Question 10

Callie was admitted to the Adams & Beal Partnership four years ago. The association has a deficiency at the end of the year for the current year. How could this deficiency be accounted for?

a-Use the profit and loss ratios to absorb the deficiency

b-Do not account for the loss in the incurred year, this can be compensated with the income in future years

c-Not to account for the loss in the incurred year, this could be compensated with the income in future years or recovered to compensate the income in previous years

d-The losses are not transmitted to the individual partners of an association

Question 11

For financial accounting purposes, the assets of an individual partner contributed to a company are recorded by the company in

a-Historical cost

b-Book value

c-Fair market value

d-Lower market cost

Question 12

In a global liquidation of a company

a-All assets are paid to partners based on their initial contribution, with the oldest association paid first

b-All assets are paid to the partners on the basis of equal distribution, regardless of when the member was admitted to the association

c-All assets must be made before any distribution can be made

d- All assets are paid to the partners, at the same time, it is based on the fair market value at the time they were initially donated to the association

Question 13

Sales between affiliated companies will be registered

a - Normally in the books of companies separately

b-Only in the books of the parent company

d-Only in the books of the subsidiary company

c-Will not be registered by any of the affiliated companies

Question 14

The consolidation process is carried out

a-Every year since the entries are registered only by the parent company

b- Every year since the tickets are registered only by the subsidiary company

c-Every year since the tickets are registered by both, the parent company and the subsidiary

d- Every year since the tickets are not registered by the parent company or subsidiar

Question 15

The following is the sequence of priorities in which the liquidation proceeds will be distributed for a company

a-The association plans, the liabilities of association, the association loans, the capital balances of the association

b-Liabilities of the association, loans of the association, balances of capital of the association

c-Liabilities of the association, loans of the association, plans of the association, balances of capital of the association

d-Liabilities of the association, capital balances of the association, loans of the association

Question 16

When the financial statements of a foreign subsidiary are translated and the local currency is the functional currency of the foreign entity, which of the following accounts is typically translated using an average rate for the reporting period?

a-Accounts payable

b-Notes to be paid in the long term

c-Earth

d-Revenue from sales

Question 17

When a partner withdraws from a partnership and the remaining partners acquire that interest

a- This may have an effect on the liquidity of the company

b-This will increase the cash flow in society

c-This will always create a goodwill for an amount equal to the original interest of the retired member in the company

d - This will cause all assets to be recorded to offset the cost of acquiring the interest of the retired member at the time of withdrawal

Question 18

Company A invested in Company B. The market value of Company B has decreased significantly in the current year and it is predicted that this trend will continue. Company A uses the equity method and as a controller it would be acting ethically if you:

a-Does nothing and takes the investment at its original cost

b-Registers the investment temporarily and registers it again when the company improves in the coming years

c-Registers the investment at its market value and recognizes a loss

d-Registers the investment at market value, but does not recognize a loss

Question 19

You have just been hired by ABC Inc. and are preparing consolidated statements. The company has had some difficult financial problems lately and they expect you to help them solve their financial problems. You would be acting ethically if:

a-Does not eliminate any intercompany transactions in the consolidation process

b-Does not eliminate any intercompany transaction in the consolidation process, including inter-company profit not realized

c-Eliminates all transactions between companies in the consolidation process, including the unrealized inter-company profit

d-Eliminates intercompany transactions in the consolidation process but does not eliminate the unrealized inter-company profit since it has not been carried out

Question 20

You are the controller of company A that has recently merged with company B. You are required to communicate with senior management about how you would represent the merger. While doing an investigation, he finds an old accounting textbook left on the shelf by his predecessor, who retired after 30 years. Based on your readings in this book, you are thinking about using the pooling method for this transaction. This method a-Requires that assets are only recorded at historical cost and liabilities at fair value b-Requires that all assets be recorded at historical cost c-Requires that all assets and liabilities be recorded at their fair value d-It is no longer an acceptable method