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Prelim_1_Spring_2006_Final_Exam

Prelim_1_Spring_2006_Final_Exam - :Spring2006...

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HA 121 Financial Accounting Prelim 1: Spring 2006 Student name: _________________________________ID number_______________________________ True and False section: each question = 1 point. 1. Unearned rent revenue is an example of a liability account that will usually not be satisfied by payment of cash but rather by allowing the tenant to occupy the premises for which they have prepaid. True False 2. Revenue collected in advance of being earned represents a liability until it is earned. True False 3. Net income measured under the accrual basis will equal the change in cash during the accounting period. True False 4. The statement of cash flows is designed to explain the causes of changes in the cash account during the period that resulted from the inflows and outflows of cash. True False 5. Papa John's net profit margin was 4.85% in 2001 and 4.95% in 2002. This signals they were more efficient in the management of revenues and expenses in 2002. True False 1
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6. The users of accounting information are decision makers such as investors, creditors, and analysis experts who provide financial advice. True False 7. When a company uses cash to purchase equipment, cash flows out are reported as an investing activity on the Statement of Cash Flows.. True False 8. A form 10-Q is a brief unaudited report for a quarter normally containing a summary income statement and balance sheet. True False 9. Accounting is a system that collects and processes financial information about an organization and reports that information to decision makers. True False 10. If it is determined that Enron Corporation's public auditors, Arthur Andersen, knew or should have discovered through their audit, Enron's failure to report liabilities, then the auditors will be subject to financial claims of those creditors and stockholders who suffered losses. True False 11. If a company has liabilities of $100,000 and their stockholders' equity is $70,000, then total assets must be $30,000. True False 12. The objective of transaction analysis is to determine the economic effects of each transaction in terms of the accounting model. True False
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13. The division of business activities into a series of equal time periods for accounting purposes is known as the time period assumption. True False 14. An example of deferred revenue would be cash collected by Papa John's from franchisees where Papa John's has not yet provided the franchisee promised with the services such as site selection and restaurant design. True False 15. The word credit means to record an entry on the right side of an account. True False 3
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Multiple Choice Section 2 points each:
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