
May invested $100,000 cash, and no goodwill was recognized.
- What is the balance of May’s capital account after the
new partnership is created?
A. $84,000.
B. $100,000.
C. $140,000.
D. $176,000.
E. $200,000. - What is the balance of Donald’s capital account after
the new partnership is created?
A. $84,000.
B. $100,000.
C. $140,000.
D. $176,000.
E. $200,000. - What is the balance of Hane’s capital account after the
new partnership is created?
A. $84,000.
B. $100,000.
C. $140,000.
D. $176,000.
E. $200,000.
- What is the new total balance of the partnership
accounts?
A. $84,000.
B. $140,000.
C. $176,000.
D. $200,000.
E. $400,000.
Use this information for 25-26
P, L, and O are partners with
capital balances of $50,000, $30,000 and $20,000 and who share in the profit
and loss of the PLO partnership 30%, 20%, and 50%, respectively, when they
agree to admit C for a 20% interest.
- If C is to contribute an amount equal to his book value
share of the new partnership, how much should C contribute?
A. $22,000
B. $20,000
C. $25,000
D. $18,000
E. $10,000
- C contributes $38,000 to the partnership and the bonus
method is used. What amount will be credited for C’s beginning capital
balance?
A. $20,000
B. $25,000
C. $27,600
D. $32,600
E. $38,000
- The Abrams, Bartle, and Creighton partnership began the
process of liquidation with the following balance sheet:Abrams, Bartle, and Creighton share profits and losses
in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000.
If the noncash assets were sold for $234,000, what amount of the loss would have been allocated to Bartle?
A. $43,200.
B. $46,800.
C. $40,000.
D. $42,400.
E. $43,100.
The Henry, Isaac, and Jacobs
partnership was about to enter liquidation with the following account balances:
Estimated expenses of liquidation
were $5,000. Henry, Isaac, and Jacobs shared profits and losses in a ratio of
2:4:4.
- 2What amount of cash was available for safe
payments, based on the above information?
A. $30,000.
B. $85,000.
C. $25,000.
D. $35,000.
E. $40,000.
Use the following information for 29
and 30
A local partnership has assets of
cash of $5,000 and a building recorded at $80,000. All liabilities have been
paid. The partners capital accounts are as follows Harry $40,000, Landers
$30,000 and Waters 15,000. The partners share profits and losses 4:4:2.
- If the building is sold for $50,000, how much cash will
Harry receive in the final settlement?
A. $5,000.
B. $9,000.
C. $18,000.
D. $28,000.
E. $55,000.
- If the building is sold for $50,000, how much cash will
Waters receive in the final settlement?
A. $5,000.
B. $9,000.
C. $18,000.
D. $28,000.
E. $55,000.
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