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ECON 3A- INTRO ACCOUNTING, SPRING 2005 MIDTERM #1 Name: ________________________ Perm #: ___________________ Date: __________ ID: A 1 S05 MT1 True/False Indicate whether the sentence or statement is true or false- MARK ON YOUR SCANTRON- A FOR TRUE AND B FOR FALSE. ____ 1. In order to qualify as an S-Corporation, a business entity shall have less than 150 employees. ____ 2. Borrowing and repayment of debt, and buying and selling an enterprises own stock are examples of financing activities. ____ 3. While the balance sheet presents a company’s financial position as of a specified date, the income statement presents the results of their operations for a specified period of time. Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. CONTINUE TO RECORD YOUR ANSWERS ON YOUR SCANTRON. ____ 4. The activities of a business enterprise are separated into three categories. These three categories are listed as the three components of the statement of cash flows. They include all but: a. Accruing c. Investing b. Operating d. Financing ____ 5. Information that is material means that an error or alternative method of handling a transaction a. would possibly affect the judgment of someone relying on the financial statements. b. might cause a company to understate its earnings for the accounting period. c. would not affect the decisions of users. d. could increase the profitability of a company. ____ 6. Which of the following categories on a statement of cash flows is used to report the cash flow effects of buying and selling long-term assets? ____ 7. XYZ, Inc. paid $12,000 on January 1, 2004 for an insurance policy covering the period from January 1 through December 31, 2004. The following amounts should be reflected on their balance sheet as of July 31, 2004 and as an expense on the income statement for the 7 months ended July 31, 2004, respectively: ____ 8. The financial statement which reports changes in all components of stockholders' equity is the
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