JOHN MOLSON SCHOOL OF BUSINESS
DEPARTMENT OF ACCOUNTING
MID TERM EXAMINATION
February 11, 2011
6:00 to 9:00 P.M.
| |Marks |Minutes | | | | | |Question 1 |24 |43 | |Question 2 |25 |45 | |Question 3 |35 |63 | |Question 4 |16 |29 | | |100 |180 |
• Silent, cordless calculators (financial calculators are permitted) • Translation dictionaries
QUESTION 1- 24 MARKS- 43 MINUTES
Please answer all parts of this question in your answer booklet PART A- MULITPLE CHOICE
Select the Best Answer
1.Which of the following criteria must be met before an event or item should be recorded for accounting purposes? a.The event or item can be measured objectively in financial terms. b.They are probable.
c.The event or item is an element.
d.All of these must be met.
2.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
3.Which of the following never affects the current year’s income statement?
a.Correction of an amortization error made two years ago. b.Using raw materials in the production process
c.Dividend declaration and subsequent payment
d.None of these affect the current year’s income statement.
4.An accrued expense can best be described as an amount a.paid and currently matched with earnings.
b.paid and not currently matched with earnings.
c.not paid and not currently matched with earnings. d.not paid and currently matched with earnings.
5.If, during an accounting period, an expense item has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve a.a liability account and an asset account.
b.an asset or contra-asset and an expense account.
c.a liability account and an expense account.
d.a receivable account and a revenue account.
6.In posting from the general journal, an expense item was debited to a liability account in error. Which of the following is true? a.The net income for the period will be understated by the amount of the expense. b.The net assets at the end of the period will be unaffected. c.The trial balance will be out of balance.
d.None of these.
7.Which of the following statements is not an objective of financial reporting? a.Provide information that is useful to users in making resource allocation decisions. b.Provide information about an entity’s economic resources, obligations, and equity/net assets. c.Provide information on the liquidation value of an enterprise. d.Provide information about changes in an entity’s economic resources, obligations, and equity/net assets.
8.In establishing financial accounting standards, “due process” refers to a.the process of giving interested parties ample opportunity to express their views....