Exam2 Fall 2010 2010 11 05 V-1 solutions

Exam2 Fall 2010 2010 11 05 V-1 solutions - Accounting 101,...

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Accounting 101, Fall 2010, Exam 2 1 Name: PENN ID: __________________________ Recitation Section: __________________________ ACCOUNTING 101, EXAM #2 VERSION I Instructions: 1. There are 20 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 16 4 points each III 16 4 points each IV 16 4 points each V 16 4 points each VI 16 4 points each
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Accounting 101, Fall 2010, Exam 2 2 Section I: Conceptual Questions 1. Credit terms "2/10, n/30" indicate customers receive a 2% discount if they pay in full within 10 days, and the balance is due within 30 days a. True b. False 2. The Allowance for Doubtful Accounts method of recording bad debts is required for financial reporting and tax purposes. a. True b. False The direct write-off method is required for tax purposes 3. When using the Allowance for Doubtful Accounts method of recording bad debts, recording a "write-off" does not affect total assets. a. True b. False A “write-off” decreases gross accounts receivables and decreases allowance for doubtful accounts. Thus net accounts receivables, and therefore total assets are unaffected. 4. An increase in the Allowance for Doubtful Accounts relative to the prior period, implies an increase in Bad Debt Expense relative to the prior period. a. True b. False Because Allowance for Doubtful Accounts is a balance sheet account (and cumulative), it can increase even without Bad Debt Expense increasing. An increase in Allowance for Doubtful Accounts implies Bad Debt Expense minus Writeoffs is positive. 5. Ignoring taxes, using FIFO results in higher cumulative income over the life of the firm than using LIFO. a. True b. False Cumulative income over the life of the firm is unaffect by choice of inventory valuation
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Accounting 101, Fall 2010, Exam 2 3 6. In any given year, LIFO always results in lower taxes than if the firm used FIFO. a.
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This note was uploaded on 03/02/2011 for the course ACCT 101 taught by Professor Armstrong during the Fall '09 term at UPenn.

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Exam2 Fall 2010 2010 11 05 V-1 solutions - Accounting 101,...

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