3am2w05va

3am2w05va - Econ. 3A Midterm #2 Winter 2005 Name _Solution_...

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Version A Econ. 3A Midterm #2 Winter 2005 Name __Solution _______ Intial _A ___ Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. PLACE YOUR ANSWERS ON A SCANTRON. ____ 1. Companies like Burger King sell franchises to individuals as well as operate company-owned stores. When franchises are sold to individuals, a franchise fee is charged for assistance provided in the startup phase, typically a period of 30 to 60 days. Assume there is an up-front franchise fee of $340,000 per store, and the franchise license lasts for 10 years. When should Burger King recognize revenue from the franchise fee of $340,000? a. Over the period during which Burger King provides the services for which the franchise fee is paid b. When the franchise is awarded c. At the end of the 10-year term d. When the franchise operator goes out of business ____ 2. Which one of the following adjusting entries will increase assets? a. Interest incurred during the period but not yet paid is accrued. b. The use of supplies is recorded. c. Depreciation for the period is recorded. d. Rent revenue is recorded for amounts owed by a tenant but not yet paid. ____ 3. One effect one the accounting equation of lending money is a. liabilities decrease. b. liabilities increase. c. total assets remain the same. d. owners' equity decreases. ____ 4. A credit means a. the event is favorable. b. the right hand side of an account. c. always increase the account. d. always decrease the account. e. the event is unfavorable. Exhibit 3-2 Recall that the basic accounting records include accounts, journals, ledgers, a chart of accounts, and a trial balance. Identify the correct term for each statement in the following set of questions. ____ 5. Refer to Exhibit 3-2. The record used to accumulate monetary information for each individual asset, liability, owners' equity, revenue, and expense item. a. General journal b. Account c. Chart of accounts d. Trial balance e. General ledger
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Version A ____ 6. Refer to Exhibit 3-2. A list of all accounts and their balances which is used to prove the equality of debits and credits as of a specific date. a. Account b. General journal c. Chart of accounts d. Trial balance e. General ledger ____ 7. When the amount for a debit entry in a journal is transferred to a specific account in the general ledger, it must be recorded a. in sum only, without regard to debit or credit, since the general ledger accounts do not have spaces for debit and credit entries. b. as a debit to that account in the general ledger. c. cannot be determined without further information. d. as a credit to that account in the general ledger. ____ 8.
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3am2w05va - Econ. 3A Midterm #2 Winter 2005 Name _Solution_...

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