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First midterm practice exam answers.pdf

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York University
Administrative Studies
ADMS 2500

York University AP/Adms 2500.03 Introduction to Financial Accounting Midterm Examination #1 – Test Form A Fall 2011 Time: 3 hours Questions: 33 Instructions: 1. Submit:  Only the pink mark sense sheet will be collected: you may keep this midterm examination paper. Mark your answers on it for reference 2. Mark Sense Sheet:  Record your name and student number and answer all questions on the computer mark sense sheet provided with an HB (soft lead) pencil. Bring several pencils in case one breaks. The computer will not recognize ink or hard lead .encils  Test Form is 'A' and Code is your Section (in the.left column)  Fill in the bubbles for your name and student number in pencil (your phone number is not required). Leave the last column of the student number.BLANK  If you change an answer, use a high quality eraser to completely remove the previous mark. If the computer senses two answers to a question, only the first scanned will be recognized. 3. Exam Aids:  Only calculators without alphanumeric programmable memories are allowed. It is strongly suggested you bring a couple of cheap 4 function computers to the exam in case one fails. Be prepared to be challenged by invigilators if you bring a “fancy” calculator.  Compact foreign language/English dictionaries may be used. However, these will be examined by invigilators. If there are any loose pages or handwriting in the dictionary, it will be seized and you will be charged with academic dishonesty. Electronic dictionaries are banned. 4. Exam Strategy:  Careful budgeting of time on an accounting exam is essential. Bring a watch and check your progress regularly. Poor time management is the most common reason for poor exam performance in accounting.  It is always a good idea to attempt the questions you deem easiest first. In an interrupted exam that is not restarted, your exam will be scored based on questions attempted.  It is essential to transfer your answers to the grading sheet after each question i n case the exam is interrupted by fire alarm.  The last ten minutes of an exam should be devoted to double checking your transfers. What you submit is what is graded. If you have not transferred your answesense sheet at the end of the exam, t he invigilator will not wait. Your answill be seized and it will be graded based on whatever questions have choicfilled in.  Remember there is no penalty for guessing on a multiple choice computer graded exam. Submit a choice for every question. Also note that in 2500, choice (E) None of the above does indeed represent a frequent correct choice to questions. 1 5. Exam room regulations:  All personal belongings either on the floor or at the front of the exam room. All items on your desk will be examined by invigilators  Bring appropriate ID as proof of registration. You will be required to sign in and show appropriate documentation. Students without ID will be allowed to write the exam, but will be photographed and asked to submit registration and photo ID to the School of Administrthe next daNo student may leave the exam in the first hour. No student may start the exam after an hour. Students requiring restroom visits must be accompanied by an invigilator.  The proctors will announce when there are 15 minutes remaining and any answers not transferred should be recorded at this time. No one is to leave their seat in the last 10 minutes.  When time is called, the proctors will go down the rows collecting your answer sheets and this exam paper. They will not wait and they will not accept your sheet once they have passed. Any violation of this protocol will result in a grade of zero recorded for the exam. 6. Fire Alarms  A frequent occurrence in York exams. In the event of a fire alarm, you are to leave your exam and answer sheet face down on your desk and immediately proceed outside with coats and all personal belongings. Print your surname on the back of the exam so you know which seat to return to. An invigilator will lead the group outside to a place of safety. There is to be no talking during the evacuation or outside. Most rooms are cleared so that exams can recommence, within 30 minutes of the alarm. You will be told after this time whether to reenter the room and recommence the exam or to go home. 7. Academic Dishonesty  You are reminded that cheating is a serious offense which can result in expulsion from university  Exams at York are held in regular classrooms, which may involve tiered seating. Consequently, neck exercises are not allowed during exams. First instanceyes has theng student relocated to the front of the room. Second instance results in seizure of paper. 8. Special Instructions:  This exam is a case, which then has a series of questions based on that case. While an attempt has been to minimize the impact of the impact of carry -forward errors in question design, some questions of necessity are related to multiple computations or previous questions, so an error potentially can have multi -mark impact. However, such questions are kept to an absolute minimum. Most questions stand alone.  In 2500, invigilators answer no questions of interpretation.  Accounting exams contain so many numbers that some times typos creep into the exam questions despite proofreading. If you notice what appears to be a typo ask the nearThey will pass along questions regarding possible errors/ typos/missing data to the head invigilator. If there is a typo and it is caught early during the exam, a correction will be announced and placed on the front board. Typos caught late in the exam will just result in that particular question not being scored by the computer. If you believe a question contains an error and do not receive a response during the exam then this is an issue for you to send an email to your instructor post exam. 2 The Godfather Michael Corleone was a student at York University enrolled in the BAS degree and planning to major in accounting. Michael was an idealist and wanted to change the world for the better. He had originally thought about becoming a corporate executive and becoming rich enough like Bill Gates to set up a charitable foundation that could make a real impact. However, a summer job at Walmart threw cold water on that dream. It was very clear that the road to becoming president of a company was very uncertain and the road to becoming a billionaire was about as certain as the road to winning a lottery. Michael next thought about politics as the route to effect real change. Maybe he would get a law degree and run for public office. As Prime Minister of Canada he could have an impact. However, the more he studied the news the more he realized that although most people first entered public office with the same idealism as himself; years as a backbencher and toeing the party line to get a cabinet post and then courting lobbyists and special interest groups to get power always seemed to lead to corruption and loss of idealism. He thought about medical school and finding a cure for cancer was enough of a realist to know that his poorest grades were in science and he was not cut out for that field. Michael was indeed discouraged. This discouragement turned into hope one sunny afternoon when he made his annual visit to see his godfather Vito Don Corleone. Vito Corleone was over 80 years old and was the patriach of the Corleone family. He had made a tidy sum importing olive oil from Europe before branching into other interests (none of which had ever been revealed to Michael). Vito was now retired and spent most of his days rocking on the veranda and tending his grape vines in the garden. Vito was actually Michael’s grandfather but long ago when the Mario Puzzo novel of the same name was popular the family affectionately gave him the name “godfather”. It was indeed a remarkable coincidence that he had the same name as the central protagonist in the book, both made their start in the olive oil business and both spent their waning years tending vines. One sunny afternoon the two of them sat rocking on the porch veranda sipping a fine pinot noir while the sun played tag with the fluffy white clouds. It was a hot day yet a gentle breeze made the ambiance delightful. “Godfather, I don’t know what to do. I want to become important enough to change the world but all the doors seem closed. How should I plan my life to become someone who can make a difference?’ Vito Corleone seldom spoke without reflection and refilling his glass. For some time he stared at his grandson then set his glass down and took him by the shoulder. “Michael, Michael Michael….I am proud you want to do something with your life. I agree the paths of business and politics are rocky and will corrupt your ideals. I will tell you a way to change the world and make it a better world” Vito leaned over and whispered a single word into Michael’s ear…… “accounting” 3 Michael was so surprised he spilled the red wine down the front of his crisp white polyester- cotton Georgio Armani suit. “ What do you mean Godfather? How is accounting going to change the world?” The old man sighed and replied “ Look about you my son….the housing bubble, the banking scandal, the euro crisis. If you look behind the headlines you will see that almost all of the economic disasters that face the world today are caused by accounting failures….failures to keep good books and failures to disclose the real events. What we need more than anything is an overhaul in the way records are kept. You can become a professional accountant with certainty. You can be a leader in your profession with some certainty. You can renounce the search for personal wealth and volunteer your time to the standard setting process and there is a reasonable expectation you could one day be president of the international accounting federation. From that post you could initiate change that could shake the foundations of the corporate world. My son it is as a simple accountant you will achieve your dream” It was as if a great weight had fallen from his shoulders and Michael was seeing the bees flitting about the garden for the first time. “You are indeed right Godfather. Thank you” With that he kissed his grandfather’s hand said farewell and rushed off to enroll in the School of Administrative Studies program. It was now some months later and Michael was again sitting on his grandfather’s veranda. This time he had the foresight to ask for white wine and wore a sweat shirt from Old Navy “Godfather I am discouraged. I am taking the introductory financial accounting course and can’t seem to get my head around it. The first midterm is approaching and I am worried about even passing. Getting an A just seems impossible. I am so discouraged” The old man asked him a few questions about his study habits and sighed. “Your problem is a simple one my son. You are just going through the motions. Your study consists of memorization not understanding. Learning only comes through understanding” Michael looked at him with tears welling in his eyes. “Show me the right way grandfather. I will follow your advice” Vito replied. “Real life is not predictable. It is not a script written in advance. There are deviations at every turn. What you must do is to work on accounting problems that are not just blatant copies of classroom exercises. I have never told you this and I have always told the family to never ask me 4 about my business but the other interests outside the olive oil importing business I worked as supply teacher in accounting and there I learned the secret of learning. Let me give you an example. The standard accounting question gives you a transaction and asks for the journal entry. If you instead looked at a question that gives the journal entry or part of it and asks what was the transaction, or half of a journal entry and what was the other half, this accelerates learning. Let me give you some examples Michael. I still have my teaching notes from many years ago and they are right here in this old satchel. Let me read some questions to you” (1) If a journal entry had a debit to Cost of Goods Sold what would be the most likely credit if a company used a periodic inventory system and a physical count had just been performed: a. Sales b. Inventory c. Cash d. Freight In e. None of the above (2) If there was a debit to Accounts receivable the most likely credit is to: a. Cash b. Bad debt expense c. Sales d. Owners equity e. None of the above (3) If there was a credit to Accounts Receivable then the most likely debit is to: a. Cash
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