FREE Bachelor of Science in Accountancy: FAR Questions and Answers

Question 1

Andrew, a consultant, uses a cash basis to maintain his accounting records.
Gary received $300,000 in client fees in year 2.
Andrew had $50,000 in accounts receivable as of 12/31/Year 1.
At 12/31/Year 2, Andrew had $70,000 in accounts receivable and $6,000 in unearned income.
What would Andrew's second-year service revenue be if he used the accrual basis?

Accepted Answer

341,000

Answer

320,000

Answer

250,000

Answer

300,000

Question 2

True or False: The rules for contributions partners make while forming a partnership are the same under GAAP and tax.

Accepted Answer

False

Answer

True

Question 3

Beginning inventory for ABC Corp. was $32,000 undervalued at the beginning of Year 1 while ending inventory was $57,000 inflated. So, ABC Corp's cost of goods sold for the third year was:

Accepted Answer

understated by 89,000

Answer

overstated by 25,000

Answer

overstated by 89,000

Answer

understated by 25,000

Question 4

Relative value, commonly referred to as salvage value, is:

Accepted Answer

An estimate of the amount that will be realized at the end of the useful life of a depreciable asset

Answer

The actual value at the end of the useful life of a depreciable asset

Answer

Gain that will be realized then an asset is scrapped

Answer

The estimated accumulated depreciation at the end of an assets life

Question 5

Bobcat Corp. sold a piece of land to Crystal Corp. on September 1st, Year 3 for $300,000. The land originally cost $275,000 to Bobcat Corp. Courtside Corp's subsidiaries include Crystal Corp and Bobcat Corp. What would the land's worth be on the consolidated balance sheet?

Accepted Answer

$275,000

Answer

$250,000

Answer

$300,000

Answer

$325,000

Question 6

Determine the depreciation in year three of an asset's useful life based on the information below.

1. Cost of asset $11,000
2. Salvage Value $1,000
3. Useful life is four years
4. Sum of years digit method is used to calculate

Accepted Answer

2,000

Answer

1,000

Answer

3,000

Answer

4,000

Question 7

15% of Company B is owned by Company A. The CEO of Company A is a member of Company B's board of directors. What kind of accounting procedure ought to be applied to this investment?

Accepted Answer

Equity Method

Answer

Fair Value

Answer

Consolidation

Answer

All of the above