Reference no: EM132649843
Questions -
Q1) If the business combination is treated as a purchase and the fair value of Sims Company's current assets is Br. 90,000, its plant and equipment is Br. 242,000, and its liabilities are Br. 56,000, Price Company's balance sheet immediately after the combination will include
a) Negative goodwill of Br 36,000.
b) Plant and equipment of Br 817,000.
c) Plant and equipment of Br 781,000.
d) Goodwill of Br. 36,000.
Q2) ABC Company that operates in the USA purchased merchandise on credit from an Italian company at a cost of 5,000 euros. The spot rate on the date of purchase was 1 euro= $ 1.05. Which of the following would be true on the date on which ABC Company pays the Italian company for the merchandise?
a) ABC will incur a foreign currency transaction loss if the selling spot rate decreases
b) ABC will realize a foreign currency transaction gain if the selling spot rate decreases
c) ABC will realize a foreign currency transaction gain if the selling spot rate increases
d) A and C
Q3) Which of the following is not a right of a consignee?
a) To receive reimbursement for storage and handling costs incurred on the consigned items.
b) To sale consigned items on credit in whatever term unless forbidden by the contract
c) To offer the customers warranties on goods that are sold.
d) All of the above
Q4) One of the following is the importance of segment reporting
a) Users of financial statements can better understand the performance of an enterprise
b) Users can better assess the risks and return of an enterprise.
c) Users can make more informed judgment about the enterprise judgment about the enterprise as a whole.
d) All of the above
Q5) Which one of the following accounts would not appear on the consolidated financial statements at the end of the first fiscal period of the combination?
a) Goodwill
b) Equipment
c) Investment in Subsidiary
d) Common Stock
Q6) ----------------------- an enterprise controlled by another enterprise (the parent) that has the right and ability to obtain future economic benefits from the resources of the enterprise and is exposed to the related risks.
a) Subsidiary
b) Branch
c) Joint venture
d) Parent
Q7) Which one of the following is true about current rate method of translation?
a) All balance sheet items are translated at its current rate.
b) Financial assets are translated at its current rate.
c) All balance sheet items except equity are translated at current rate.
d) Dividends are translated at its historical rate.
Q8) According to the installment method of accounting, gross profit on an installment sale is recognized in income
a) on the date of sale.
b) on the date the final cash collection is received.
c) in proportion to the cash collection.
d) after cash collections equal to the cost of sales have been received.
Q9) Gross profit or loss in consignment sales is recognized by the consignor when---------
a) The merchandise is transferred to the consignee
b) The merchandise is sold by the consignee
c) Title or ownership is transferred to the purchaser
d) Cash is collected from the consignee
Q10) Which of the following is wrong
a) Home office is a quessi-ownership equity account that shows the net investment by home office
b) The home office account is closed to income summary at the end of the period
c) Investment in a branch is a non-current assets accounts
d) Net income increases the credit balance of home office account
Q11. From the following alternatives, select the correct one:
a) Under the cost recovery method, profit is recognized when collection is made regardless of cost recovery.
b) Due to the capacity for postponing the recognition of taxable income & the payment of income taxes, the accrual method of gross profit recognition is acceptable under the income tax regulation.
c) An over allowance is the shortage of the current fair value of the used properly over trade-in allowance.
d) If there is no reasonable basis for estimating the degree of collectibles and collection of installment receivables is not reasonably assumed, accountants are recommended to use the accrual method of gross profit recognition.
Q12. The term survivor is associated with a business combination accomplished through:
a) A statutory merger
b) A statutory consolidation
c) An acquisition of common stock
d) An acquisition of assets
Q13. Which of the flowing is not false about Joint venture firm?
a) A joint venture covers a long period whereas a partnership is established only for specific purpose sought to be achieved in a short period.
b) Joint venture is less risky business and required small capital while partnerships have high risky and demanded small capital.
c) Partnership is a temporary joint venture whereas joint venture is permanent venture.
d) Under small joint ventures, joint venture did not maintain books of accounts and each venture required to record their own incomes and expenses.
Q14. The -------------------- to valuation is easy to use when the property is new and represents the highest and best use of the property.
a) Cost approach
b) Market approach
c) Income Approach
d) None of the above
Q15. Which one of the following is not benefit of Privatization?
a) Greater Efficiency and Productivity of Enterprises
b) Increased Competition in the Economy
c) Means of Foreign Direct investment (FDI)
d) Monopolistic tendency