2500 Alt Midterm Fall 2008 Solution ADMS 2500|QUESTIONS AND ANSWERS

York University……..Ak/Adms 2500.03 Introduction to Financial Accounting Midterm Examination – Test Form A Time: 3.0 hours February 8, 2009 Questions: 50 Instructions: 1. Only the mark sense sheet will be collected - - you may keep this midterm examination paper. Mark your answers on it for later reference. 2. Record your name and student number and answer all questions on the computer mark sense sheet provided with an HB (soft lead) pencil.  Test Form is 'A' and Code is your Section (in the left column)  Fill in the bubbles for your name and student number in pencil (your phone number is not required). Leave the last column of the student number BLANK 3. Calculators without alphanumeric programmable memories are the only aid allowed. The exam is three hours in length. Check that your exam contains 50 questions. 5. It is essential to transfer your answers to the grading sheet after each question in case the exam is interrupted by fire alarm and to double check your transfers. It is always a good idea to attempt the questions you deem easiest first as an interrupted exam may just mark your score based on questions attempted.  The proctors will announce when there are 15 minutes remaining and any answers not transferred should be recorded at this time. No one is to leave their seats in the last 15 minutes.  When time is called, the proctors will go down the rows collecting your answer sheets and this exam paper. They will not wait and they will not accept your sheet once they have passed. Any violation of this protocol will result in a grade of zero recorded for the exam. 6. In the event of a fire alarm, you are to leave your exam and answer sheet face down on your desk and immediately proceed outside with coats and all personal belongings. Print your surname on the back of the exam so you know which seat to return to. An invigilator will lead the group outside to a place of safety. There is to be no talking during the evacuation or outside. Most rooms are cleared within 30 minutes of the alarm. You will be told after this time whether to reenter the room and recommence the exam or to go home. You are reminded that cheating is a serious offense which can result in expulsion from university. 1. The financial statement that does not “articulate” with the other financial statements is the a) Income Statement b) Statement of Owner’s Equity c) Balance Sheet d) Cash flow statement e) None of the above is correct (all four statements articulate…the balance from one is used in another) 2. Which of the following is a contra account? a) Sales discounts given from list price b) Bad debt expense c) Petty cash d) Freight In (transportation in) e) None of the above are contra-liabilities (The question can be answered very quickly as soon as you spot the phrase contra liability since none of the choices have anything to do with liabilities. Even without this hint the choice is still d because none of the above are contra accounts….sales discounts never get recorded and freight in is added rather than substracted from the control account.) 3. Which of the following accounts are decreased by debits and increased by credits? a) Purchase Discounts & Allowances (yes…this is a contra to purchases which has a debit balance) b) Allowance for Doubtful Accounts (yes…this is a contra to A/R which has a debit balance) c) Retained Earnings (yes) d) Accumulated Depreciation (yes…this is a contra to capital asets) e) Several of the above meet this condition 4. Which of these statements is incorrect? a) The debit credit equality of the ledger accounts cannot be demonstrated in the trial balance until after the adjustments are posted. (incorrect….a trial balance should be run before and after adjustments) b) Debits are always recorded on the left