Midterm Exam Instructions And Questions For Intermediate Acc

Midterm Exam Instructions and Questions for Intermediate Accounting II

Analyze the midterm accounting exam instructions and questions, covering topics such as premium plans, bond valuation and amortization, stock dividends, earnings per share, investment reporting, warranty liabilities, and financial statement analysis. The task involves detailed calculations, journal entries, and theoretical explanations based on provided data and scenarios within an academic accounting context, specifically focused on intermediate accounting principles and practices.

Paper For Above instruction

The midterm exam for Intermediate Accounting II encompasses a broad range of accounting topics, requiring a comprehensive understanding of both practical application and theoretical concepts. The exam is designed to evaluate students’ proficiency in recording transactions, analyzing financial data, and applying accounting standards to various scenarios that reflective real-world financial reporting challenges.

The first question deals with a premium plan offered by a company, requiring calculations of inventory, sales, expenses, and liability estimations for premiums. This involves understanding revenue recognition, cost accounting, and provisions for future liabilities, emphasizing journal entry preparation aligned with GAAP standards. Precise calculations demonstrate how to appropriately record the sale of product X, expenses related to premiums, and the valuation of inventory and liabilities.

The second question addresses bond valuation and amortization, emphasizing the calculation of the issuance price of bonds that carry a market interest rate different from the coupon rate. Using present value tables, students must compute the bond price, prepare an amortization schedule, and journal entries for bond issuance and subsequent interest payments. Attaching an amortization schedule aids in visualizing the effective-interest method, matching expense recognition with cash flows, and accurately recording bond-related liabilities on the financial statements.

Question three explores dividend distributions from preferred and common stock and requires calculating the amounts allocated under varying dividend preferences—noncumulative, cumulative, and fully participating preferences. This tests comprehension of stockholders’ equity and dividend policy applications in financial reporting.

Question four focuses on earnings per share (EPS), particularly on calculating basic and diluted EPS incorporating convertible bonds, which involves adjusting net income and weighted average shares outstanding based on conversion features, and considering the impact of potential dilution on earnings figures.

The fifth question involves fair value adjustments for trading securities and requires journal entries to record unrealized gains and losses, as well as sale transactions and their impact on financial statements under the fair value method. It introduces the concept of recognizing unrealized gains/losses in income or other comprehensive income, depending on the classification of securities.

Question six examines revenue recognition for construction contracts under the percentage of completion method, with calculations to determine gross profit, recognized revenue, and the excess billings during the period. This demonstrates the application of revenue recognition principles in long-term contracts, emphasizing margin calculations and contract asset/liability management.

Questions seven and eight incorporate multiple-choice questions covering contingent liabilities, accounting for sick and vacation pay, bond issuance, and comprehensive income recognition. These test students’ theoretical knowledge of liabilities, employee benefits, marketable securities, and reporting standards in diverse scenarios involving potential obligations and valuation adjustments.

The subsequent problems expand into detailed computations on payroll taxes, warranty liabilities, bond amortization, debt restructuring, treasury stock transactions, earnings per share adjustments, investment valuation, default repossessions, and equity allocations in binding transactions, all within the scope of intermediate accounting standards and reporting accuracy.

Furthermore, the exam includes analysis of corporate financial statements, stock splits, share issuance, and market value allocations, culminating in an applied understanding of financial statement presentation, equity transactions, and forecasting based on historical data, all aimed at fostering a robust grasp of advanced accounting principles in a practical business context.

References

  • Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory & Practice (15th ed.). Cengage Learning.
  • Harrison, W. T., Horngren, C. T., & Thomas, C. W. (2018). Financial & Managerial Accounting (11th ed.). Pearson.
  • Gibson, C. H. (2017). Financial Reporting & Analysis (13th ed.). Cengage Learning.
  • FASB Accounting Standards Codification (ASC). (2023). Financial Accounting Standards Board.
  • Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial Accounting Theory and Analysis (13th ed.). Wiley.
  • CPA Australia. (2019). Corporate Financial Reporting Standards. CPA Publishing.
  • Young, S. M., & Solomon, G. R. (2018). Intermediate Financial Accounting. McGraw-Hill Education.
  • Keown, A. J., Martin, J. D., Petty, J. W., & Scott, D. F. (2014). Foundations of Finance: The Logic and Practice of Financial Management. Pearson.
  • Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. (2019). Financial Accounting 11e. Wiley.
  • International Financial Reporting Standards (IFRS). (2023). IFRS Foundation.

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