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Midterm

COMMERCE 1AA3 Study Guide - Midterm Guide: Matching Principle, Retained Earnings, The May Department Stores CompanyExam


Department
Commerce
Course Code
COMMERCE 1AA3
Professor
All
Study Guide
Midterm

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Version 1 Page 1
Last Name: _________________________
First Name: _________________________
STUDENT ID #: ___________________
COMM 2AA3
Version 1
Duration of Examination: 2 hours Emad Mohammad and Paul Ianni
McMaster University Midterm Examination November 9, 2012
Question Marks Points Earned
1 20 _________
2 07 _________
3 04 _________
4 09 _________
40 _________

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Version 1 Page 2
INSTRUCTIONS:
This examination paper comprises 20 pages (including cover page), 10 true/false questions, 1.0
point each, 25 multiple-choice questions, 2 points each, and 4 problems totaling 40 points. You are
responsible for ensuring that your copy of the question paper is complete. Bring any discrepancy
to the attention of the invigilator.
The true/false and multiple-choice questions are to be answered on the computer answer sheet
provided, and the problem questions are to be answered on the examination paper and in the
designated spaces.
Each question has only one correct answer. No correction factor will be applied to incorrect
answers.
On the question paper remember to fill in your name, student number and section number.
Only the McMaster Standard Calculator (Casio FX 991) may be used.
The special scanner, which scans the sheets, senses the shaded areas by their non-reflection of
light. A heavy mark must be made, completely filling the circular bubble, with an HB pencil.
Marks made with a pen or felt-tip marker will NOT be sensed. Erasures must be thorough or the
scanner may still sense a mark. Do NOT use correction fluid on sheets. DO NOT PUT ANY
OTHER MARKS OR WRITING ON THE SHEET, INCLUDING THE MARGINS.
0Print your name, student number, course name, section number, and the date in the space
provided at the top of side 1 of the form. Then the sheet must be signed in the space marked
SIGNATURE.
Mark your student number in the space provided on sheet Side 1 and fill in the corresponding
bubbles underneath.
Mark only ONE choice from the alternatives (A, B, C, D, and E) provided for each question. The
question number is to the left of the bubbles. Make sure that the number of the question on the
scan sheet is the same as the question number on the test paper.
Pay particular attention to the Marking Directions on the form
Begin answering questions using the first set of bubbles, marked “1”.

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Version 1 Page 3
Part I: True/False (10 questions x 1 point each = 10 points)
For each of the following questions, choose the best answer then darken the identifying letter
to the corresponding number in the answer sheet.
1.
In the case of a net loss, the cash inflow from operating activities will be negative.
A)
True
B)
False
2.
Managers must consider the cost of debt and the return on potential investments when
deciding whether to take advantage of purchase discounts.
A)
True
B)
False
3.
Companies may not, under any circumstance, use the direct write-off method to account
for bad debt expense.
A)
True
B)
False
4.
Cash paid to suppliers is accrual based cost of goods sold plus the increase in inventory
minus the increase in accounts payable for the year.
A)
True
B)
False
5.
Under Indirect Method, Depreciation expense is added to net income because it
represents a "flow" of cash during the current period.
A)
True
B)
False
6.
Sale of an asset and issuance of long-term debt will each cause an outflow of cash.
A)
True
B)
False
7.
A change in the balance of any non-current account causes a change in cash flows from
investing or financing activities.
A)
True
B)
False
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