Sample- Final Exam_2013 Solution(1)

Sample- Final Exam_2013 Solution(1) - April 10th 2013...

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April 10 th , 2013 Commerce 353 Practice Final Exam 150 minutes Question 1. Multiple Choice Questions (14 pts: 2 pts. each. 15 minutes) (1) Which statement is correct about financial instruments? a) A contract whose value changes according to an underlying market, requires little or no initial investment and is settled at a future date. b) A contract that gives the holder the residual interest in an entity after deducting all of its liabilities. c) Any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity. d) Any contract that entitles the holder to joint interest in an entity after deducting all of its liabilities. (2) If the gross margin percentage used in the gross margin method were overstated (for example, 28% instead of 25%), what would the effect be? a) Cost of goods sold would be overstated. b) Ending inventory would be understated. c) Ending inventory would be correctly stated, but beginning inventory would be incorrect. d) Ending inventory would be overstated. (3) Grey Company uses declining-balance amortization and Brown Company uses straight-line amortization. Both companies commenced operations on January 1, 2006 and acquired equipment on that date. If the 2 companies are identical in all respects except for the different amortization methods, which of the following statements is true?
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