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(ACCT203)[2010](f)midterm~1356^_10016.pdf
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Paper B


Hong Kong University of Science and Technology

Department of Accounting

ACCT203
Intermediate Financial Accounting
for Non-Accounting Majors

Mid-term Test
(Fall 2010)



Instructions to Students:
1. This paper consists of 12 pages (excluding cover).

2. Time allowed is 75 minutes.

3. Answer ALL questions.

4. Do NOT detach any sheets.

5. Please remain in your seat until the end of the test.







Name: __________________________________________


Student Number: _________________________________
PART A Multiple Choice Questions (Total of 60 marks, 2 marks each)

Please CIRCLE the best answer. (Answers are underlined)

1. Which of the following statements regarding debits and credits are INCORRECT?
I. On the income statement, debits are used to increase account balances, whereas on the statement of financial position, credits are used to increase account balances.
II. Before adjustments, debits will not equal credits in the trial balance.
III. The rules for debit and credit and the normal balance of Share CapitalCOrdinary are the same as for liabilities.
IV. On the income statement, revenues are increased by debit whereas on the statement of financial position, retained earnings is increased by a credit.

a. I, II and III
b. I, II and IV
c. I, III, and IV
d. II, III and IV

2. Which of the following is considered cash? (This question is excluded from marking)
a. Certificates of deposit (CDs)
b. Money orders
c. Money market savings certificates
d. Postdated checks

3. Gregg Corp. reported revenue of Rp1,100,000 in its accrual basis income statement for the year ended June 30, 2011. Additional information was as follows:
Accounts receivable June 30, 2010 Rp 350,000
Accounts receivable June 30, 2011 530,000
Uncollectible accounts written off during the fiscal year 13,000
Under the cash basis, Gregg should report revenue of
a. Rp 687,000.
b. Rp 700,000.
c. Rp 907,000. (i.e. 1,100,000 + 350,000 C 530,000 C 13,000)
d. Rp 933,000.

4. Changing the method of inventory valuation should be reported in the financial statements under what qualitative characteristic of accounting information?
a. Understandability.
b. Verifiability.
c. Timeliness.
d. Comparability.

5. An adjusting entry should NEVER include
a. a debit to an expense account and a credit to a liability account.
b. a debit to an expense account and a credit to a revenue account.
c. a debit to a liability account and a credit to revenue account.
d. a debit to a revenue account and a credit to a liability account.

6. The trial balance will NOT balance when a company
a. Fails to journalize a transaction.
b. Omits posting a correct journal entry.
c. Posts a journal entry twice.
d. Debits two statement of financial position accounts and no income statement accounts.

7. The occurrence t