This document is an accounting test from Hawassa University for an Advanced Financial Accounting course. It contains 10 multiple choice questions worth 1.5 points each, and one work out question worth 5 points related to accounting for inventory flows between a home office and branch. The test covers topics like accounting for branches, joint ventures, and discrepancies in home office and branch ledger account balances. The document provides the test questions but leaves the answer key blank for students to complete.
This document is an accounting test from Hawassa University for an Advanced Financial Accounting course. It contains 10 multiple choice questions worth 1.5 points each, and one work out question worth 5 points related to accounting for inventory flows between a home office and branch. The test covers topics like accounting for branches, joint ventures, and discrepancies in home office and branch ledger account balances. The document provides the test questions but leaves the answer key blank for students to complete.
This document is an accounting test from Hawassa University for an Advanced Financial Accounting course. It contains 10 multiple choice questions worth 1.5 points each, and one work out question worth 5 points related to accounting for inventory flows between a home office and branch. The test covers topics like accounting for branches, joint ventures, and discrepancies in home office and branch ledger account balances. The document provides the test questions but leaves the answer key blank for students to complete.
This document is an accounting test from Hawassa University for an Advanced Financial Accounting course. It contains 10 multiple choice questions worth 1.5 points each, and one work out question worth 5 points related to accounting for inventory flows between a home office and branch. The test covers topics like accounting for branches, joint ventures, and discrepancies in home office and branch ledger account balances. The document provides the test questions but leaves the answer key blank for students to complete.
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Hawassa University
School of Management and Accounting
Accounting and Finance Program Advanced Financial Accounting Test-I Date: October 29, 2015 Marks: 20% Time allowed: 45 minutes Name: ______________________________________ ID No: ____________ Section:________ ______________________________________________________________________________
Part One: Multiple choice (1.5 pts each)
1. In accounting for branch transactions, it is improper for the home office to: A. Credit cash received from a branch to the Investment in Branch ledger account. B. Maintain Common Stock and Retained Earnings ledger accounts for only the home office. C. Debit shipments of merchandise to the branch from the home office to the Investment in Branch ledger account. D. Credit shipments of merchandise to the branch to the Sales ledger account. 2. Which one of the following is/are incorrect about joint venture? A. A short duration special purpose partnership confined to many types of transactions B. Co-venturers share profits/loss of the venture at an agreed ratio likewise partnership C. Generally profit/loss of the venture is computed on the annual basis D. Going concern assumption of accounting is appropriate for joint venture accounting E. A and C F. C and D 3. The Home Office ledger account in the accounting records of the Tahoe Branch had a credit balance of $12,000 at the end of April, and the Investment in Branch account in the accounting records of the home office had a debit balance of $15,000. The most likely reason for the discrepancy in the two ledger account balances is: A. Merchandise shipped by the home office to the branch had not been recorded by the branch. B. The home office had not recorded the branch net income for April. C. The branch had just collected home office trade accounts receivable in the amount of $3,000. D. The branch had not yet recorded the home office net income for April.
4 4. Jayhawk Company has numerous branches in the state of Kansas. The home office purchases merchandise and makes shipments to branches from a central warehouse at the request of branch managers. Which of the following would be an improper accounting practice? A. The Investment in Branch ledger account is debited in the accounting records of the home office when merchandise is shipped to a branch, and the Shipments to Branch account is credited (assume use of the periodic inventory system). B. The home office debits Trade Accounts Receivable and credits Sales when merchandise is shipped to a branch. C. Cash received from a branch is credited to the Investment in Branch ledger account by the home office. D. Only the home office maintains a Common Stock ledger account and a Retained Earnings account. 5. Neither the Palmer Branch nor the home office of Rupert Company had completed any intracompany transactions during the last half of May, yet the credit balance of the branch's Home Office ledger account on May 31 was larger than the debit balance of the home office's Investment in Palmer Branch account. The most likely reason for this discrepancy is: A. The home office reported a net loss for the month of May. B. The branch reported a net loss for the month of May. C. The branch returned merchandise to the home office. D. The branch reported a net income for the month of May. 6. Which of the following ledger accounts is displayed in the combined financial statements for a home office and branch? A. Shipments to Branch B. Home Office C. Dividends Declared D. Allowance for Overvaluation of Inventories: Branch 7. The home office of Irby Company bills merchandise to branches at 25% above home office cost. Information taken from the accounting records of Kipp Branch is as follows:
Beginning inventories (at billed prices) $17,000
Shipments from home office (at billed prices) 42,500 Ending inventories (at billed prices) 20,000 Net loss for accounting period 1,500
The net income or net loss of Kipp Branch, based on home office cost of branch merchandise, is: A. $7,900 net income C. $6,400 net income B. $9,400 net loss D. $7,000 net income
4 E. Some other amount
8. Both the Home Office ledger account and the Investment in Branch account are displayed in the combined financial statements for the home office and the branch.
A. True B. False
9. An account used to measure the profit/loss of a joint venture is;
A. Joint bank account C. Co-venturers’ account B. Joint venture account D. All could measure 10. The combined net income for the home office and branches would be the same when the home office bills merchandise to branches at home office cost as when the home office bills branches at amounts above home office cost. A. True B. False
Part Two: Work out question
1. Refer the following information for ABC company and one of its branch; ABC Company Flow of merchandise from home office to branch During 2004 E.C Billed price home office cost mark up Beginning inventory................................22,500 15,000 7,500 Add: shipment from HO.........................120,000 80,000 40,000 Merchandise available for sale...............142,500 95,000 47,500 Less: ending inventory...........................30,000 20,000 10,000 Cost of goods sold.................................112,500 75,000 37,500
Required: (5 pts) a. What is the total value of allowance for overvaluation of inventories? b. What is the amount of realized gross profit during the year? c. By how much the value of branch’s inventory increased during the year? d. By how much the value of home office’s inventory decreased during the year?
4 Hawassa University School of Management and Accounting Accounting and Finance Program Advanced Financial Accounting Test-I Date: October 29, 2015 Marks: 20% Time allowed: 45 minutes Name: ______________________________________ ID No: ____________ Section:________ ______________________________________________________________________________
