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CONCORDIA UNIVERSITY FINANCIAL ACCOUNTING DEPARTMENT OF ACCOUNTANCY COMM 217 ALL SECTIONS FINAL EXAMINATION Fall 2008 Duration: 3 hours Instructions (very important) : 1. This examination paper consists of 10 pages including this page and the present value tables. Please make sure your copy has all pages before commencing to write. 2. You must answer the multiple choice questions by using the computer input sheet ; darken the letter you choose in pencil on the computer input sheet. Write all your answers to the other questions in the examination answer booklet . You may answer the questions in any order you prefer. Only the answers on the computer input sheet and in the examination booklet will be graded. 3. Read the questions carefully and budget your time wisely. Show all calculations. 4. This is a closed book examination. However, a silent hand-held (not graphical) calculator and one standard language (not electronic) dictionary are permitted. The examination should be answered in ink. 5. Invigilators will not answer questions (unless you think there is an error in the question). 6. Return the exam along with the computer input sheet and answer booklets when you have finished. Question Topic Total Marks 1 Multiple Choice 21 2 Accounting for Inventory 20 3 Accounting for Long-term Assets 16 4 Accounting for Liabilities 21 5 Analysis of Financial Statements 22 Total 100
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2 Question 1 (21 marks; 38 minutes) Multiple choice For each of the following, answer on the computer input sheet , not on this examination paper or booklet . Each correct answer is worth 1.5 marks. Make sure that you use a pencil. 1. Under the allowance method for doubtful accounts, writing off an uncollectible account a. affects only income statement accounts. b. affects both balance sheet and income statement accounts. c. affects only balance sheet accounts. d. is not an acceptable practice. 2. Which of the following statements is correct if a perpetual inventory system is used? a. There is no need for a year-end physical count. b. Increases in inventory resulting from purchases are debited to the Purchases account. c. Accounting records continuously disclose the cost of inventory. d. The account Purchase Returns and Allowances is credited when goods are returned to vendors. 3. Provo Co. buys a piece of equipment with a selling price of $9,000. The dealer grants the company a reduction of 15% on the list price. The company made the following additional expenditures: sales taxes that are not refundable, $450; insurance on the equipment for one year, $250; and a delivery charge, $300. At what cost should Provo record the equipment on its books? a. $9,750 b. $9,000 c. $8,400 d. $8,650 4. Luther Inc. has the following shares outstanding during 2007 and 2008: 1,000 shares of $4, no par value, cumulative preferred shares and 50,000 shares of no par value common shares. Dividends were not declared in 2007. In 2008, $12,000 of dividends are declared and paid. What is the amount of dividends received by the preferred shareholders in 2008?
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