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ADMS 2500 midterm 2.docx

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York University
Administrative Studies
ADMS 2500

York University AP/Adms 2500.03 Introduction to FinancialAccounting Midterm Examination – Test Form B th Time: 3.0 hours Winter 2010 March 5 , 2010 Questions: 50 Instructions: 1. Only the mark sense sheet will be collected - - you may keep this midterm examination paper. Mark your answers on it for later reference. 2. Record your name and student number and answer all questions on the computer mark sense sheet provided with an HB (soft lead) pencil. • 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 3. Calculators without alphanumeric programmable memories are the only aid allowed. The exam is three hours in length. Check that your exam contains 50 questions. Budget your time carefully. You should not spend more than 3.5 minutes per question, otherwise you will not finish the exam. 4. It is essential to transfer your answers to the grading sheet after each question in case the exam is interrupted by fire alarm and to double check your transfers. It is always a good idea to attempt the questions you deem easiest first as an interrupted exam may just mark your score based on questions attempted. • 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 seats in the last 15 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. 5. 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 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. You are reminded that cheating is a serious offense which can result in expulsion from university. 1. Which of the following is a liability? a) Allowance for Doubtful (Uncollectible) Accounts b) Bank overdraft c) Overpayment by a customer in paying his account balance d) Both (b) and (c) above e) None of the above 2. Which of the following accounts are increased by credits and decreased by debits? a) Purchase Returns & Allowances b) Allowance for Doubtful Accounts c) Retained Earnings d) Accumulated Depreciation e) All of the above 3. Axle Co. at December 31 has a credit balance of $30,000 in its Allowance for Doubtful Accounts account. It uses the “aging” method of determining its provision for doubtful accounts (bad debts). A review of its aged trial balance shows that an allowance of $30,000 is appropriate to properly allow for uncollectible accounts. The required adjusting entry at December 31 is: a) no adjusting entry is required. The current balance is appropriate b) would include a credit to an expense account of $30,000 c) would include a debit to an expense account of $30,000 d) would include a debit to an expense account of $60,000 e) would include a credit to an expense account of $60,000 A. The balance of Total Assets for Virtue Company is $500,000 on November 30. During November, the following took place: Sold $60,000 of inventory for cash Purchased a $100,000 machine for cash Increased accounts payable $50,000 by acquisitions of inventory on account Wrote off accounts receivable of $20,000 Total Assets for Virtue Company. on November 1 is: a) $500,000 b) $550,000 c) $450,000 d) $530,000 e) none of the above B. A Petty Cash Fund was established at $100. An examination of the contents of the strongbox shows $50 in currency and $50 in receipts. a) This could not occur without a violation of GAAP b) An adjusting journal entry would be required before a proper income statement could be constructed c) The $50 in receipts will be added to miscellaneous receipts (a revenue account) on the income statement d) The replenishment entry should not be made until there is no currency left in the box e) none of the above 6. Sales of $1000 are made by Acme Ltd. to Deuce Ltd. with sales terms of 2/10 net 30 and all the goods are returned by the customer within the discount period. Acme follows the “gross method “of recording sales and Deuce follows the net method of recording Purchases. Acme agrees to the return. a) The two journal entries by Acme and Deuce will be for different amounts. b) The two journal entries for Acme and Deuce will be for identical amounts. c) Acme will credit a contra account and reduce its receivable d) Deuce will debit a contra account and reduce its payable e) none of the above statements are correct 7. Which of the following statements about accruals and deferrals are correct? a) accruals represent expenses and revenues of the current period b) deferrals represent expenses and revenues of future periods c) accruals trigger cash flows in future periods d) deferrals represent cash flows that have already occurred e) all of the above are true 8. The order in which financial statements are prepared: a) does matter and the income statement must be first b) does matter and the balance sheet must be first c) does matter and the statement of retained earnings must be first d) does matter and the cash flow statement must be first e) does not matter 9. Deposits in transit shown on the company’s bank reconciliation for June: a) are shown as decreases to the bank balance in the bank reconciliation b) are shown as increases to the general ledger cash account in the bank reconciliation c) are not reconciling items on the June bank reconciliation d) are shown in both sections of the June reconciliation e) None of the above Use the following information to answer questions 10 to 14: The 123 Accounting Company sells accounting videos. The following information has been extracted from the records of 123 Accounting Co.: January 1 Beginning Inventory 60 units @ $10.00 each January 10 Bought 100 units @ $11.00 each January 15 Bought 100 units @ $13.00 each January 20 Sold 220 units @ $20.00 each January 25 Bought 40 units at $15.00 each This blank page is for your rough work. This blank page is for your rough work. 10. If 123 Accounting uses the FIFO cost flow assumption and the perpetual method for inventory, the gross profit for January, is a) $1,840 b) $1,760 c) $1,920 d) $1,620 e) none of the above 11. If 123 Accounting uses the LIFO cost flow assumption and the periodic method for inventory, the ending inventory for January, is a) $820 b) $1,120 c) $1,760 d) $1,840 e) none of the above 12. If 123 Accounting uses the weighted average method of inventory and the perpetual method then the average cost of each unit charged to cost of sales when the sale is made will be: a) $10 b) $10.63 c) $11.54 d) $13.27 e) none of the above 13. If 123 Accounting uses the weighted average method for inventory valuation and the periodic system then the unit cost charged to cost of sales when the sale is made would be: a) $10 b) $10.63 c) $11.54 d) $13.27 e) Some other amount 14. If prices are rising during the year (inflation) then 123 Accounting will show the highest net income under: a) FIFO b) LIFO c) Weighted Average (periodic) d) Weighted Average (perpetual) e) All methods will yield the same reported income -----------------------------End of 123 Accounting questions -------------------------------- 15. NSF cheques (not sufficient funds): a) are shown as additions to the bank balance in the bank reconciliation b) are shown as additions to the general ledger cash account in the bank reconciliation c) should be reclassified as Accounts Payable with an adjusting entry d) should be re-deposited in the bank as soon as received e) None of the above 16. Which of these transactions did not result in revenue being reported: a) Sold merchandise for cash b) Sold merchandise on account c) Collected account receivable d) All of the above result in revenue being reported e) None of a, b, or c result in revenue being reported 17. Which of these accounts is not an expense? a. Depreciation b. Sales salaries c. Dividends d. Postage costs e. All of the above are expenses 18. The account “Accumulated Depreciation” reflects depreciation: a. for the most current period only b. taken since acquisition of the asset c. still to be taken on the asset in future periods d. equal to the amount of revenue from that asset e. equal to the salvage value of the asset 19. Ricker Ltd. completed its first year of operations in 2009. The general ledger shows that it paid dividends of $50,000, and had revenues of $400,000. If the balance of Retained Earnings after adjustments was $70,000, then expenses in 2009 must have been: a. $350,000 b. $330,000 c. $280,000 d. None of the above 20. Beginning and ending Total Assets for the year were $25,000 and $32,000 respectively. At year end, Owner’s Equity was $20,000 and Liabilities were $4,000 larger than they were at the beginning of the year. If owner’s drawings exceeded owner’s investment made during this period, then what was Net Income or Net Loss for the year? a. $5,000 net loss b. $13,000 net income c. $9,000 net income d. $5,000 net income e. cannot be determined from the data provided 21. In recording transactions: a. The word debit means to increase and the word credit means to decrease b. Assets and expenses are debited for decreases c. Liabilities and revenue are debited for increases d. Debits should be done in black and credits in red e. All of the above are untrue 22. The main goal of corporations in Canada is: a. profitability b. solvency c. growth d. fiscal responsibility e. two of the choices above share equal status as the primary goal 23. In the context of financial accounting, articulation refers to: a. how well written (how articulate) the financial statements are b. that the financial statements are interconnected (numbers from one are necessary to complete another) c. the fact that the financial statements relate to a specific time frame d. the need for footnotes to make the financial statements complete and meaningful e. none of the above 24. Canadian GAAP as defined in this course: a. is an acronym standing for generally agreed on accounting procedures b. must be used by all public corporations c. stresses the central role of cash in commerce by requiring the cash paradigm d. must be used by all organizations and individuals preparing financial statements regardless of size e. none of the above 25. The individual who invented double entry bookkeeping (which is based on the balance sheet equation) is: a. Bertolli b. Ravioli c. Pacioli d. Bookoli e. None of the above 26. The Cash Flow statement: a. must be the first statement completed when preparing the financial statement b. suffers from the deficie
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