ADM_MT2_solutions - Dec 17, 2007 BA 2403 2nd MIDTERM EXAM...

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Dec 17, 2007 BA 2403 2nd MIDTERM EXAM GROUP A :______ SOLUTIONS ___________________ ID Number :_________________________ This exam booklet consists of 8 pages including this page. Please count the pages before you start. Exam has two sections. Section I has 20 multiple choice questions worth 60 points and section II has 4 classical questions worth 40 points. Answer the questions in Section I to the OPTIC PAPER. Do not forget to code in your name, ID and Group code. Answer the questions in Section II on this booklet at the spaces provided after each question. You can use a calculator, but can not share it. You are not allowed to use mobile phones as calculators. Make a good TIME MANAGEMENT, GOOD LUCK…. .
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SECTION I Group A 1) An inventory flow assumption is used mainly to determine the costs in: a. Recording purchases of inventory. b. Recording the cost of goods sold. c. Recording sales revenue. d. Forecasts of future operating results. 2) Which of the following flow assumptions produces the ending inventory amount at the most current acquisition costs? a. Specific identification. b. LIFO. c. FIFO. d. Average cost. 3) During a period of steadily rising prices , which of the following flow assumptions will yield the highest gross profit? a. FIFO. b. LIFO. c. Specific identification. d. Average cost. 4) On Saturday, 29 September 2007, Şık Gomlek sold merchandise on account. The sales price was TL42, and the cost of goods sold was TL31. The sales revenue was recorded immediately, but the entry recording the cost of goods sold was dated Monday, 1 October 2007. As a result, net income for September was: a. Overstated by TL42. b. Overstated by TL31. c. Overstated by TL11. d. Not affected, but the net income for October is understated. 5) During the current year, Star Stores had net sales of TL480,000, cost of goods sold of TL288,000 , average accounts receivable of TL80,000 and average inventory of TL72,000. The store’s inventory turnover rate is: a. 6.7 b. 4 c. 1.1 d. Some other amount. 6) The main purpose of generally accepted accounting principles is to: a. make sure that assets are valued at cost and that expenses are "matched" with revenue. b. provide the basic framework for financial reporting that is understood by both the issuer and users of financial statements. c. prepare financial statements that are designed to meet the information needs of the company's management. d. Ensure that the same accounting methods are applied in all countries.
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7) The concept of materiality as it applies to accounting means that : a. the accountants need to deduct all costs as expense in the period in which they are used to generate revenue. b.
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This note was uploaded on 03/22/2012 for the course ECON 106 taught by Professor Kücüksenel during the Spring '12 term at Middle East Technical University.

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ADM_MT2_solutions - Dec 17, 2007 BA 2403 2nd MIDTERM EXAM...

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