21) Consolidated financial statements are prepared for:
A) balance sheet and income statement only.
B) statement of cash flows and statement of stockholders' equity only.
C) balance sheet, income statement and statement of cash flows only.
D) balance sheet, income statement, statement of cash flows and statement of stockholders' equity.
22) Why are consolidated financial statements prepared?
A) The American Institute of Certified Public Accountants requires consolidated financial statements in certain situations.
B) The Securities and Merchant Commission requires consolidated financial statements in certain situations.
C) The Society of Certified Fraud Examiners requires consolidated financial statements in certain situations.
D) So financial statement users get a better picture of the total operations of the parent and subsidiary together.
23) A consolidated balance sheet will NOT report:
A) the Investment account in a 100% owned subsidiary.
B) the Common Stock of a 100% owned subsidiary.
C) the Retained Earnings of a 100% owned subsidiary.
D) all of the above.
24) Noncontrolling Interest is reported in the:
A) liability section of the consolidated balance sheet.
B) intangible asset section of the consolidated balance sheet.
C) long-term investment section of the consolidated balance sheet.
D) stockholders' equity section of the consolidated balance sheet.
25) The demise of Arthur Andersen, one of the largest public accounting firms, can be attributed to:
A) reversal of an indictment by the U.S. Justice Department.
B) fines levied by the U.S. Securities and Exchange Commission.
C) the death of Kenneth Lay.
D) the lack of quality of audit work for several clients that include Enron, WorldCom and Waste Management.
26) Santa Barbara Company purchased merchandise on account from a company in England. The price was 1,000 pounds. At the time of the purchase, the exchange rate for a pound was $1.52. At the time Santa Barbara Company paid for the merchandise, the exchange rate for a pound was $1.55. What is the amount of the gain or loss recorded by the Santa Barbara Company upon payment?
A) Foreign currency transaction gain $30
B) Foreign currency transaction loss $30
C) Foreign currency translation gain $30
D) Foreign currency translation loss $30
27) Santa Ana Company purchased merchandise on account from a company in England. The price was 1,000 pounds. At the time of the purchase, the exchange rate for a pound was $1.52. At the time Santa Ana Company paid for the merchandise, the exchange rate for a pound was $1.55. What can we say about the pound relative to the U.S. dollar?
A) the pound weakened and the U.S. dollar strengthened over time
B) the pound strengthened and the U.S. dollar weakened over time
C) the pound and U.S. dollar strengthened over time
D) the pound and U.S. dollar weakened over time
28) When we translate a foreign subsidiary's balance sheet into U.S. dollars, we calculate a:
A) foreign currency transaction gain or loss.
B) foreign exchange conversion rate.
C) foreign currency translation gain or loss.
D) foreign currency exchange rate.
29) A foreign currency translation adjustment is reported as:
A) Other Comprehensive Income on Statement of Comprehensive Income.
B) Other Comprehensive Income on combined statement of income and comprehensive income.
C) Accumulated Other Comprehensive Income on the balance sheet.
D) all of the above.