ACCT 4370 Final Exam Questions with Correct Answers Latest Update 2025
During 200X, Papa Company sold inventory, which cost it $18,000, to its subsidiary, Sonnyco, for
$27,000. At the end of 200X, Sonnyco had $9,000 of the intercompany goods still on its books. The
balance had been resold to unaffiliated customers for $24,000. Which one of the following is the
amount of intercompany sales that should be eliminated for 200X consolidated statements?
$27,000
$24,000
$18,000
$12,000 - Answers 27000
Which one of the following will occur on consolidated financial statements if an intercompany inventory
transaction is not eliminated?
An understatement of sales.
An overstatement of sales.
An understatement of purchases.
An overstatement of accounts receivable. - Answers An overstatement of sales.
During 200X, Papa Company sold inventory, which cost it $18,000, to its subsidiary, Sonnyco, for
$27,000. At the end of 200X, Sonnyco had $9,000 of the intercompany goods still on its books. The
balance had been resold to unaffiliated customers for $24,000. Which one of the following is the
amount of ending inventory that should be eliminated for consolidated statements?
$3,000
$6,000
$9,000
$15,000 - Answers 3000
Which of the following can be overstated on consolidated financial statements if intercompany
inventory balances on-hand at the end of a period are not eliminated?
Consolidated Income
Consolidated Loss
Yes
Yes
,Yes
No
No
Yes
No
No - Answers Yes
Yes
Pine Company acquired goods for resale from its manufacturing subsidiary, Strawco, at Strawco's cost to
manufacture of $12,000. Pine subsequently resold the goods to a nonaffiliate for $18,000. Which one of
the following is the amount of the elimination that will be needed as a result of the intercompany
inventory transaction?
$-0-
$6,000
$12,000
$18,000 - Answers 12000
Tulip Co. owns 100% of Daisy Co.'s outstanding common stock. Tulip's cost of goods sold for the year
totals $600,000, and Daisy's cost of goods sold totals $400,000. During the year, Tulip sold inventory
costing $60,000 to Daisy for $100,000. By the end of the year, all transferred inventory was sold to third
parties. What amount should be reported as cost of goods sold in the consolidated statement of
income?
$900,000
$940,000
$960,000
$1,000,000 - Answers 900000
In which of the following legal forms of business combination does at least one preexisting entity cease
to exist?
Merger
Consolidation
Acquisition
,Yes
Yes
Yes
Yes
Yes
No
Yes
No
No
No
No
Yes - Answers Yes
Yes
No
In which of the following legal forms of business combination are the assets and liabilities of an acquired
entity or entities recorded on the books of the acquiring entity?
Merger
Acquisition
Consolidation
Yes
Yes
Yes
Yes
Yes
No
Yes
, No
Yes
No
Yes
No - Answers Yes
No
Yes
On December 1, 200X, Betaco agreed to be acquired 100% by Alphaco at a cost equal to Betaco's book
value. The combination was initiated at that time, and the closing date for the acquisition was December
31, 200X. Both firms have December 31 fiscal year-ends. There were no other transactions between the
firms during 200X or 200Y. Each firm had the following net incomes for the periods shown:
Alphaco Betaco
1/1/0X-11/30/0X $20,000 $5,000
12/1/0X-12/31/0X 4,000 1,000
1/1/0Y-1/31/0Y 2,000 3,000
Which one of the following is the consolidated net income that Alphaco should recognize for 200X?
$24,000
$25,000
$29,000
$30,000 - Answers 24000
In which of the legal forms of business combination does more than one entity survive?
Merger
Consolidation
Acquisition
Yes
During 200X, Papa Company sold inventory, which cost it $18,000, to its subsidiary, Sonnyco, for
$27,000. At the end of 200X, Sonnyco had $9,000 of the intercompany goods still on its books. The
balance had been resold to unaffiliated customers for $24,000. Which one of the following is the
amount of intercompany sales that should be eliminated for 200X consolidated statements?
$27,000
$24,000
$18,000
$12,000 - Answers 27000
Which one of the following will occur on consolidated financial statements if an intercompany inventory
transaction is not eliminated?
An understatement of sales.
An overstatement of sales.
An understatement of purchases.
An overstatement of accounts receivable. - Answers An overstatement of sales.
During 200X, Papa Company sold inventory, which cost it $18,000, to its subsidiary, Sonnyco, for
$27,000. At the end of 200X, Sonnyco had $9,000 of the intercompany goods still on its books. The
balance had been resold to unaffiliated customers for $24,000. Which one of the following is the
amount of ending inventory that should be eliminated for consolidated statements?
$3,000
$6,000
$9,000
$15,000 - Answers 3000
Which of the following can be overstated on consolidated financial statements if intercompany
inventory balances on-hand at the end of a period are not eliminated?
Consolidated Income
Consolidated Loss
Yes
Yes
,Yes
No
No
Yes
No
No - Answers Yes
Yes
Pine Company acquired goods for resale from its manufacturing subsidiary, Strawco, at Strawco's cost to
manufacture of $12,000. Pine subsequently resold the goods to a nonaffiliate for $18,000. Which one of
the following is the amount of the elimination that will be needed as a result of the intercompany
inventory transaction?
$-0-
$6,000
$12,000
$18,000 - Answers 12000
Tulip Co. owns 100% of Daisy Co.'s outstanding common stock. Tulip's cost of goods sold for the year
totals $600,000, and Daisy's cost of goods sold totals $400,000. During the year, Tulip sold inventory
costing $60,000 to Daisy for $100,000. By the end of the year, all transferred inventory was sold to third
parties. What amount should be reported as cost of goods sold in the consolidated statement of
income?
$900,000
$940,000
$960,000
$1,000,000 - Answers 900000
In which of the following legal forms of business combination does at least one preexisting entity cease
to exist?
Merger
Consolidation
Acquisition
,Yes
Yes
Yes
Yes
Yes
No
Yes
No
No
No
No
Yes - Answers Yes
Yes
No
In which of the following legal forms of business combination are the assets and liabilities of an acquired
entity or entities recorded on the books of the acquiring entity?
Merger
Acquisition
Consolidation
Yes
Yes
Yes
Yes
Yes
No
Yes
, No
Yes
No
Yes
No - Answers Yes
No
Yes
On December 1, 200X, Betaco agreed to be acquired 100% by Alphaco at a cost equal to Betaco's book
value. The combination was initiated at that time, and the closing date for the acquisition was December
31, 200X. Both firms have December 31 fiscal year-ends. There were no other transactions between the
firms during 200X or 200Y. Each firm had the following net incomes for the periods shown:
Alphaco Betaco
1/1/0X-11/30/0X $20,000 $5,000
12/1/0X-12/31/0X 4,000 1,000
1/1/0Y-1/31/0Y 2,000 3,000
Which one of the following is the consolidated net income that Alphaco should recognize for 200X?
$24,000
$25,000
$29,000
$30,000 - Answers 24000
In which of the legal forms of business combination does more than one entity survive?
Merger
Consolidation
Acquisition
Yes
