ADVANCED ACCOUNTING REVISION GUIDE 200 QUESTIONS
WITH COMPLETE SOLUTIONS A+ GRADED
Q1
What is goodwill in a business combination? A. Current assets minus liabilities B. Purchase price
minus net assets C. Net profit of subsidiary D. Total equity
Answer: B Goodwill = Consideration paid – Fair value of net identifiable assets (simplified
form).
Q2
Under IFRS 3, business combinations are accounted using: A. Cost method B. Equity method C.
Acquisition method D. Revaluation method
Answer: C IFRS 3 requires the acquisition method.
Q3
Non-controlling interest represents: A. Parent company ownership B. External shareholders in
subsidiary C. Government ownership D. Loan creditors
Answer: B NCI is the portion not owned by parent.
Q4
In consolidation, intra-group sales are: A. Added B. Ignored C. Eliminated D. Taxed
Answer: C They are eliminated to avoid double counting.
,Q5
Equity method is used for: A. Subsidiaries B. Associates C. Inventory valuation D. Cash flow
statements
Answer: B Used when significant influence exists.
Q6
Goodwill impairment is recognized when: A. Assets increase B. Recoverable amount < carrying
amount C. Profit increases D. Dividends are paid
Answer: B Impairment occurs when carrying value exceeds recoverable amount.
Q7
Which IFRS governs consolidated financial statements? A. IFRS 9 B. IFRS 10 C. IAS 2 D. IAS
16
Answer: B IFRS 10 covers consolidation.
Q8
Intra-group inventory profit is: A. Ignored B. Deferred C. Recorded twice D. Taxed immediately
Answer: B It is deferred until sold externally.
Q9
Functional currency is: A. Reporting currency only B. Currency of primary economic
environment C. USD only D. Euro only
Answer: B It reflects main operating environment.
Q10
,Exchange differences are recorded in: A. Equity only B. Profit or loss C. Cash flow statement D.
Notes only
Answer: B Usually in profit or loss under IAS 21.
Q11
Parent company control requires: A. 10% ownership B. 20% ownership C. Power over investee
D. Equal voting rights
Answer: C Control = power + returns + ability to affect returns.
Q12
Consolidation combines: A. Only liabilities B. Only assets C. Assets, liabilities, income,
expenses D. Only equity
Answer: C Full financial statement aggregation.
Q13
NCI can be measured at: A. Cost only B. Fair value or proportionate net assets C. Historical cost
only D. Market value only
Answer: B Two IFRS 3 options.
Q14
Unrealized profit arises from: A. External sales B. Intra-group transactions C. Bank loans D.
Depreciation
Answer: B Between group entities.
Q15
Associate ownership is typically: A. Below 20% B. 20%–50% C. Above 50% D. 100%
, Answer: B Indicates significant influence.
Q16
A subsidiary is controlled when ownership is: A. Above 10% B. Above 20% C. Above 50% D.
Below 50%
Answer: C Majority control implies subsidiary.
Q17
Consolidation adjustments eliminate: A. External transactions B. Intra-group balances C. Taxes
D. Salaries
Answer: B Internal group effects removed.
Q18
Investment in subsidiary is: A. Retained in consolidation B. Eliminated C. Doubled D. Ignored
Answer: B Removed to avoid duplication.
Q19
Retained earnings in consolidation belong to: A. Parent only B. Subsidiary only C. Group D.
Government
Answer: C Group retained earnings.
Q20
Joint ventures require: A. Full control B. Joint control C. No control D. Government control
Answer: B Shared control arrangement.
WITH COMPLETE SOLUTIONS A+ GRADED
Q1
What is goodwill in a business combination? A. Current assets minus liabilities B. Purchase price
minus net assets C. Net profit of subsidiary D. Total equity
Answer: B Goodwill = Consideration paid – Fair value of net identifiable assets (simplified
form).
Q2
Under IFRS 3, business combinations are accounted using: A. Cost method B. Equity method C.
Acquisition method D. Revaluation method
Answer: C IFRS 3 requires the acquisition method.
Q3
Non-controlling interest represents: A. Parent company ownership B. External shareholders in
subsidiary C. Government ownership D. Loan creditors
Answer: B NCI is the portion not owned by parent.
Q4
In consolidation, intra-group sales are: A. Added B. Ignored C. Eliminated D. Taxed
Answer: C They are eliminated to avoid double counting.
,Q5
Equity method is used for: A. Subsidiaries B. Associates C. Inventory valuation D. Cash flow
statements
Answer: B Used when significant influence exists.
Q6
Goodwill impairment is recognized when: A. Assets increase B. Recoverable amount < carrying
amount C. Profit increases D. Dividends are paid
Answer: B Impairment occurs when carrying value exceeds recoverable amount.
Q7
Which IFRS governs consolidated financial statements? A. IFRS 9 B. IFRS 10 C. IAS 2 D. IAS
16
Answer: B IFRS 10 covers consolidation.
Q8
Intra-group inventory profit is: A. Ignored B. Deferred C. Recorded twice D. Taxed immediately
Answer: B It is deferred until sold externally.
Q9
Functional currency is: A. Reporting currency only B. Currency of primary economic
environment C. USD only D. Euro only
Answer: B It reflects main operating environment.
Q10
,Exchange differences are recorded in: A. Equity only B. Profit or loss C. Cash flow statement D.
Notes only
Answer: B Usually in profit or loss under IAS 21.
Q11
Parent company control requires: A. 10% ownership B. 20% ownership C. Power over investee
D. Equal voting rights
Answer: C Control = power + returns + ability to affect returns.
Q12
Consolidation combines: A. Only liabilities B. Only assets C. Assets, liabilities, income,
expenses D. Only equity
Answer: C Full financial statement aggregation.
Q13
NCI can be measured at: A. Cost only B. Fair value or proportionate net assets C. Historical cost
only D. Market value only
Answer: B Two IFRS 3 options.
Q14
Unrealized profit arises from: A. External sales B. Intra-group transactions C. Bank loans D.
Depreciation
Answer: B Between group entities.
Q15
Associate ownership is typically: A. Below 20% B. 20%–50% C. Above 50% D. 100%
, Answer: B Indicates significant influence.
Q16
A subsidiary is controlled when ownership is: A. Above 10% B. Above 20% C. Above 50% D.
Below 50%
Answer: C Majority control implies subsidiary.
Q17
Consolidation adjustments eliminate: A. External transactions B. Intra-group balances C. Taxes
D. Salaries
Answer: B Internal group effects removed.
Q18
Investment in subsidiary is: A. Retained in consolidation B. Eliminated C. Doubled D. Ignored
Answer: B Removed to avoid duplication.
Q19
Retained earnings in consolidation belong to: A. Parent only B. Subsidiary only C. Group D.
Government
Answer: C Group retained earnings.
Q20
Joint ventures require: A. Full control B. Joint control C. No control D. Government control
Answer: B Shared control arrangement.
