W05 11am mt1

W05 11am mt1 - January 31, 2005 Anderson Econ 136A 11:00...

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January 31, 2005 Anderson Econ 136A 11 :00 class Midterm #1 Name _________________________ Write your name and perm number on your green scantron and your blue- book. Complete the multiple choice on your green scantron and the problems in the blue book . ------------------------- Complete on your green scantron. 1. Ed Sloan wants to withdraw $25,000 (including principal) from an investment fund at the end of each year for five years. How should he compute his required initial investment at the beginning of the first year if the fund earns 10% compounded annually? a. $25,000 times the future value of a 5-year, 10% ordinary annuity of 1. b. $25,000 divided by the future value of a 5-year, 10% ordinary annuity of 1. c. $25,000 times the present value of a 5-year, 10% ordinary annuity of 1. d. $25,000 divided by the present value of a 5-year, 10% ordinary annuity of 1. 2. Which of the following is a limitation of the balance sheet? a. Many items that are of financial value are omitted. b. Judgments and estimates are used. c. Current fair value is not reported. d. All of these 3. Which of the following items is not presented on a "net of tax" basis in the financial statements? a. discontinued operations b. other comprehensive income c. restatements of retained earnings d. all of the above 4. Present value is a. the value now of a future amount. b. the amount that must be invested now to produce a known future value. c. always smaller than the future value. d. all of these. 5. The basis for classifying assets as current or noncurrent is conversion to cash within a. the accounting cycle or one year, whichever is shorter. b. the operating cycle or one year, whichever is longer. c. the accounting cycle or one year, whichever is longer. d. the operating cycle or one year, whichever is shorter.
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Midterm #1--Page 2 6. The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the a. retained earnings statement. b. income statement. c. statement of cash flows. d. statement of financial position. 7. When converting from cash basis to accrual basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual basis service revenue? a. Subtract ending accounts receivable. b. Subtract beginning unearned service revenue. c. Add ending accounts receivable. d. Add cash sales. 8. The statement "risk is commensurate with reward" means that the higher the perceived risk, the: a. Higher the interest rate b. Lower the interest rate c. No impact on the interest rate d. More likely an investor is to abstain from investment. 9. Adjusting entries are necessary to 1. obtain a proper matching of revenue and expense. 2. achieve an accurate statement of assets and equities.
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This note was uploaded on 05/18/2011 for the course ECON 136A taught by Professor Anderson during the Spring '08 term at UCSB.

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W05 11am mt1 - January 31, 2005 Anderson Econ 136A 11:00...

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