Prelim_1___Ver_2___Fall_2006_1_

Prelim_1___Ver_2___Fall_2006_1_ - TEST NUMBER_ AEM 221...

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TEST NUMBER_______ AEM 221 Financial Accounting Prelim #1 Fall 2006 Name ________________________________ TA’s Name ____________________________ Section # ___________ 1. This exam consists of 20 multiple choice questions and 4 problems. There are 14 pages in this packet, including the cover page; please ensure that you have all the pages. 2. Your answers to Part I should be transposed on to an optical sheet. Failure to do so will result in zero credit for Part I. 3. Your written work for Part II should be completed in the space provided. 4. You will lose points for arithmetic errors; please be careful. 5. This exam is not to leave the testing room. The exam questions and answers will be posted to Blackboard in due course. Your grades will be posted to Blackboard when complete and you may review your test during next section. 6. Read carefully and good luck! I hereby certify that I have not given or received assistance while taking this exam and have at all times abided by Cornell University’s Code of Academic Integrity. Signature: ______________________________________ Date: _____________ Points Scored Points Available Part I Multiple Choice 40 Part II Problem 1 20 Problem 2 10 Problem 3 – Part1 19 Problem 3 – Part2 9 Problem 4 2 TOTAL 100 1
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Part I: Multiple Choice (40 Points) 1. Select the statement which best describes the primary purpose of closing entries. A. To allow preparation of the financial statements. B. To facilitate preparing adjusting entries. C. None of the other answers are correct. D. To determine the amount of net income or net loss for the period. E. To reduce the balances of revenue and expense accounts to zero so that they may be used to accumulate the revenues and expenses of the next period. 2. Identify the potential economic consequences of not following generally accepted accounting principles (GAAP). A. It could affect the stock price of the company B. A and E only are potential consequences C. All of the other answers are potential consequences D. It could affect management and employee bonuses E. It could result in legal liability of the company 3. According to the readings posted on Blackboard, the SEC's “Report Pursuant to Section 704 of the Sarbanes- Oxley Act of 2002,” issued in January of 2003, divided investigations into 3 categories. Which of the following was not one of those categories? A. Revenue Recognition B. Expense Recognition C. Business combinations D. Cash Flow Recognition 4. Which of the following liability accounts is usually not satisfied by payment of cash? A. Accounts payable B. All of the other answers are satisfied by paying cash C. Taxes payable D. Unearned revenues 2
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5. For each transaction recorded in an accounting system, the two basic equalities that must be maintained at all times are A. (1) Assets = Liabilities + Stockholders' Equity. (2) Net Income = Revenues + Expenses. B. (1) Net Income = Revenues + Expenses. (2) Debits = Credits.
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This test prep was uploaded on 09/24/2007 for the course AEM 2210 taught by Professor Little,j. during the Spring '07 term at Cornell University (Engineering School).

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Prelim_1___Ver_2___Fall_2006_1_ - TEST NUMBER_ AEM 221...

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