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CONCORDIA UNIVERSITY FINANCIAL ACCOUNTING DEPARTMENT OF ACCOUNTANCY COMM 217 ALL SECTIONS MID-TERM EXAMINATION Fall 2008 Duration: 3 hours Instructions (very important) : 1. This examination paper consists of 7 pages including this page. Please make sure your paper 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. 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 Preparation of journal entries 15 3 Preparation of journal entries and financial statements 32 4 Accounting for Receivables and Bad Debts 13 5 Preparation of cash flow statement 19 Total 100
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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. If liabilities increase by $115,000 during a given period and shareholders' equity decreases by $25,000 during the same period, assets must a. increase by $140,000. b. decrease by $90,000. c. increase by $90,000. d. increase by $115,000. 2. The continuity assumption asserts that a. expenses should be matched with revenues. b. revenues should be matched with expenses. c. the life of a business is deemed to be indefinite, unless specific facts suggest otherwise. d. the personal assets of shareholders are not included in the assets of the business that they own. 3. Which of the following statements best describes the matching principle? a. Total assets should equal total liabilities and owners’ equity. b. Revenues should be recognized when they are earned and realized. c. Revenue and the expenses that were incurred to earn that revenue should be reported in the same accounting period. d. Debits should always be equal to credits. 4. 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.
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