Sample Quizzes - Page 1 of 5 ACCOUNTING & MANAGEMENT...

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FIRST EXAMINATION PLEASE NOTE: ALTHOUGH THIS WAS THE FIRST EXAMINATION IN AUTUMN 2001, ITS OVERALL LEVEL OF DIFFICULTY (OUT OF A MAXIMUM POSSIBLE SCORE OF 40 CORRECT ANSWERS, THE AVERAGE SCORE OF THE 419 STUDENTS WHO TOOK THIS EXAMINATION WAS 32.487 AND THE MEDIAN SCORE WAS 34) WAS MUCH LESS THAN IS TYPICAL OF EXAMINATIONS IN OUR COURSE. IN OTHER WORDS, YOUR INSTRUCTORS FEEL VERY STRONGLY THAT THIS EXAMINATION WAS "TOO EASY!" FOR THAT REASON, WE WERE RELUCTANT TO PLACE THIS EXAMINATION ON OUR COURSE'S WEB PAGE. WE DO SO BECAUSE WE WANT TO SHARE THIS EXAMINATION WITH EVERY STUDENT IN OUR COURSE, AND WE HOPE THAT EVERYONE UNDERSTANDS THAT THIS QUARTER'S FIRST EXAMINATION WILL BE MORE "CHALLENGING" THAN THE ONE THAT FOLLOWS BELOW. 1. Jim's Tune-up Shop follows the revenue recognition principle. Jim services a car on July 31. The customer picks up the vehicle on August 1 and mails the payment to Jim on August 5. Jim receives the check in the mail on August 6. When should Jim show that the revenue was earned? a. August 5 b. August 6 c. July 31 d. August 1 2. At December 31, 2001, before any year-end adjustments, Hart Company's Insurance Expense account had a balance of $725 and its Prepaid Insurance account had a balance of $1,900. It was determined that $1,500 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be a. $1,500. b. $2,225. c. $1,125. d. $ 725. 3. Ames Real Estate signed a four-month note payable in the amount of $8,000 on September 1. The note requires interest at an annual rate of 12%. The amount of interest to be accrued at the end of September is a. $320. b. $960. c. $107. d. $ 80. 4. If a resource has been consumed but a bill has not been received at the end of the accounting period, then a. an adjusting entry should be made recognizing the expense. b. it is optional whether to record the expense before the bill is received. c. an expense should be recorded when the bill is received. d. an expense should be recorded when the cash is paid out. 5. An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction? a. Debit another asset account for $500. b. Credit a different asset account for $500. c. Nothing further must be done. d. Debit a stockholders' equity account for $500. 6. The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n) a. account receivable. b. expense. c. account payable. d. revenue. 7. If total liabilities increased by $25,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $30,000 increase
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Sample Quizzes - Page 1 of 5 ACCOUNTING & MANAGEMENT...

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