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2006_-summer-test2

# 2006_-summer-test2 - University of Toronto Joseph L Rotman...

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University of Toronto Joseph L. Rotman School of Management June 15, 2006 MGT120 H1F Financial Accounting I Duration: 1 hour 50 minutes Aids allowed: Non-programmable calculator Instructions: Please print your name and student number in the spaces provided below. There are ten multiple choice questions and four problems. Please use the space provided below for your answer to the multiple choice questions. You must use a pen. WHITEOUT is not allowed. Clearly show all computations in order to obtain full marks for the problems. Tests written in pencil will not be considered for remarking. If you are requesting a remark, include a note telling specifically why you feel you deserve more marks. The entire paper will be remarked, marks may go up, down or remain the same. ------------------------------------------------ --------------------------------------------- Student name (LAST NAME FIRST) Student number Marks: Answers to the Multiple Choice Questions Part A (10 marks) 1.______ 6.______ Part B (15 marks) 2.______ 7.______ Part C ( 5 marks) 3.______ 8.______ Part D ( 6 marks) 4. ______ 9. ______ Part E ( 9 marks) 5.______ 10.______ Total (45 marks)

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Part A (10 marks) 1. Rant Enterprises Ltd. purchases a truck for \$32,000 on July 1, 2004. The truck has an estimated salvage value of \$2,000, and estimated useful life of five years, and an estimated total mileage of 300,000 km. If 50,000km are driven in 2004, what amount of amortization expense would Rant record at December 31, 2004, assuming it uses the units-of-activity method? a) \$2,500 b) \$3,000 c) \$5,000 d) \$5,333 2. Which of these would cause the inventory turnover ratio to increase the most? a) Increasing the amount of inventory on hand. b) Keeping the amount of inventory on hand constant but increasing sales. c) Keeping the amount of inventory on hand constant but decreasing sales. d) Decreasing the amount of inventory on hand and increasing sales. 3. Lolla Ltd’s ending inventory is understated by \$4,000. The effects of this error on the current year’s cost of good sold and net earnings, respectively are: a) Understated and overstated b) Overstated and understated c) Overstated and overstated d) Understated and understated 4. A company would minimize its amortization expense in the first year of owning an asset if
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2006_-summer-test2 - University of Toronto Joseph L Rotman...

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