S05 MT1 930

S05 MT1 930 - April 20, 2005 Anderson ECON 136A- 9:30...

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April 20, 2005 Anderson ECON 136A- 9:30 MIDTERM #1, 9:30 CLASS Name _________________________ RETURN THIS EXAM WHEN YOU ARE FINISHED. Answer questions 1-25 on your scantron and the rest in your blue-book. ------------------------- ANSWER ON YOUR SCANTRON. 1. Which of the following is a recordable event or item? a. Changes in managerial policy b. The value of human resources c. Changes in personnel d. None of these 2. Under the cash basis of accounting, revenues are recorded a. when they are earned and realized. b. when they are earned and realizable. c. when they are earned. d. when they are realized. 3. Adjusting entries are necessary to 1. obtain a proper matching of revenue and expense. 2. achieve an accurate statement of assets and equities. 3. adjust assets and liabilities to their fair market value. a. 1 b. 2 c. 3 d. 1 and 2 4. Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles? a. To reduce the federal income tax liability b. To aid management in cash-flow analysis c. To match the costs of production with revenues as earned d. To adhere to the accounting constraint of conservatism 5. When an item of expense is paid and recorded in advance, it is normally called a(n) a. prepaid expense. b. accrued expense. c. estimated expense. d. cash expense. 6. If the inventory account at the end of the year is understated, the effect will be to a. overstate the gross profit on sales. b. understate the net purchases. c. overstate the cost of goods sold. d. overstate the goods available for sale.
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MIDTERM #1, 9:30 CLASS--Page 2 7. Under accounting principles generally accepted in the United States of America, which of the following statements are true: a. Revenue is recorded when the payment has been received and expenses are recorded when paid. b. Revenue is recorded when it has been earned and expenses when the associated benefit has been received. c. Revenue is recorded when the expense for the revenue has been paid. d. Revenue is recorded when estimable by the Company's management and expenses are recorded when it is reasonably determined. 8. Another term for the balance sheet is: a. Statement of sources and uses of cash b. Statement of activity for the period c. Statement of financial position d. I have no idea 9. In 2004, Rowe Company changed from straight-line to double- declining-balance depreciation. The total difference in depreciation for all years through 2003 was $104,000 and for 2004 the difference was $10,000. The tax rate is 30%. The amount that should be reported as a restatement in the statement of stockholders equity for 2004 as the cumulative effect of a change in accounting principle is: a. $72,800 debit. b. $72,800 credit.
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S05 MT1 930 - April 20, 2005 Anderson ECON 136A- 9:30...

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