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btv1D3 - ECON 3A-FALL 2007 MIDTERM#2 Name PERM ANSWER...

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ECON 3A---FALL 2007 MIDTERM #2 Name: _________________________________ PERM #: _______________________ ANSWER QUESTIONS #1-25 ON GREEN SCANTRON AND THE REST IN THE SPACE PROVIDED-PLEASE. 1. Gross profit equals the difference between A) net sales revenues and operating expenses. B) net income and operating expenses. C) net sales revenues and cost of goods sold plus operating expenses. D) net sales revenues and cost of goods sold. 2. Goods purchased for future use in the business, such as supplies, are called 3. The balance in the prepaid rent account before adjustment at the end of the year is $9,000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is 4. The revenue recognition principle dictates that revenue should be recognized in the accounting records 5. Accounts often need to be adjusted because A) many transactions affect more than one time period. B) management can't decide what they want to report. C) there are never enough accounts to record all the transactions. D) there are always errors made in recording transactions. 6. Two categories of expenses in merchandising companies are 7. One of the accounting concepts upon which adjustments for prepayments and accruals Version 1 Page 1
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