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 5year, 10% ordinary annuity
of 1.
b. $25,000 divided by the future value of a 5year, 10% ordinary
annuity of 1.
c. $25,000 times the present value of a 5year, 10% ordinary annuity
of 1.
d. $25,000 divided by the present value of a 5year, 10% ordinary
annuity of 1.
2. Which of the following is a limitation of the balance sheet?
3. Which of the following items is not presented on a "net of tax"
basis in the financial statements?
4. Present value is
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 #1Page 2
6. The financial statement which summarizes operating, investing, and
financing activities of an entity for a period of time is the
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?
8. The statement "risk is commensurate with reward" means that the
higher the perceived risk, the:
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 Spring '08
 anderson
 Income Statement, Generally Accepted Accounting Principles, a. b. c.

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