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Midterm

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Department
Administrative Studies
Course
ADMS 2500
Professor
Brian Gaber
Semester
Summer

Description
York University .. Ak/Adms 2500.03 Introduction to Financial Accounting Midterm Examination Test Form A Time: 3.0 hours 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' 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 programmable memories are the only aid allowed. 4. The exam is three hours in length. Check that your exam contains 50 questions. 5. It is prudent practice to transfer your answers to the grading sheet after each question, and to proof your transfers. 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. 6. You are reminded that cheating is a serious offense which can result in expulsion from university. 1. When we say that the financial statements articulate, this necessarily implies that: a) a) The grand total from the Balance Sheet is an input into the Income Statement b) b) The grand total from the Statement of Owners Equity is an input into the Cash Flow Statement c) c) The grand total from the Cash Flow Statement is an input into the Statement of Owners Equity d) d) All of the above ( ie choices a, b and c ) are correct e) e) None of choices a, b and c are correct 2. Which of the following is a liability? a) a) Allowance for Doubtful (Uncollectible) Accounts b) b) Bank overdraft c) c) Overpayment by a customer in paying his account balance d) d) Both (b) and (c) above e) e) None of the above 3. Which of the following accounts are increased by credits and decreased by debits? a) a) Purchase Discounts & Allowances b) b) Allowance for Doubtful Accounts c) c) Retained Earnings d) d) Accumulated Depreciation e) e) None of the above Several of the above 4. Which of these statements is correct? a) a) The normal balances of the ledger accounts cannot be demonstrated in the trial balance until after the adjustments are posted. b) b) Debits are always recorded on the left side of expense accounts, but on the right side of revenue accounts c) c) The total of the subsidiary ledger for receivables must always agree to the balance of the receivables control account unless there are uncollectible accounts. d) d) Account balances can be debit or credit but not positive or negative (no negative numbers in accounting) e) e) None of the above are correct statements Use the following information for Questions 5 7 According to its website (www.Glowlite.com), the Glowlite Company was founded in 2004 and sells light fixtures. The Report on Business in the Financial Post reported the following announcement from the company: Glowlites fiscal third-quarter results for 2008 are very disappointing due to major losses in its investment portfolio. The company reported a loss of $10,000,000 for this quarter ended October 31st on sales of $25,000,000. Combined sales for the first three quarters are $40,000,000. Comparable quarterly results for the same period last year are profits of $20,000,000 and $80,000,000. Despite the loss for the quarter, sales are actually 10% higher than the comparable quarter last year and sales for the three quarters are 30% higher. Gross profit percentage has stayed consistent at 25% in all quarters. The company released its quarterly financial statements on November 1 5. Based on the information given, Glowlitess year-end is most likely a) a) October 31 b) b) November 30 c) c) December 31 d) d) January 31 e) e) Cannot be ascertained from the given data 6. Based on the information given, GlowlitesSales for the third quarter 2007 are: a) a) $20,000,000. b) b) $18,181,818 c) c) $22,000,000 d) d) not determinable from the information provided e) e) is determinable, but is not one of the above choices ( 25M/1.1) 7. Based on the information given for Glowlite cost of goods sold is : a) a) $18,000,000 for the third quarter 2008 b) b) $22,450,000 for the third quarter 2008 c) c) A higher amount than for the third quarter 2007 ( because sales lower in 2007 and relationship constant) d) d) A lower amount than for the third quarter 2007 e) e) Cannot be ascertained from the information provided --------------------------------------- end of Glowlites questions ---------------------------------- 8. ABC Co. at December 31 has a credit balance of $20,000 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 $20,000 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 $20,000 c) would include a debit to an expense account of $20,000 d) would include a debit to an expense account of $40,000 e) would include a credit to an expense account of $40,000 9. Wow Corporations Retained Earnings decreased by $300,000 during the year. Also during the year, dividends were paid to shareholders. The opening balance of Retained Earnings for the period was $500,000. Wow Corporations net income for the year was: a) a) $300,000 b) b) $100,000 c) c) $200,000 d) d) not determinable from the information provided (2 unknowns in the equation) e) e) none of the above 10. Using the following information: Category 2006 2007
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