Midterm Alternate Winter08

Midterm Alternate Winter08 - CONCORDIA UNIVERSITY...

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CONCORDIA UNIVERSITY FINANCIAL ACCOUNTING DEPARTMENT OF ACCOUNTANCY COMM 217 ALL SECTIONS ALTERNATE MID-TERM EXAMINATION March 2, 2008 Duration: 3 hours Instructions : 1. This examination paper consists of 8 pages including this page. Please make sure your paper has all pages before commencing to write. 2. Write all your answers (including answers to multiple choice statements) in the examination answer booklet. You may answer the questions in any order you prefer. Only the answers 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, silent hand-held (not graphical) calculator and one standard language (not electronic) dictionary is 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 answer booklets when you have finished. Question Topic Total Marks 1 Multiple choice 21 2 Merchandising transactions and receivables 14 3 Preparation of adjusting entries 15 4 Preparation of cash flow statement 20 5 Preparation of financial statements 30 Total 100
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Question 1 (21 marks; 38 minutes) Multiple choice For each of the following, choose the letter that corresponds to the best answer, and write the letter in your examination booklet, not on this examination paper . Each correct answer is worth 1.5 marks. 1. Which of the following statements is false ? a. Owners' equity is the residual interest in the organization's assets after deducting liabilities. b. Assets are probable future economic benefits owned by the entity as a result of past transactions. c. Liabilities are economic obligations or claims against the assets of an organization by outsiders. d. Assets should always be greater than the sum of liabilities and owners' equity. 2. If liabilities increase by $115,000 during a given period and shareholders' equity decreases by $25,000 during the same period, assets must a. decrease by $140,000. b. increase by $140,000. c. decrease by $90,000. d. increase by $90,000. e. increase by $115,000. 3. Selling inventory at a price in excess of its cost will cause a. no change in total assets as the decrease in inventory is offset by increases in other asset accounts. b. a change in total assets; however, the effect on total assets will be different depending on whether the sale was for cash or on account. c. an increase in total assets and an increase in total liabilities. d. an increase in total assets and an increase in shareholders' equity. 4. Chris Smart is the sole owner and manager of Smart Auto Repair Shop. In 2007, Chris purchased a new automobile for personal use and continued to use an old truck in the business. Which of the following fundamentals prevents Chris from recording the cost of the new automobile as an asset to the business? a.
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Midterm Alternate Winter08 - CONCORDIA UNIVERSITY...

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