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Unformatted text preview: CONCORDIA UNIVERSITY FINANCIAL ACCOUNTING DEPARTMENT OF ACCOUNTANCY COMM 217 ALL SECTIONS FINAL EXAMINATION WINTER 2006 Introduction (READ THIS PAGE – IT CONTAINS IMPORTANT INFORMATION) 1. This examination consists of Five (5) Questions printed on nine (9) pages including this page. The last page of the exam shows present value tables . Make sure your copy of the exam is complete before starting. 2. Write all your answers (including answers to multiple-choice statements) in the lined examination answer booklet that has been provided to you separately. Only the answers in the lined examination booklet will be graded. You may answer the Questions in any order. 3. Your answers must be written in ink. 4. Read the Questions carefully and budget your time carefully. Show details of all calculations, except for Multiple-choice. Attempt all Questions. 5. This is a closed book examination; no reference to notes, etc. is allowed. However, a silent hand-held four-function calculator and one standard (not electronic) dictionary are permitted. 6. Invigilators will not answer questions , unless you think there is an error in the examination questionnaire . 7. When you have finished submit your exam booklet(s) and this questionnaire. Question Topic Marks 1 Multiple-choice. 15 2 Preparation and interpretation of the cash flow statement. 23 3 Calculation and interpretation of financial ratios. 24 4 Analysis of selected transactions, and general accounting theory. 27 5 Accounting for long-term debt. 11 Total 100 QUESTION (1) ( 15 marks) Multiple-choice Choose the best answer for each of the following. Write your answer only in the lined booklet that has been provided to you separately. You are not required to show calculations for this Question. 1. The manager of Fast Growing Company receives an annual bonus based on the company’s reported net income. What combination of the following accounting methods is the manager inclined to use in a period of rising prices? A. Straight-line amortization and LIFO cost. B. Accelerated amortization and LIFO cost. C. Straight-line amortization and FIFO cost. D. Accelerated amortization and FIFO cost. E. It does not matter which combination of methods is used because these methods do not affect cash from operations. 2. An understatement of the ending inventory in Year 1, if not corrected, will cause A. net income to be understated in Year 1 and overstated in Year 2. B. net income to be overstated in Year 1 and overstated in Year 2. C. net income to be overstated in Year 1 and correct in Year 2. D. net income to be overstated in Year 1 and understated in Year 2. 3. On December 15, 2005, Toby Company accepted delivery of merchandise that it purchased on credit. As of December 31, 2005, the company had neither recorded the transaction nor included the merchandise in its inventory because the seller's invoice had not been received....
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