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COMMERCE 1AA3 Study Guide - Final Guide: Net Income, The May Department Stores Company, Operating ExpenseExam


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

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Last Name: _________________________
First Name: _________________________
STUDENT ID #: _____________________
COMM 2AA3
Version 1
Duration of Examination: 3 hours Emad Mohammad
McMaster University Final Examination December 12, 2006
Question Marks Points Earned
1 10 _________
2 20 _________
3 10 _________
4 16 _________
46 _________
INSTRUCTIONS:
1. This examination paper comprises 15 pages (including cover page), 60 multiple-choice
questions, each worth 0.9 points totalling 54 points, and 3 problems totalling 46 points.
You are responsible for ensuring that your copy of the question paper is complete. Bring
any discrepancy to the attention of the invigilator.
2. The 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.
3. Each question has only one correct answer. No correction factor will be applied to
incorrect answers.
4. On the question paper remember to fill in your name, student number and section
number.

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5. 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.

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Part I: Multiple Choice (60 questions * 0.90 points each = 54 points)
1.
To accurately determine inventory quantities, a company must
A)
determine ownership of goods.
B)
estimate if there is a large quantity to be counted.
C)
rely on the warehouse records.
D)
deduct freight in from net purchases.
2.
The accounts of a business before an adjusting entry is made to record an accrued
revenue reflect an
A)
overstated asset and an understated revenue.
B)
understated expense and an overstated revenue.
C)
understated asset and an understated revenue.
D)
understated liability and an overstated revenue.
3.
Lee wants to know if he will have to keep putting cash into companies after he purchases
them. Here are three companies Lee has identified as potential acquisitions along with
the information from the most recent cash flow statements. Which company is least
likely to need additional cash inflows from Lee in order to continue to operate over the
next several years?
Cash flow Line Items:
TimCo Inc.
JimCo Inc.
SimCo Inc.
Payments to vendors
$52,000
$178,000
$284,000
Purchases of long-term assets
$202,000
$68,000
$24,000
Cash collections from customers
$90,000
$164,000
$184,000
Sale of long-term assets
$4,000
None
None
Loan obtained during period
$20,000
None
$38,000
Dividends paid
$20,000
$20,000
None
Contributions from owners
$112,000
$122,000
$84,000
A)
B)
C)
D)
4.
For the issuer of ten-year bonds, the amount of amortization using the effective-interest
method would increase each year if the bonds were sold at a
Discount Premium
A)
No Yes
B)
No No
C)
Yes No
D)
Yes Yes
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