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Answer SectionBMGT 220 FALL 2013 Midterm Exam 1 Thursday, February 21For the following Multiple Choice Questions, identify the letter of the choice (A,B,C or D) that best completes the statement or answers the question.____ 1. Financial statements are prepared:A.Only for publicly owned business organizations. B.For corporations, but not for sole proprietorships or partnerships. C.Primarily for the benefit of persons outside of the business organization. D.In either monetary or nonmonetary terms, depending upon the need of the decision maker. ____ 2. Which of the following organizations is not recognized as a source of generally accepted accounting principles?A.The Financial Accounting Standards Board (FASB). B.Securities and Exchange Commission (SEC)C.International Accounting Standards Board (IASB)D.Federal Bureau of Investigation (FBI)____ 3. Which of the following transactions would cause an increase in both assets and owners' equity?A.Providing service to a customer to generate revenue.B.Paying dividends to shareholders.C.Borrowing money from a bank. D.Sale of land for cash at a price equal to its cost. ____ 4.In the above data for a company, if the total assets are $556,000, Retained Earnings must be: A.$811,000. B.$180,000. C.$221,000. D.$335,000. ____ 5. The owner of Maryland Crabcakes purchased a new car for his daughter at a cost of $39,000 and reported this amount on the restaurant's balance sheet. The reporting of this item in this manner violated the: A.Cost principle. B.Fair Value PrincipleC.Monetary Unit AssumptionD.Economic Entity Assumption____ 6. During the current year, assets of Wagner Company increased by $382,000, and liabilities decreased by $240,000. The owners' equity in the business must have: A.Decreased by $142,000. B.Decreased by $622,000. C.Increased by $142,000. D.Increased by $622,000. ____ 7. On December 31, 2011, O’Keefe Company’s Assets and Liabilities were $66,000 and $15,000 respectively. On December 31, 2012, the assets and liabilities were $94,000 and $28,000 respectively. During 2012, the company issued $7,000 of additional stock, and paid $3,000 of dividends. Determine the company’s net income for 2012?A.$8,000B.$11,000C.$19,000D.$15,000____ 8. The following items were listed by Shiny Dentures Company for the month of September.Common Stock (September 1) $42,000Accounts payable 7,000Equipment 40,000Service revenue 22,000Dividends 6,000Dental supplies expense 3,500Cash 5,000Utilities expense 700Dental supplies 2,800Salaries expense 7,000Accounts receivable 4,000Rent expense 2,000Determine the company’s Net income for the month of September.A.$2,800B.$8,800C.$6,000D.$12,800____ 9. In a ledger, debit entries cause: A.Increases in owners' equity, decreases in liabilities, and increases in assets. B.Decreases in liabilities, increases in assets, and decreases in owners' equity.C.Decreases in assets, decreases in liabilities, and decreases in owners' equity. D.Increases in assets, decreases in liabilities, and increases in owners' equity. ____ 10. Which of the following represents the correct flow of information through financial statements? A.Balance Sheet to Income Statement to Statement of Retained Earnings. B.Income Statement to Balance Sheet to Statement of Retained Earnings. C.Income Statement to Statement of Retained Earnings to Balance Sheet. D.Statement of Retained Earnings to Balance Sheet to Income Statement. ____ 11. Double-entry accounting is characterized by which of the following? A.Every transaction affects both sides of the accounting equation.B.The number of ledger accounts with debit balances is equal to the number of ledgers with credit balances. C.The total dollar amount of debit entries posted to the ledger is equal to the dollar amount of the credit entries. D.The number of debit entries posted to the ledger equals the number of credit entries. ____ 12. The manager of a retail store purchased several cash registers for the business on January 10, but at the end of the year does not remember whether he paid cash for the full price of the registers or recorded a liability to the vendor. Where is the best place for the manager to get information about this transaction? A.A trial balance prepared at the end of June. B.The general journal.C.A balance sheet prepared at the end of June. D.The ledger account for equipment. ____ 13. Kevin Company’s Accounts Receivable accounts had a balance of $27,400 on January 1, and a balance of $43,500 on February 1. During the month of January, the company made sales on credit for $55,800. Determine the cash collections made by Kevin Company from its credit customers in January.A.$39,700B.$15,100C.$71,900D.It cannot be determined from the information given____ 14. Kristian Company’s Accounts Payable account had a balance of $32,400 on January 1, and a balance of $24,100 on February 1. During the month of January, the company made cash payments for outstanding bills for $35,800. Determine Kristian Company’s purchases on credit in January.A.$44,100B.$20,700C.$27,500D.It cannot be determined from the information given____ 15. An accountant for Jessica Company made the following journal entry on January 30, 2013:Before the journal entry above, Jessica Company had assets, liabilities, and owners' equity of $450,000, $100,000, and $350,000, respectively. What are total assets immediately after the above transaction? A.$221,000. B.$671,000.C.$736,000.D.$450,000. ____ 16. Which of the following errors would be discovered by preparation of a trial balance? A.The collection of an account receivable was recorded by a debit to the Land account rather than to the Cash account. B.The collection of an account receivable for $319 was recorded by a $391 debit to Cash and a $391 credit to Accounts Receivable. C.The collection of a $375 account receivable was not recorded at all.D.The collection of a $225 account receivable was recorded by a $225 debit to Cash and a $225 debit to Accounts Receivable. ____ 17. Which of the following is NOT a purpose of adjusting entries? A.To prepare the revenue and expense accounts for recording


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UMD BMGT 221 - Midterm Exam 1

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