Prelim1_Fall07_Prelim__EXAM1-1 - Question Sheet HA121...

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Question Sheet HA121 Preliminary Exam Fall 2007 Name: __________________________________ CUID: _____________________ TRUE / FALSE QUESTIONS Directions: Answer True or False to Questions 1 through 15 on the attached answer sheet. 1. Accounting is a system that collects and processes financial information about an organization and reports that information to decision makers. 2. A balance sheet should be dated for a period (such as "For the year ended December 31, 20A"), whereas an income statement should be dated at a point in time (such as "December 31, 20A"). 3. The payment of a cash dividend to stockholders reduces stockholders' equity. 4. One feature of the statement of cash flows is to show the change in cash for the period. 5. The amount of cash paid by a business for office rent would be reported on the statement of cash flows as a financing activity. 6. A primary objective of accounting is to provide the fair market value of assets on the balance sheet. 7. Accrual basis accounting records revenues when earned and expenses when incurred, regardless of when the related cash is received or paid. 8. Revenues are recognized when an exchange takes place, the earnings process is complete or nearly complete, and collection is probable. 9. The matching principle states that expenses are recognized when incurred in earning revenue. 10. The primary purpose of a trial balance is to determine the equality of debits and credits in the ledger accounts (or T-accounts). Page 1
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Question Sheet HA121 Preliminary Exam Fall 2007 Name: __________________________________ CUID: _____________________ 11.At the end of the accounting period, wages earned by employees but not yet recorded nor paid amounted to $400; therefore, the adjusting entry should be: Debit--Wages payable; Credit-- Wages expense. 12. The three sections of the statement of cash flows are operating, investing, and financing activities. 13. Closing entries are required by generally accepted accounting principles, while adjusting entries are optional. 14. The users of accounting information are decision makers such as investors, creditors, and analysis experts who provide financial advice. 15. We calculate return on equity (ROE) by dividing operating income by average stockholders' equity. Page 2
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Question Sheet HA121 Preliminary Exam Fall 2007 Name: __________________________________ CUID: _____________________ MULTIPLE CHOICE QUESTIONS Directions: Answer multiple choice questions 16 through 40 on the attached answer sheet 16. The BAT Corporation had 20B revenues of $100,000, expenses of $75,000, and an income tax rate of 20 percent. Net income after taxes would be A) $25,000. B) $20,000. C) $15,000. D) $ 5,000. E)
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Prelim1_Fall07_Prelim__EXAM1-1 - Question Sheet HA121...

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