Acct-110 midterm review

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ACCT 110 - FINANCIAL ACCOUNTING 1

SAMPLE MIDTERM
TIME: 90 MINUTES

Question

Type

Possible Marks

1-15

Multiple Choice

16

16

Journal Entries

10

17

Adjusting Entries

6

18

Closing Entries

3

19

Financial
Statements

20

20

Other

5

Total

Achieved

60

Letter Grade

NO EXPLANATIONS ARE REQUIRED FOR JOURNAL ENTRIES.

NAME ____________________________________ DATE _____________________________

ACCT 110 - Mock Midterm
Page 1
1 – 15 MULTIPLE CHOICE. (16 Marks) Circle the one letter that best answers the question. 1. The purpose of a trial balance is:
a.
b.
c.
d.

To determine that journal entries are in balance before posting those entries to the ledger To indicate the effects of business transactions upon ledger accounts To prove the equality of debits and credits in the ledger

To make certain that none of the entries has been omitted

2. Communication of economic information to those people who need it involves a.
b.
c.
d.

Identifying economic events
Measuring economic events in dollars and cents
Preparing and distributing accounting reports
Recording of financial transactions

3. The owner’s equity in a business may best be described as: a. An economic resource that is owned by a business and is expected to provide future benefits
b. An obligation of the business entity to its creditors
c. Profits that have been retained in the business rather than being withdrawn by the owners d. Assets minus liabilities
4. A business organized as a corporation
a.
b.
c.
d.

Is owned by its shareholders
Is not a separate legal entity in most provinces
Requires that shareholders be personally liable for the debts of the business Terminates when one of its original shareholders dies.

5. Posting:
a.
b.
c.
d.

Should be performed in account number order
Involves transferring all debits and credits on a journal page to the trial balance Is accomplished by examining ledger accounts and seeing which ones need updating Involves transferring journal entry information to ledger accounts

6. The time period assumption states that:
a. A transaction can only affect one period of time
b. Estimates should not be made if a transaction affects more than one time period c. Adjustments to the enterprise’s accounts can only be made in the time period when the business terminates its operations

d. The economic life of a business can be divided into artificial time periods 7. Another name for journal is:
a.
b.
c.
d.

Book of final entry
Book of original entry
Book of accounts
Book of source documents

8. Assets would be overstated if a necessary adjusting entry were omitted for: a.
b.
c.
d.

Expired insurance
Accrued salaries owing to employees
Accrued interest earned
Revenue collected in advance during the period

ACCT 110 - Mock Midterm
9. The purpose of adjusting entries is to:

Page 2

a. Correct errors made in the accounting records
b. Update the balance of the owner’s capital account for changes in owner’s equity temporarily recorded in revenue and expense accounts
c. Prepare the revenue and expense accounts for recording the transactions of the next accounting period
d. Bring an asset or liability account balance to its proper amount while also updating the related expense or revenue account
10.The fiscal year of a business is usually determined by:
a.
b.
c.
d.

Canada Customs and Revenue Agency (formerly called Revenue Canada) The Tax Act
The operating cycle of the business itself
Provincial securities and exchange commissions

11.Closing entries are made:
a. In order to terminate the business as an operating entity b. So that all assets, liabilities, and owner’s capital accounts will have zero balances when the next accounting period starts
c. To prepare accounts for recording the transactions of the next period d. So that financial statements can be prepared
12.If the Revenue account has...
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