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Theoretical Test - Joint Arrangement Accounting

Description

Multiple choice type for accounting theories and concepts
simon_pisano
Quiz by simon_pisano, updated more than 1 year ago
simon_pisano
Created by simon_pisano almost 9 years ago
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Resource summary

Question 1

Question
It arises where two or more entities have an arrangement between each other such that these entities have joint control over the arrangement
Answer
  • Joint Arrangement
  • Joint Operation
  • Joint Venture
  • Joint Account

Question 2

Question
The characteristics of a joint arrangement includes the following, except:
Answer
  • The parties are bound by a contractual arrangement
  • The contractual arrangement gives two or more parties joint control over the arrangement
  • There is a unanimous consent of the parties over the arrangement
  • There should be 50% interest over the corporate arrangement.

Question 3

Question
Joint control exists when there are the following items, except
Answer
  • There exists a contractually agreed sharing of control
  • There must be a unanimous consent of the parties
  • There is no single party that has control over the arrangement
  • The party that holds the substantial portion over the company must have a sole control over the arrangement.

Question 4

Question
A Corporation and B Corporation made an arrangement. A has a 50% interest over the entity. B has a share of 50%. The contract requires that 70 percent of the entity's interest must agree before making a decision over a particular activity. The contract is:
Answer
  • Partnership
  • Incorporation
  • Joint Arrangement
  • Sales

Question 5

Question
A, B and C made an entity with agreed sharing in the entity's interest: 50%,20% and 30%. They agreed that a company can make a decision if at least 50% of the interest had been exercised. The contract has:
Answer
  • a joint control
  • no joint control
  • joint management
  • absolute control of party - C

Question 6

Question
A, B, C and D had decided to make an arrangement. The parties require that there may be unanimous vote for all the activities they are going to take. The contract has:
Answer
  • Joint Control
  • Significant Influence
  • Absolute Control of one party
  • Financial Interest only but no control

Question 7

Question
The accounting method for joint venture is:
Answer
  • Cost Method
  • Fair Value through profit or loss
  • Equity Method
  • Fair Value through Other Comprehensive Income

Question 8

Question
An example of a credit to Investment in Joint Venture account.
Answer
  • Initial Investment
  • Share in Net Income
  • Dividend Received
  • Change in accounting estimate

Question 9

Question
An example of debit to Investment in Joint Venture account.
Answer
  • Share in Net Loss
  • Share in Other Comprehensive Loss
  • Dividend Received
  • Initial Investment

Question 10

Question
Recording the share of net income from a joint venture will result to:
Answer
  • Decrease in Investment in Joint Venture account
  • Increase in Investment in Joint Venture account
  • No effect in Investment in Joint Venture account
  • Decrease in total equity

Question 11

Question
A joint arrangement may be:
Answer
  • A Corporation
  • A Partnership
  • A Financial Structure
  • All of the choices are correct

Question 12

Question
If the joint arrangement has no separate vehicle. The arrangement is a:
Answer
  • Joint Venture
  • Joint Operation
  • Corporation
  • Partnership

Question 13

Question
A Joint Arrangement that has a separate vehicle is a:
Answer
  • Joint Management
  • Joint Account
  • Joint Operation
  • Joint Venture

Question 14

Question
Which of the following statement is false:
Answer
  • Under the Equity Method, a share in net income will result to an increase in the Investment account.
  • Under Equity Method, initial investment to a joint venture will result to an increase in the Investment account.
  • Under Equity Method, dividend received from a joint venture will result to a decrease in the Investment account.
  • Under Equity Method, dividend received from a joint venture will result to an increase in the Investment account.

Question 15

Question
Dividend received from a joint venture shall be treated in the Investor's books as
Answer
  • A Dividend Income
  • Expense
  • Return of Investment
  • Other Comprehensive Income

Question 16

Question
The method of accounting for joint operation
Answer
  • the Equity Method
  • Fair Value Method
  • Cost Method
  • The joint operator shall record his separate assets, liabilities, revenue and expenses in his separate books.

Question 17

Question
When the contractual arrangement establishes the allocation of revenues and expenses on the basis of the relative performance of each party to the joint arrangement. The arrangement is a:
Answer
  • Joint Venture
  • Joint Operation
  • Joint Account
  • none of the choices

Question 18

Question
When the contractual arrangement establishes that the parties to the joint arrangement are liable to the arrangement only to the extent of their respective investments. The arrangement is a:
Answer
  • Joint Venture
  • Joint Operation
  • Joint Account
  • Joint Management

Question 19

Question
The accounting for joint operation includes the following, except:
Answer
  • The joint operator must recognize the assets it controls in the arrangement
  • The joint operator must recognize the liabilities it incurs in the arrangement
  • The joint operator must recognize the share of revenue over the operation and the expenses that he incur
  • The joint operator must only recognize his share in the net assets over the arrangement

Question 20

Question
Which of the following statement is false:
Answer
  • In a joint arrangement, the control may be joint but profit sharing is not necessarily equal
  • A party that participates in, but does not have joint control nor a significant influence, a joint venture shall account for its interest in the arrangement in accordance with PAS 39/PFRS 9 Financial Instruments
  • A joint venture accounting uses consolidation method in the financial statement preparation
  • A cash settlement may also be represented by the joint operator's account balance after recording investments, withdrawals and share in joint operation profit.
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