Exam#2 Solution - Name Professor Section Number...

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Name: _______ __________ _______________ Accounting 101 Professor: ______________________________ Fall 2009 Section Number: _________________________ Exam #2 Instructions: 1. READ CAREFULLY! Failure to follow instructions can result in substantial loss of points. 2. There are 11 pages in this exam. Make sure you have all of the pages before you begin. 3. All work is to be done on the attached pages. 4. For problems requiring computations, work must be shown in order to get credit. Zero points will be given to any correct answer showing no supporting calculations. Showing your work is also necessary for partial credit. Therefore, label all your work and make it as neat as possible. 5. If journal entries are required, use descriptive account titles (no abbreviations or acronyms) that indicate you know what you are doing. Be sure the journal entry is in the proper form, including the date. Explanations for the entry are not required. 6. Write your name on the back of the last page prior to handing in the exam. 7. You may use a four function or a business (financial) calculator only. No graphing calculators, PDAs, or cell phones are permitted. 8. During the exam, the proctors will not answer any questions. If you are unclear and make an assumption when answering a question, state the assumption you made clearly at the beginning of your answer. Score: Question 1: ______/18 Question 5: ______/8 Question 9: ______/12 Question 2: ______/3 Question 6: ______/8 Question 10: _____/14 Question 3: ______/3 Question 7: ______/6 Question 11: _____/12 Question 4: ______/8 Question 8: ______/8 Total Score: _____/100 1
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1. (18 Points – 3 Points Each; Budget approximately 6 minutes for this question) In the columns below, indicate whether each transaction caused an increase (I), a decrease (D), or no change (NC) in assets, liabilities, and shareholders ’ equity. You must place a response in each blank. Transaction Assets Liabilities Equity a. A firm recorded depreciation expense for the year. D NE D b. A firm sold a building for $10,000 more than its book value. I NE I c. A firm purchased inventory on credit using a perpetual inventory system. I I NE d. A firm recorded bad debt expense for the year using the percent of credit sales method. D NE D e. The market value of a firm’s inventory at the end of the year is $100,000 and its cost is $120,000. D NE D f. A firm’s goodwill is considered impaired at the end of the year. D NE D 2. (3 Points) If you write off uncollectible accounts using the direct writeoff method , this would affect the following accounts: a) Total assets would (circle one) increase decrease stay the same b) Net income would (circle one) increase decrease stay the same c) Cash would (circle one) increase decrease stay the same 3. (3 Points) If you write off uncollectible accounts using the allowance method , this would affect the following accounts: a) Total assets would (circle one) increase
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