Accounting Exit Exam
1) Samuel and Darci are partners. The partnership capital for Samuel is $50,000 and for Darci is $60,000.
• Josh is admitted as a new partner by investing $50,000 cash. Josh is given a 20% interest in return for his investment.
• The amount of the bonus to the old partners is
A. $0
B. $18,000
C. $8,000
• D. $10,000
2) Tomas and Sara are partners who share income in the ratio of 3:1. Their capital balances are $80,000 and $120,000 respectively.
net come is $30,000.
• What is Sara's capital balance after closing Income Summary to Capital?
• A $102,500
B. 5120,000
C. $112,500
• D. $127,500
3) X and Y have original investments of $50,000 and $100,000 respectively in a partnership.
The articles of partnership include the following provisions rega division of net income: interest on original investment at 15%, allowances of $22,000 and $20,000 respectively, and the rema equally
How much of the net income of $90,000 is allocated to X7
• A. $30,250
B. 547,750
•C. $45,000
D. 542,250
4) The contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
A. significant influence
B. control
C. joint control
D. contractual control
5) According to IFRS 11, it is an entity that participates in a joint arrangement, regardless of whether that entity has joint control of the arrangement.
A. joint arranger
B. minority interest
C. party to a joint arrangement
D. participating
6) According to IFRS 11, it is a separately identifiable financial structure, including separate legal entities or entities recognized by statute, regardless of whether those entities have a legal personality.
A. separate vehicle
B. special purpose vehicle
C. special purpose entity
D. public utility vehicle
7) A Corporation had net income of $50,000 in 2019 and 560,000 in 2020, excluding any Income from its investment in & Company. & Company had net income of 530,000 in 2019 and $40,000 in 2020. On January 1, 2020, A Corporation acquired all of the outstanding common shares of 8 Company for a cash payment of $300,000. Assume that there was no acquisition differential on this business combination.
What net income would A Corporation report for 2020 in its comparative consolidated financial statements at the end of 2020?
• A. 580,000
B. $100,000
• C. $40,000
D. $60,000
8) If an accounting change has no material effect on the financial statements in the current year, but the change is reasonably certain to have a material effect in later years, the change should be
A. Disclosed in the notes to the financial statements of the current year.
B. Disclosed in the notes to the financial statements and referred to in the auditor's report for the current year.
C. Referred to in the auditor's report for the current
D. Treated as a subsequent event.
9) After considering an entity's negative trends and financial difficulties, an auditor has substantial doubt about the entity's ability to continue as a going concern. The auditor's considerations. relating to management's plans for dealing with the adverse effects of these conditions most likely would include management's plans to:
A. Purchase assets formerly leased.
B. Increase current dividend distributions.
C. Reduce existing lines of credit.
D. Increase ownership equity.
10) Which of the following will result in emphasis of matter as to consistency in the auditor's report, regardless of whether the item is fully disclosed in the financial statements?
A. A change in accounting estimate.
B. A change from an unacceptable accounting principle to a generally accepted one.
C. A change in classification.
D.. Correction of an error not involving a change in accounting principle.
11) Internal control is used in a business to enhance the accuracy and reliability of its accounting records and to:
A. safeguard its assets.
B. prevent fraud.
C. produce correct financial statements.
•D. deter employee dishonesty.
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