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Unformatted text preview: BMGT310 Prof. S. Brown 2009 - Mid Term 1 - Sample Questions In the interests of being fair to all students, I cannot answer questions during the test. If you think there are ambiguities resulting in multiple or no correct answers to the multiple-choice questions, choose the answer that you believe to be the BEST. If I subsequently agree that the question was erroneous, I will adjust your scores accordingly to give credit where appropriate. Section A (xx questions worth 1 point each) 1 With any sales on account (credit sales) there is always uncertainty if the customer is going to pay. Because of this uncertainty, when Osborne Company makes any sales on account it does not record the sale until cash is received from the customer. The CFO of Osborne thinks this is a sensible approach. What accounting principle is the CFO putting emphasis on? A) materiality B) conservatism C) cost-benefit tradeoff D) full disclosure 2 [This question is adopted from a recent CPA exam] The following balances were reported by Mall Co. at December 31, 2004 and 2005: 12/31/04 12/31/05 Inventory $260,000 $290,000 Accounts payable 75,000 50,000 Mall paid suppliers $490,000 during the year ending December 31, 2005. What amount should Mall report for cost of goods sold in 2005? 3 A common set of accounting standards and procedures are called A) financial accounting standards. B) generally accepted accounting principles. C) objectives of financial reporting. D) statements of financial accounting concepts. 4 The Financial Accounting Standards Board employs a "due process" system which A) is an efficient system for collecting dues from members. B) enables interested parties to express their views on issues under consideration. C) identifies the accounting issues that are the most important. D) requires that all accountants must receive a copy of financial standards. 5 The purpose of the Emerging Issues Task Force is to A) develop a conceptual framework as frame of reference for the solution of future problems. B) lobby the FASB on issues that affect a particular industry. C) review internal auditing approaches for companies. D) issue statements which reflect a consensus on how to account for new and unusual financial transactions that need to be resolved quickly. 6 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 7 Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles?...
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