ACCT
Exam1 Fall 2010 V-3 Solutions

Exam1 Fall 2010 V-3 Solutions - Accounting 101 Fall 2010...

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Accounting 101, Fall 2010, Exam 1 1 Name: PENN ID: __________________________ Recitation Section: __________________________ ACCOUNTING 101, EXAM #1 VERSION III Instructions: 1. There are 17 numbered pages in this booklet (including a cover page and 2 blank pages at the end). Make sure you have all the pages before you begin. 2. Please print your name and student number at the top of this page AND on all subsequent pages. 3. This exam has 100 total points. You have 120 minutes to complete the exam so please budget your time accordingly. Allocate time wisely and do not spend too much time on one question. 4. If any part of the statement is FALSE the entire statement is FALSE. 5. In the interest of fairness to all students, NO questions will be answered during the exam. If you think a question cannot be unambiguously answered with the information provided, you can choose “none of the above”. 6. The exam is closed book and the use of a laptop computer is prohibited. You are permitted to use ONE double-sided 8 ½ x 11 inch reference sheet. You are also permitted to use a calculator. 7. Exams written in pencil will not be considered for a regrade. Use a pen if you think you might submit your exam for a regrade request. Section Total Points Break up of points Points Earned I 20 1 point each II 23 3 points each; except Q22 with 5 points III 21 3 points each IV 16 4 points each V 20 4 points each
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Accounting 101, Fall 2010, Exam 1 2 Section I: Conceptual Questions 1. For long-term contracts, revenue is recognized whenever cash is received. a. True b. False False. Revenue recognition is independent of cash receipts. 2. All assets except marketable securities are recorded on the balance sheet at historical cost a. True b. False False. Inventory is lower of cost or market. Long-term assets can be impaired 3. The Financial Accounting Standards Board is responsible for developing generally accepted accounting principles (GAAP) and the Securities and Exchange Commission is responsible for enforcing GAAP. a. True b. False True. SEC does not set accounting standards. 4. Assets are a source of claim against the resources of the firm a. True b. False False. Liabilities are a source of claim against the resources of the firm. 5. It is not possible for the left-side of the accounting equation to both increase and decrease as a result of the same transaction a. True b. False False. For example, use cash to pre-pay an expense. Cash decreases, pre-paid expense increases. Both assets. 6. Revenue is recognized only if all of the following four conditions are satisfied: (i) The company has delivered its good/services to the customer (ii) There is persuasive evidence of an arrangement for customer payment (iii) the price is fixed or determinable (iv) Collection of cash (or other benefits) is guaranteed
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Accounting 101, Fall 2010, Exam 1 3 a. True b. False False. Condition (iv): collection need only be "reasonably assured".
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