1.All of the following are the characteristics of installment sales exceptA.It requires a cash down paymentB.There is no risk of uncollectblity for the sellerC.Title remains with the seller D. All E. None2.If merchandise is billed to a branch at a price above home office cost and the perpetual inventory method used , the home office :A.Debit investment in branch for the billed price of merchandise.B.Credits inventories for the cost of merchandise billed.C.Credits allowance for over valuation of inventories billed D. All E. None3.In consignment sales, the consigneeA.Prepares an “account report” for the consignor which shows sales, expenses, and cash receipts.B.Records the merchandise as an asset on its books.C.Records a liability for the merchandise held on consignment.D.Recognizes revenue when it ships merchandise to the consignor.4.Revenue is recognized by the consignor when theA.Consignor receives an account sales from the consignee.B.Goods are shipped to the consignee.C.Consignee receives the goods.D.Consignor receives an advance from the consignee.5.All of the following are the characteristics of consignment sales exceptA.Record is kept by both consignee and consignorB.It results in recognition of revenue for consignee as well as consignor.C.Governed by the agency and principal relationship. D. All. E. None6.Acquired in-process research and development is considered asA.a definite-lived asset subject to amortization.B.a definite-lived asset subject to testing for impairment.C.an indefinite-lived asset subject to amortization.D.an indefinite-lived asset subject to testing for impairment.E.a research and development expense at the date of acquisition.7.According to GAAP, the pooling of interest method for business combinationsA.Is preferred to the purchase method.B.Is allowed for all new acquisitions.C.Is no longer allowed for business combinations after June 30, 2001.D.Is no longer allowed for business combinations after December 31, 2001.E.Is only allowed for large corporate mergers like Exxon and Mobil.8.Which one of the following is a characteristic of a business combination accounted for as an acquisition?A.The combination must involve the exchange of equity securities only.B.The transaction establishes an acquisition fair value basis for the company being acquired.C.The two companies may be about the same size, and it is difficult to determine the acquired company and the acquiring company.D.The transaction may be considered to be the uniting of the ownership interests of the companies involved.E. The acquired subsidiary must be smaller in size than the acquiring parent.9. Which one of the following is a characteristic of a business combination that is accounted for as an acquisition?A.Fair value only for items received by the acquirer can enter into the determination of the acquirer's accounting valuation of the acquired company.B.Fair value only for the consideration transferred by the acquirer can enter into the determination of the acquirer's accounting valuation of the acquired company.C.Fair value for the consideration transferred by the acquirer as well as the fair value of items received by the acquirer can enter into the determination of the acquirer's accounting valuation of the acquired company.D.Fair value for only consideration transferred and identifiable assets received by the acquirer can enter into the determination of the acquirer's accounting valuation of the acquired company.E.Only fair value of identifiable assets received enters into the determination of the acquirer's accounting valuation of the acquired company.10.A statutory merger is a(n)A.business combination in which only one of the two companies continues to exist as a legal corporation.B.business combination in which both companies continues to exist.C.acquisition of a competitor.D.acquisition of a supplier or a customer.E.legal proposal to acquire outstanding shares of the target's stock.BBB Inc. acquired 100% of the voting common stock of VVV Inc. on January 1, 20X1. The book value and fair value of VVV's accounts on that date (prior to creating the combination) follow, along with the book value of BBB 's accounts:BBB Book ValueVVV Book ValueVVVFair ValueRetained Earnings, 1/1/X1250,000240,000cash and receivables170,00070,00070,000Inventory230,000170,000210,000Land280,000220,000240,000Buildings (net)480,000240,000270,000Equipment (net)120,00090,00090,000Liabilities650,000430,000420,000Common Stock360,00080,000Additional paid-in capital20,00040,00011.Assume that BBB issued 12,000 shares of common stock with a Br. 5 par value and a Br. 47 fair value to obtain all of VVV's outstanding stock. In this acquisition transaction, how much goodwill should be recognized?A.Br. 144,000.B.Br. 104,000.C.Br. 64,000.D.Br. 60,000.E.Br. 0.12.Assume that BBB issued 12,000 shares of common stock with a Br. 5 par value and a Br. 42 fair value for all of the outstanding stock of VVV. What is the consolidated Land as a result of this acquisition transaction?F.Br. 460,000.G.Br. 510,000.H.Br. 500,000.I.Br. 520,000.J.Br. 490,000.13.Assume that BBB issued 12,000 shares of common stock with a Br. 5 par value and a Br. 42 fair value for all of the outstanding shares of VVV. What will be the consolidated Additional Paid-In Capital and Retained Earnings (January 1, 20X1 balances) as a result of this acquisition transaction?K.Br. 60,000 and Br. 490,000.L.Br. 60,000 and Br. 250,000.M.Br. 380,000 and Br. 250,000.N.Br. 464,000 and Br. 250,000.O.Br. 464,000 and Br. 420,000.14.Assume that BBB issued preferred stock with a par value of Br. 240,000 and a fair value of Br. 500,000 for all of the outstanding shares of VVV in an acquisition business combination. What will be the balance in the consolidated Inventory and Land accounts?P.Br. 440,000, Br. 496,000.Q.Br. 440,000, Br. 520,000.R.Br. 425,000, Br. 505,000.S.Br. 400,000, Br. 500,000.T.Br. 427,000, Br. 510,000.15.Assume that BBB paid a total of Br. 480,000 in cash for all of the shares of VVV. In addition, BBB paid Br. 35,000 for secretarial and management time allocated to the acquisition transaction. What will be the balance in consolidated goodwill?U.Br. 0.V.Br. 20,000.W.Br. 35,000.X.Br. 55,000.16.Which one of the following operating segment disclosure is not required under the current GAAP accounting guideline?A.LiabilitiesB.Interest expenseC.Intersegment salesD.Unusual items17.In determining whether a particular operating segment is of significant size to warrant disclosure , which of the following is true?A.Three tests are applied, and all three must be metB.Four tests are applied, and only one must be metC.Three tests are applied, and only one must be metD.Four tests are applied, and all four must be met18.Which of the following is a criterion for determining whether an operating segment is separately reportable?A.Segment liabilities are 10 percent or more of consolidated liabilitiesB.Segment profit or loss is 10 percent or more of consolidated net incomeC.Segment assets are 10 percent or more of combined segment assetsD.Segment revenues from external sales are 5 percent or more of combined segment revenues from external sales19.For interim financial reporting, an extraordinary gain occurring in the second quarter should beA.Recognized ratably over the last three quartersB.Recognized ratably over all four quarters, with the first quarter being restatedC.Recognized in the second quarterD.Disclosed by footnote only in the second quarter20.Which of the following items must be disclosed in interim reports?A.Total assets B. Total liabilities C.Cash flow from operating activitiesD. Gross revenues