Midterm - Mid-term Examination ADM 2340 Financial...

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Mid-term Examination ADM 2340 Financial Accounting QUESTION NO. 1 - 50 marks Circle the best answer for each of the following multiple-choice questions directly onto your examination sheet. Only one answer will be accepted for each question. There is no penalty for guessing. No account will be taken of any explanations provided. Questions 1 to 20 are each worth one mark. 1. Recording an asset at what you paid for it instead of what you hope to be able to sell it for is an example of which characteristic of accounting information? a. Relevance b. Timeliness c. Neutrality d. Consistency 2. The use of the same accounting method by a company over time is an example of: a. Understandability b. Verifiability c. Consistency d. Neutrality 3. Which of the following represents the cost of goods sold? a. Beginning inventory + ending inventory – purchases b. Beginning inventory + purchases – ending inventory c. Purchases + ending inventory – beginning inventory d. Purchases – beginning inventory – ending inventory 4. Which of the following is a revenue recognition criterion? a. Recorded revenues and expenses are reliable. b. Recorded revenues and expenses are probable. c. There is reasonable assurance that recorded revenues and expenses will ultimately be received or paid. d. There is a high probability that recorded revenues and expenses will result in related cash flows. 5. At the end of the accounting period, the recording of interest expense that has not been paid yet on a loan outstanding during the period is an example of which of the following accounting principles? a. Matching concept b. Revenue recognition c. Historical cost d. Cash basis of accounting Note: I suggest both a. and b. are correct. Expenses are matched with revenue duly recognized. The Hoskin text does roll this into “revenue recognition”, but in my lectures I have emphasized matching expenses with revenue so I will have to accept both a. and b. as correct.
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6. Under GAAP, equipment is valued at a. historical cost b. market value c. current replacement cost d. inflation adjusted historical cost 7. Which of the following sequences concerning the accounting cycle is correct? a. Journalize, post, adjusting entries, financial statements b. Transaction analysis, trial balance, post, adjusted trial balance c. Post, adjusting entries, closing entries, financial statements d. Adjusting entries, closing entries, adjusted trial balance, financial statements 8. Which of the following accounts normally has a credit balance? 3 a. Accumulated amortization b. Accounts receivable c. Dividends declared d. Rent expense 9. The sale of merchandise to a customer partly for cash and partly on account would require which of the following entries? a. Dr. Accounts receivable, Dr. Cash, Cr. Sales revenue
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Midterm - Mid-term Examination ADM 2340 Financial...

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