ACC311_Nuhogli_Exam1

ACC311_Nuhogli_Exam1 - ACC 311 FALL 2009 EXAM 1 SECTION I...

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ACC 311 FALL 2009 EXAM 1 SECTION I - MULTIPLE CHOICE (50 points - 2 points each) - Please choose the BEST answer for each question and record your answer on the Scantron answer sheet. 1. WindNet Corporation purchased factory equipment for $38,000 cash. Which of the following statements regarding this purchase is incorrect ? A. The net income for WindNet will be reduced by the $38,000 expense of the factory equipment. B. The total amount of assets on WindNet’s balance sheet will not change. C. The total liabilities will not change. D. The amount of the stockholders' equity on WindNet’s balance sheet will not change. E. All of the above are correct. 2. During 2010, Sensa Corporation incurred operating expenses amounting to $100,000 of which $75,000 was paid in cash; the balance will be paid in January 2011. Transaction analysis of operating expenses for 2010 should reflect only the following: A. increase expenses, $75,000; decrease assets, $75,000. B. decrease assets, $100,000; increase expenses, $100,000. C. decrease assets, $100,000; increase liabilities, $25,000; increase expenses, $100,000. D. increase expenses, $100,000; decrease assets, $75,000; increase liabilities, $25,000. E. None of the above. 3. A company purchases $20,000 of inventory in February 2011 and will pay for it in March 2011. Which of the following statements is false ? A. The company will report an accounts payable of $20,000 in February 2011. B. The statement of cash flows will report an operating cash outflow of $20,000 in March 2011. C. The income statement will report the $20,000 as cost of goods sold in February 2011 when it was purchased. D. The company will record $20,000 in inventory purchased in February 2011. E. All of the above are correct. 4. Morgan Company purchased supplies inventory for $2,000. Due to an error in posting, the inventory account was debited for only $200 when accounts payable was credited for $2,000. During which phase of the accounting cycle would this error be discovered? A. Recording the transaction in the journal. B. Preparation of the financial statements. C. Preparation of the trial balance. D. Analysis of each transaction. 5. On October 1, 2009, Adams Company paid $4,000 for a two-year insurance policy on the building with the insurance starting on that date. The accounting period ends December 31. At the end of December 31, 2009, the financial statements should report A. Prepaid insurance, $4,000 and Insurance expense, $0. B. Prepaid insurance, $0 and Insurance expense, $4,000. C. Prepaid insurance, $2,000 and Insurance expense, $2,000. D. Prepaid insurance, $3,500 and Insurance expense, $500.
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E. None of the above is correct. 6. Which of the following accounts is NOT closed at the end of the year? A. Interest receivable
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This note was uploaded on 02/01/2011 for the course ACC 311 taught by Professor Charrier during the Fall '08 term at University of Texas.

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ACC311_Nuhogli_Exam1 - ACC 311 FALL 2009 EXAM 1 SECTION I...

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