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Midterm

ADMS 2500 Study Guide - Midterm Guide: Bank Reconciliation, Cash Flow Statement, Basis Of Accounting


Department
Administrative Studies
Course Code
ADMS 2500
Professor
Brian Gaber
Study Guide
Midterm

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York University AP/Adms 2500.03
Introduction to Financial Accounting
Midterm Examination Test Form B
Time: 3.0 hours Winter 2010 March 5th, 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.

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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

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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
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