Midterm Exam Attempt Review PDF

5/25/2021 Midterm Exam: Attempt review
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Started on Tuesday, 25 May 2021, 10:33 AM

State Finished
Completed on Tuesday, 25 May 2021, 12:16 PM
Time taken 1 hour 42 mins
Marks 44.00/50.00
Grade 88.00 out of 100.00
Question 1
Correct
Mark 1.00 out of 1.00
An issuer of bonds is required by its bond indenture agreement to use a sinking fund for the retirement of the bonds. Cash was transferred
to the sinking fund. The sinking fund cash was then used to purchase investments. The sinking fund
Select one:
a. Increases when revenue is earned on the investments 
b. Decreases when the investments are purchased.
c. Is not affected by revenue earned on the investments.
d. Increases when the investments are purchased
Question 2
Correct
An entity purchased bonds at a discount on the open market as an investment and intends to hold these bonds to maturity. The entity
should account for these bonds at
Select one:
a. Cost
b. Amortized cost 
c. Fair value
d. Lower of cost and fair value
https://trimestral.amaesonline.com/2033/mod/quiz/review.php?attempt=268422&cmid=9951 1/18
Question 3
Correct
It is a contractual arrangement whereby two or more parties undertake an economic activity which is subject to join control.
Select one:
a. Joint undertaking
b. Joint venture 
c. Joint operation
d. Partnership
Question 4
Correct
Carlos, Inc. purchased bonds at a discount of 18,400. Subsequently, Carlos sold these bonds at a premium of 26,500. Bond discount
amortization of 3,400 had been recorded during the period that Carlos held this bond investment.
What amount should Carlos, Inc. report as gain on the sale of these bonds?
Select one:
a. 26,500
b. 11,500
c. 41,500 
d. 44,900
Question 5
Correct
If Pop Company exercises significant influence over Son Company and owns 40% of its common stock, then Pop Company:
Select one:
a. Would record dividends received from Son Company as investment revenue.
b. Would increase its investment account when Son Company declares dividends.
c. All of the choices are correct.
d. Would record 40% of the net income of Son Company as investment income each year. 
Question 6
Correct
A real estate company converts one of its products to property for commercial lease. The entity elected to use the fair value model on
recognition of this property. The difference between the fair value and carrying amount of the property shall be recognized in
Select one:
a. Profit or loss 
b. Reserves as other comprehensive income
c. Reserves as revaluation surplus
d. Retained earnings as a prior period error
Question 7
Correct
Inventories encompass all of the following, except;
Select one:
a. Finished goods produced
b. Merchandise purchased by a retailer
c. Materials and supplies awaiting for use in the production process
d. Land and other property not held for sale 
Question 8
Correct
When an entity reclassification a financial asset from amortized cost to fair value through profit or loss, the fair value is determined at
reclassification date.
Select one:
a. True 
b. False
Question 9
Correct
On January 1, 2010, Kei Co. sold P1,000,000 of its 10% bonds for P885,296 to yield 12%. Interest is payable semiannually on January 1 and
July 1. What amount should Kei report as interest expense for the six months ended June 30, 2010?
Select one:
a. 50,000
b. 44,266
c. 53,118 
d. 60,000
Question 10
Correct
From an investor's point of view, a liquidating dividend from an investee is;
Select one:
a. A dividend declared by the investee in excess of the investee's retained earnings
b. A dividend declared by the investee in excess of its earnings since acquisition by the investor 
c. A dividend declared by the investee in excess of its earnings in the current year
d. Any dividend declared by the investee since acquisition
Question 11
Correct
Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 1,200 units that cost 12 each.
During the month, the company made two purchases: 500 units at 13 each and 2,000 units at 13.50 each. Checkers also sold 2,150 units
during the month. Using the average cost method, what is the amount of cost of goods sold for the month?
Select one:
a. 28,950.
b. 27,843. 
c. 27,950.
d. 26,975.
Question 12
Correct
A change from the cost method to the equity method of accounting for an investment in common stock resulting from an increase in the
number of shares held by the investor requires;
Select one:
a. retroactive restatement as if the investor always had used the equity method 
b. only a footnote disclosure
c. that the change be accounted for as an unrealized gain included in other comprehensive income
d. that the cumulative amount of the change be shown as a line item on the income statement, net of tax
Question 13
Incorrect
What is the estimated cost of ending inventory in item 43?
Select one:
a. 38,133
b. 80,000 
c. 44,000
d. 48,000
Question 14
Incorrect
True or False
Statement 1: Net realizable value is the estimated selling price in the ordinary course of business plus the estimated costs of completion
and the estimated costs necessary to make the sale.
Statement 2: Inventories shall be measured at the higher of cost and net realizable value.
Select one:
a. Statement 1 is true, statement 2 is false 
b. Both statements are false
c. Both statements are true
d. Statement 1 is false, statement 2 is true
Question 15
Correct
The proceeds from bonds issued with nondetachable share warrants shall he accounted for
Select one:
a. Entirely as bonds payable
b. Partly, us unearned revenue and partly as bonds payable
c. Partly as bonds payable and partly as shareholders equity 
d. Entirely as shareholders' equity
Question 16
Correct
Bonds that pay no interest unless the issuing company is profitable are called
Select one:
a. income bonds 
b. debenture bonds
c. collateral trust bonds
d. revenue bonds
Question 17
Correct
Long-term debt that matures within one year and is to be converted into stock should be reported
Select one:
a. as noncurrent
b. as a current liability
c. as noncurrent and accompanied with a note explaining the method to be used in its liquidation 
d. in a special section between liabilities and stockholders' equity
Question 18
Correct
Under PAS 2, Inventories, all of the following should be disclosed when reporting inventories except
Select one:
a. The use of the lower-of-cost-or-net-realizable-value method, if applicable.
b. The carrying amount of inventories in classifications appropriate to the enterprise.
c. The cost formulas used.
d. An estimated amount of obsolete inventory included in the total inventory valuation 
Question 19
Correct
An example of an inventory accounting policy that should be disclosed is the
Select one:
a. method used for inventory costing. 
b. classification of inventory into raw materials, work in process, and finished goods.
c. effect of inventory profits caused by inflation.
d. identification of major suppliers.
Question 20
Correct
In its financial statements, Pulham Corp. uses the equity method of accounting for its 30% ownership of Angles Corp. At December 31, 2010,
Pulham has a receivable from Angles. How should the receivable be reported in Pulham's 2010 financial statements?
Select one:
a. The total receivable should be included as part of the investment in Angles, without separate disclosure.
b. 70% of the receivable should be separately reported, with the balance offset against 30% of Angles' payable to Pulham.
c. The total receivable should be disclosed separately. 
d. None of the receivable should be reported, but the entire receivable should be offset against Angles' payable to Pulham.
Question 21
Correct
Under PAS 28, adjustments to share in profit or loss of an associate may differ if the transaction is downstream or upstream. Which of the
following statements is true?
I. Jack Co. owns 20% interest in Old Man, Inc. During the year Old Man sold magic beans to Jack. This is an upstream transaction.
II. Goldilocks Co. owns 20% interest in Papa Bear, Inc. During the year Goldilocks purchased porridge from Papa Bear. This is a downstream
transaction.
Select one:
a. True, True
b. False, True
c. True, false 
d. False, False
Question 22
Correct
Any contract that evidence a residual interest in the assets of an entity after deducting all of its liabilities.
Select one:
a. Equity instruments 
b. None of the choices
c. Prejudice instruments
d. Impartial instruments
Question 23
Correct
Interest in life insurance contract should be carried at
Select one:
a. Total amount of insurance premiums paid
b. NIL
c. Cash surrender value 
d. Face of policy
Question 24
Correct
An inventory determined by observation and evidenced by a listing of the actual count, weight, or measure is called;
Select one:
a. Spot check inventory
b. Perpetual inventory
c. Continuous inventory
d. Physical inventory 
Question 25
Correct
Accounting for Inventories are covered by International Accounting Standards _______?
Select one:
a. 41
b. 2 
c. 9
d. 16
Question 26
Correct
After initial recognition, investment property held by an entity shall be valued using either the cost model or the
Select one:
a. recoverable amount model.
b. revaluation model.
c. realizable value model.
d. fair value model. 
Question 27
Correct
One potential advantage of financing corporations through the use of bonds rather than common stock is
Select one:
a. a higher earnings per share is guaranteed for existing common shareholders
b. the corporation must pay the bonds at maturity
c. the interest expense is deductible for tax purposes by the corporation 
d. the interest on bonds must be paid when due
Question 28
Incorrect
Which of the following best describes interest rate swaps?
Select one:
a. a type of Futures Contract. 
b. traded on the over-the-counter market.
c. customized to meet the needs of the specific parties.
d. required an initial cash flow in the form of a margin.
Question 29
Correct
Stock dividends affect the total cost of the investment
Select one:
a. True
b. False 
Question 30
Correct
Which statement is incorrect when a venturer reports a jointly controlled operation in its separate and consolidated financial statements?
(M)
Select one:
a. The venturer should recognize the assets it controls and the liabilities it incurs.
b. The venturer should recognize the share of the income it earns from the joint venture operations.
c. The venturer should adjust its assets, liabilities, income and expenses when it presents consolidated financial statements. 
d. The venturer should recognize the expenses it incurs.
Question 31
Correct
Which of the following is a characteristic of a perpetual inventory system?
Select one:
a. Inventory records are not kept for every item
b. Cost of goods sold is determined as the amount of purchases less the change in inventory.
c. Cost of goods sold is recorded with each sale. 
d. Inventory purchases are debited to a Purchases account.
Question 32
Correct
Which of the following is not considered investment property?
Select one:
a. Building being constructed for use as
b. Land to be leased out under a finance lease. 
c. Land held for capital gains
d. Investment property Building held for undetermined use
Question 33
Correct
Bonds Payable has a balance of P900,000 and Premium on Bonds Payable has a balance of P10,000. If the issuing corporation redeems the
bonds at 102, what is the amount of gain or loss on redemption?
Select one:
a. P8,000 loss 
b. P1,100 loss
c. P8,000 gain
d. P1,100 gain
Question 34
Correct
The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the
Select one:
a. bond debenture
b. bond indenture 
c. bond coupon
d. registered bond
Question 35
Correct
Groh Co. recorded the following data pertaining to raw material X during January 2016:
Date Received Cost Issued On hand
1/1/16 Inventory 8.00 3,200
1/11/16 Issue 16,000 1,600
1/22/16 Purchase 4,000 9.4 5,600
The moving-average unit cost of X inventory at January 31, 2016 is
Select one:
a. 9.40
b. 9.00 
c. 8.70
d. 8.85
Question 36
Correct
If there is any excess of the investors share of the net fair value of the associates identifiable assets and contingent liabilities over the cost
of the investment, that is, negative goodwill, how should that excess be treated?
Select one:
a. It should be disclosed separately as part of the investors equity.
b. It should be included as income in the determination of the investors share of the associates profit or loss for the period. 
c. It should be included in the carrying amount of the investment.
d. It should be written off against retained earnings.
Question 37
Incorrect
Upon the death of an officer, Jung Co. received the proceeds of a life insurance policy held by Jung on the officer. The proceeds were not
taxable. The policy's cash surrender value had been recorded on Jung's books at the time of payment. What amount of revenue should Jung
report in its statements? (M)
Select one:
a. Proceeds received less cash surrender value. 
b. Proceeds received.
c. Proceeds received plus cash surrender value.
d. None of these.
Question 38
Incorrect
When the company pays insurance premium on a life insurance policy of an officer and the officer or his heirs are the designated
beneficiary, any cash surrender value is
Select one:
a. shown as part of non-current assets on the statement of financial position. 
b. credited to life insurance expense.
c. recorded as an income.
d. ignored.
Question 39
Correct
The market price of a bond issued at a discount is the present value of its principal amount at the market rate of interest
Select one:
a. Plus the present value of all future interest payments at the rate of interest stated on the bond
b. Less the present value of all future interest payments at the market rate of interest
c. Less the present value of all future interest payments at the rate of interest stated on the bond
d. Plus the present value of all future interest payments at the market rate of interest 
Question 40
Correct
The cost of inventories of a service provider consists primarily of
Select one:
a. Labor and other cost relating to sales and general administrative personnel
b. Operating supplies
c. Cost of materials used, direct labor incurred and attributable overhead
d. Labor and other cost of personnel directly engaged in providing the service, including supervising personnel and attributable 
overhead
Question 41
Correct
Investment in bonds shall be measured subsequently at amortized cost.
Select one:
a. True 
b. False
Question 42
Correct
Which of the following computations may properly result to the correct balance of an investment in associate account at year-end?
Select one:
a. Beginning balance of investment plus share in associates profit minus share in dividends declared by associate, and plus
amortization of share in undervaluation of associates asset.
b. Beginning balance of investment plus share in associates profit minus share in dividends declared by associate, minus amortization
of share in undervaluation of associates asset, and minus separate impairment loss on goodwill included in the carrying amount of
the investment.
c. Beginning balance of investment plus share in associates profit minus share in dividends declared by associate, and minus 
d. Beginning balance of investment plus share in associates profit plus share in dividends declared by associate, and minus
Question 43
Correct
Which of the following is true for a bond maturing on a single date when the effective interest method of amortizing bond discount is
used?
Select one:
a. Interest expense as a percentage of the bond's book value varies from period to period
b. Interest expense remains constant each 6 month period
c. Nominal interest rate exceeds effective interest rate
d. Interest expense increases each 6 month period 
Question 44
Incorrect
Entity shall recognize a financial asset or a financial liability in its statement of financial position when, and only when, the entity becomes
party to the contractual provisions of the instrument.
Select one:
a. True
b. False 
Question 45
Correct
Bell Inc. took a physical inventory at the end of the year and determined that 650,000 of goods were on hand. In addition, Bell, Inc.
determined that 50,000 of goods that were in transit that were shipped f.o.b. shipping were actually received two days after the inventory
count and that the company had 75,000 of goods out on consignment. What amount should Bell report as inventory at the end of the year?
Select one:
a. 650,000.
b. 775,000. 
c. 725,000.
d. 700,000.
Question 46
Correct
When liquidating dividends exceed the cost of investment, the difference is credited to________
Select one:
a. Liquidating dividends
b. Cash dividends
c. ex-dividend
d. Gain on investment 
Question 47
Correct
Number of share increases, but the total value of the shares remain the same
Select one:
a. Cash dividends
b. Share Split 
c. Split up
d. ex-dividend
Question 48
Correct
Which is true about fair value option?
Select one:
a. Reports all gains and losses in income 
b. All of the choices are correct.
c. May be selected as a valuation method by the entity at any time during the first two years of ownership
d. Must be applied to all instruments the entity holds
Question 49
Correct
On May 1, 20x1, Josh Company acquired 30% of the voting stock of John Corp. In 20x1, John had net earnings of 9,100,000 and paid
dividends of 910,000. Josh mistakenly measured these transactions using the cost instead of the equity method of accounting. What effect
would this have on working capital, dividend income, and net earnings, respectively?
Select one:
a. no effect, overstate, understate 
b. understate, understate, understate
c. overstate, overstate, overstate
d. no effect, understate, understate
Question 50
Correct
When the accounting policies used by the investor and the associate do not match
Select one:
a. In no instance should the accounting policies used by the investor and the associate be different.
b. PAS 28 does not require appropriate adjustments to the associates financial statements to conform them to the investors accounting
policies for reporting like transactions and other events in similar circumstances when it was not practicable to use uniform
accounting policies.
c. PAS 28 requires appropriate adjustments to the associates financial statements to conform them to the investors accounting 
policies for reporting like transactions and other events in similar circumstances.
d. PAS 28 requires the entity to discontinue the use of the equity method.
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5/25/2021 Midterm Exam: Attempt review

Home / My courses / UGRD-ACTG6141-2033T / Midterm Exam / Midterm Exam

Started on Tuesday, 25 May 2021, 10:33 AM

Mark 1.00 out of 1.00

b. Decreases when the investments are purchased.

c. Is not affected by revenue earned on the investments.

d. Increases when the investments are purchased

Mark 1.00 out of 1.00

d. Lower of cost and fair value

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Mark 1.00 out of 1.00

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c. All of the choices are correct.

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b. Reserves as other comprehensive income

c. Reserves as revaluation surplus

d. Retained earnings as a prior period error

Mark 1.00 out of 1.00

Inventories encompass all of the following, except;

b. Merchandise purchased by a retailer

c. Materials and supplies awaiting for use in the production process

d. Land and other property not held for sale 

Mark 1.00 out of 1.00

Mark 1.00 out of 1.00

Mark 1.00 out of 1.00

From an investor's point of view, a liquidating dividend from an investee is;

d. Any dividend declared by the investee since acquisition

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Mark 1.00 out of 1.00

b. only a footnote disclosure

Mark 0.00 out of 1.00

What is the estimated cost of ending inventory in item 43?

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b. Both statements are false

c. Both statements are true

d. Statement 1 is false, statement 2 is true

Mark 1.00 out of 1.00

b. Partly, us unearned revenue and partly as bonds payable

c. Partly as bonds payable and partly as shareholders equity 

d. Entirely as shareholders' equity

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c. collateral trust bonds

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d. in a special section between liabilities and stockholders' equity

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b. The carrying amount of inventories in classifications appropriate to the enterprise.

c. The cost formulas used.

d. An estimated amount of obsolete inventory included in the total inventory valuation 

Mark 1.00 out of 1.00

An example of an inventory accounting policy that should be disclosed is the

c. effect of inventory profits caused by inflation.

d. identification of major suppliers.

Mark 1.00 out of 1.00

c. The total receivable should be disclosed separately. 

Mark 1.00 out of 1.00

Mark 1.00 out of 1.00

b. None of the choices