Questions and Answers of Fundamentals Of Advanced Accounting

In the 2018 consolidated statement of cash flows for Iverson Company:a. $(25,000)b. $(37,000)c. $(38,000)d. $(42,000)Comparative consolidated balance sheet data for Iverson, Inc., and its 80
Which of the following best describes the articles of partnership agreement?a. The purpose of the partnership and partners’ rights and responsibilities are required elements of the articles of
A partnership has the following account balances: Cash $50,000; Other Assets $600,000; Liabilities $240,000; Nixon, Capital (50 percent of profits and losses) $200,000; Hoover, Capital (20 percent)
Go to website www.cedarfair.com and click on ''investor,'' then ''investor information,'' ''Financial Reporsts,'' and ''Annual Reports.'' Then click on 2017 Annual Report on 10-K" to access the 2017
Which of the following statements is true concerning the accounting for a partnership going through liquidation?a. Gains and losses are reported directly as increases and decreases in the appropriate
During a liquidation, if a partner’s capital account balance drops below zero, what should happen?a. The other partners file a legal suit against the partner with the deficit balance.b. The partner
What is a predistribution plan?a. A list of the procedures to be performed during a liquidation.b. A guide for the cash distributions to partners during a liquidation.c. A determination of the final
Which of the following is not a governmental fund?a. Special revenue fundb. Internal service fundc. Capital projects fundd. Debt service fund
What is the purpose of a special revenue fund?a. To account for revenues legally or externally restricted as an operating expenditure.b. To account for ongoing activities.c. To account for gifts when
What are the three categories of funds? What funds are included in each of these three categories?
The state awards a grant of $50,000 to the Town of Glenville. The state will pay the grant money to the town as a reimbursement for money spent on road repair. At the time of the grant, the state
The board of commissioners of the City of Hartmoore adopted a general fund budget for the year ending June 30, 2017, that included revenues of $1,000,000, bond proceeds of $400,000, appropriations of
Government-wide financial statements make a distinction between program revenues and general revenues. How is that difference shown?a. Program revenues are offset against the expenses of a specific
Go to the website www.gasb.org and click on “About Us” included in the list that runs across the top of the page. Then click on “Mission, Vision, and Core Values.” Read the information
A government expects to receive revenues of $400,000 but has approved expenditures of $430,000. The anticipated shortage will have an impact on which of the following terms?a. Interperiod equityb.
A citizen of the City of Townsend makes a donation of $22,000 in investments. The citizen has stipulated that the investments be held. Any resulting income must be used to help maintain the city’s
Which of the following statements is correct about the reporting of governmental funds?a. Fund financial statements measure only economic resources.b. Government-wide financial statements measure
Which of the following statements is correct about the reporting of governmental funds?a. Fund financial statements measure revenues and expenditures based on modified accrual accounting.b.
During the current year, a government buys land for $80,000. Which of the following is not true?a. The land could be reported as an asset by the business-type activities in the government-wide
A purchase order for $3,000 is recorded in the general fund for the purchase of a new computer. The computer is received at an actual cost of $3,020. Which of the following statements is correct?a.
A government buys equipment for its police department at a cost of $54,000. Which of the following is not true?a. Equipment will increase by $54,000 in the government-wide financial statements.b.
A city acquires supplies for its fire department and uses the consumption method of accounting. Which of the following statements is true for the fund statements?a. An expenditures account was
An income tax is an example of which of the following?a. Derived tax revenue.b. Imposed nonexchange revenue.c. Government-mandated nonexchange revenue.d. Voluntary nonexchange transaction.
A city issues five-year bonds payable to finance construction of a new school. What recording should be made?a. Report the liability in the government-wide financial statements; show an other
The City of Dylan issues a 10-year bond payable of $1 million at face value on the first day of Year 1. Debt issuance costs of $10,000 are paid on that day. For government-wide financial statements,
The City of Frost has a 20-year debt outstanding. On the last day of the current year, this debt has an outstanding balance of $4.8 million and five years remaining until it is due. On that date, the
A city constructs a special assessment project (a sidewalk) for which it is secondarily liable. The city issues bonds of $90,000. It authorizes another $10,000 that is transferred out of the general
A city constructs curbing in a new neighborhood and finances it as a special assessment. Under what condition should these transactions be recorded in an agency fund?a. Never; the work is reported in
Cash of $60,000 is transferred from the general fund to the debt service fund. What is reported on the government-wide financial statements?a. No reporting is made.b. Other Financing Sources increase
Cash of $60,000 is transferred from the general fund to the debt service fund. What is reported on the fund financial statements? a. No reporting is made. b. Other Financing Sources increase by
A city transfer cash of $20,000 is transferred from the general fund to the enterprise fund to pay for work that was done. What is reported on the government-wide financial statements?a. No reporting
A city transfer cash of $20,000 is transferred from the general fund to the enterprise fund to pay for work that was done. What is reported on the fund financial statements?a. No reporting is made.b.
A city orders a new computer for its police department that is recorded within its general fund. The computer has an anticipated cost of $88,000. Its actual cost when received is $89,400. Payment is
Use the transactions in problem (47) but prepare a statement of net position for the government-wide financial statements. Assume that the general fund had $180,000 in cash on the first day of the
Government officials of the City of Jones expect to receive general fund revenues of $400,000 in 2020 but approve spending only $380,000. Later in the year, as they receive more information,
The following are transactions of the City of Grayson. Indicate how each of the following transactions affects the fund balance of the general fund, and its classifications, for fund financial
What is the purpose of enterprise funds?a. To account for operations that provide services to other departments within a government.b. To account for asset transfers.c. To account for ongoing
Fund A transfers $20,000 to Fund B. For each of the following, indicate whether the statement is true or false and, if false, explain why.a. If Fund A is the general fund and Fund B is an enterprise
According to the acquisition method of accounting for business combinations, costs paid to attorneys and accountants for services in arranging a merger should be: a. Capitalized as pan of the
When does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In a combination created in the middle of a fiscal year.c. In an acquisition when the value of all
Consolidated financial statements are typically prepared when one company has: a. Accounted for Its investment in another company by the equity method. b. Dividend income from another
What is a statutory merger? a. A merger approved by the Securities and Exchange Commission.b. An acquisition involving the purchase or both stock and assets. c. A takeover completed within
Which of the following is the best theoretical justification for consolidated financial statements? a. In form the companies are one entity; in substance they are separate. b. In form the
Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2021. Several of Mergaronite’s accounts have been omitted. Credit balances are indicated by parentheses.
When negotiating a business acquisition, buyers sometimes agree to pay extra amounts to sellers in the future if performance metrics arc achieved over specified time horizons. How should buyers
An acquired firm's financial records sometimes show goodwill from previous business combinations. How does a parent company account for the preexisting goodwill of its newly acquired
On January I. Newtune Company exchanges 15.000 shares of its common stock for all of the outstanding shares of On-the-Go. Inc. Each of NewTune's shares has a $4 par value and a $50 fair value. The
On December 31. Pacifica. Inc., acquired 100 percent of the voting stock of Seguros Company Pacifica will maintain Seguros as a wholly owned subsidiary with its own legal and accounting identity. The
In this project, you are to provide an analysis of alternative accounting methods for controlling interest investments and subsequent effects on consolidated reporting. The project requires the use
Goodwill recognized in a business combination must be allocated among a firm’s identified reporting units. If the fair value of a particular reporting unit with recognized goodwill falls below its
What is the total for consolidation sales revenue?Alpha Company Owns 80 percent of the voting stock of beta Company. Alpha and Beta reported the following account information from their year-end
What is the total for consolidation inventory?Alpha Company Owns 80 percent of the voting stock of beta Company. Alpha and Beta reported the following account information from their year-end separate
Mittelstaedt, Inc., buys 60 percent of the outstanding stock of Sherry, Inc. Sherry owns a piece of land that cost $212,000 but had a fair value of $549,000 at the acquisition date. What value should
The noncontrolling interest represents an outside ownership in a subsidiary that is not attributable to the parent company. Where in the consolidated balance sheet is this outside ownership interest
Current liabilities:a. $50,000b. $46,000c. $40,000d. $30,000On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows:On January 2, Park borrowed $60,000 and used
In computing the noncontrolling interest’s share of consolidated net income, how should the subsidiary’s net income be adjusted for intra-entity transfers?a. The subsidiary’s reported net
James Company acquired 85 percent of Mark-Right Company on April 1. On its December 31 consolidated income statement, how should James account for Mark-Right’s revenues and expenses that occurred
Alpha Company Owns 80 percent of the voting stock of beta Company. Alpha and Beta reported the following account information from their year-end separate financial records:What is the total for
What is the total of consolidated revenues?a. $500,000b. $460,000c. $420,000d. $400,000On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash
What is the total of consolidated cost of goods sold?a. $140,000b. $152,000c. $132,000d. $145,000On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash
What is the total of consolidated expenses?a. $30,000b. $36,000c. $37,500d. $39,000On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration.
What is the consolidated total of noncontrolling interest appearing on the balance sheet?a. $85,500b. $83,100c. $87,000d. $70,500On January 1, Jarel acquired 80 percent of the outstanding voting
What is the consolidated total for equipment (net) at December 31?a. $735,000.b. $740,000.c. $760,000.d. $765,000.On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for
Dane, Inc., owns Carlton Corporation. For the current year, Dane reports net income (without consideration of its investment in Carlton) of $185,000 and the subsidiary reports $105,000. The parent
Bensman Corporation is computing EPS. One of its subsidiaries has stock warrants outstanding. How do these convertible items affect Bensman’s EPS computation?a. No effect is created because the
A subsidiary has a debt outstanding that was originally issued at a discount. At the beginning of the current year, the parent company acquired the debt at a slight premium from outside parties.
The parent company acquires all of a subsidiary’s common stock but only 70 percent of its preferred shares. This preferred stock pays a 7 percent annual cumulative dividend. No dividends are in
Mattoon, Inc., owns 80 percent of Effingham Company. For the current year, this combined entity reported consolidated net income of $500,000. Of this amount $465,000 was attributable to Mattoon’s
Redfield Company reports current earnings of $420,000 while declaring $52,000 in cash dividends. Snedeker Company earns $147,000 in net income and declares $13,000 in dividends. Redfield has held a
Assume the same information as in question (16) except that Metcalf issues a 10 percent stock dividend instead of selling new shares of stock. How does this transaction affect the business
Neill acquires 8,000 of these shares. How will this transaction affect the parent company’s Additional Paid-In Capital account?a. Has no effect on it.b. Increases it by $20,500.c. Increases it by
Neill does not acquire any of this newly issued stock. How does this transaction affect the parent company’s Additional Paid-In Capital account?a. Has no effect on it.b. Increases it by $44,000.c.
On January 1, 2021, Stamford reacquires 8,000 of the outstanding shares of its own common stock for $24 per share. None of these shares belonged to Neill. How does this transaction affect the parent
On January 1, 2021, Primair Corporation loaned Vista Company $300,000 and agreed to guarantee all of Vista’s long-term debt in exchange for (1) decision-making authority over all of Vista’s
Several years ago Brant, Inc., sold $900,000 in bonds to the public. Annual cash interest of 9 percent ($81,000) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent.
In accounting for foreign currency transactions, which of the following approaches is used in the United States?a. One-transaction perspective; accrue foreign exchange gains and losses.b.
What is hedge accounting?
An art display set up for the City of Coyote was recorded within the general fund and generated revenues of $9,000 but had expenditures of $45,000 ($15,000 in expenses and $30,000 to buy land for the
The City of Coyote mailed property tax bills for 2021 to its citizens during August 2020. Payments could be made early to receive a discount. The levy becomes legally enforceable on February 15,
The City of Coyote mailed property tax bills for 2021 to its citizens during August 2020. Payments could be made early to receive a discount. The levy becomes legally enforceable on February 15,
In 2020, the City of Coyote received a $320,000 cash grant from the state to reduce air pollution. Assume that although a special revenue fund could have been set up, the money remained in the
During 2020, the City of Coyote’s General Fund received $10,000, which was recorded as a general revenue when it was actually a program revenue earned by its park program.a. What was the correct
City government officials are analyzing a complicated financial transaction. A GASB Implementation Guide seems to provide one reporting answer and a GASB Concepts Statement seems to provide a
Read the following journal article: “25 Years of State and Local Governmental Financial Reporting— An Accounting Standards Perspective, ”The Government Accountants Journal, Fall 1992, and" the
A city provides a local business with a tax abatement so that it can avoided paying tax for the next five years. In exchange, the business agrees to construct a new facility to hire 60 or more
The City of Nomanchester has a defined benefit pension plan for a number of its employees. A pension trust fund has been set up that currently has a net position of $32.7 million because quite a
The City of Huble has a defined benefit pension plan for a significant number of its employees. Which of the following does the city not included immediately in the determination of pension expense
Use the same information as in (8). What liability balance will Webster report on its government-wide financial statements on December 31, 2020? a. $463,048 b. $487,419 c.
Use the same information as in (8). What is the total amount of expenditures that Webster will report on its fund financial statements for the governmental funds for 2020? a. $112,581 b.
A local citizen gives the City of Salem a painting by Picasso to display in city hall. Under what condition will the city not report this painting as a capital asset on its government-wide financial
Use the same information as in (8). What amount of depreciation expense will Reynolds report as its government-wide financial statements for 2020?a. Zero.b. $52,581c. $100,000d. $112,581Data from
A city creates a solid waste landfill. It assesses a charge to every person or company that uses the landfill based on the amount of materials contributed. In which of the following will the landfill
Use the same information as in (8). What amount of deferred lease revenue will Reynolds report on its statement of net position as of December 31, 2020, assuming that the county recognizes revenue on
Which of the following is true about use of the modified approach?a. It can be applied to all capital assets of a state or local government.b. It is used to adjust depreciation expense either up or
Which of the following is true for the Year 2 government-wide financial statements?a. Both expense and liability will be zero.b. Both expense and liability will be $110,000.c. Expense will be
If this landfill is judged to be a proprietary fund, what liability will the city report at the end of the second year on fund financial statements?a. $–0–b. $110,000c. $190,000d. $200,000A city
If this landfill is judged to be a governmental fund, what liability will be reported at the end of the second year on fund financial statements?a. $–0–b. $110,000c. $190,000d. $200,000A city
The City of Wilson receives a large sculpture valued at $240,000 as a gift to be placed in front of the municipal building. Which of the following is true for reporting the gift within the
In Problem 17, which of the following statements is true about reporting a revenue in connection with this gift?a. A revenue will be reported.b. Revenue is reported but only if the asset is
Assume in Problem 17 that the city reports the work as a capital asset. Which of the following is true?a. Depreciation is not recorded because the city has no cost.b. Depreciation is not required if

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