Queens College

College of Business and Economics

Department of Accounting and Finance

Final-Exam to the Course of Intermediate Accounting I

General Instructions: before proceeding to the question be sure that you have written your
name, ID, and section clearly; that there are a total of 27 questions of which 10 are true or
false, 15 multiple choices, and 2 workout questions, that you switched your mobile off, and
you are using calculator only. The time allotted is 1:20

Name: ---------------------------------------ID------------------Section----------------------

#I. Say “true” if the statement is correct, or “false” if the statement is wrong! (2pt each)

1. A ledger is where the company initially records transactions and selected other events.
2. The income statement is useful for helping to assess the risk or uncertainty of
achieving future cash flows.

3. Under International Financial Reporting Standards (IFRS) the dividends account

is considered a real account.
4. The accrual basis recognizes revenue when earned and expenses in the period when
cash is paid.
5. Companies frequently report income tax as the last item before net income on the
income statement.
6. The post-closing trial balance consists of asset, liability, equity, revenue and expense
accounts.
7. The trail balance is used to prepare statement of financial position while the general
ledger is used to prepare the income statement.
8. The objective of the Conceptual Framework— flow logically from the qualitative
characteristics, elements of financial statements, recognition, measurement, and
disclosure
9. Fair value is defined as “the price that would be received to sell an asset or paid to
 transfer a liability in an orderly transaction between market participants at the
measurement date.”

10. The IASB takes the position that both revenues and expenses and other income
and expense should be reported as part of income from operations.
#II. Choose the best answer from the given alternatives to the questions stated below!
(1pt. each)

1. In which section of the income statement is interest expense reported?

a. Gross profit.
b. Income from operations.
c. Income before income taxes.
d. Non-controlling interest.
2. Which of the following is not a selling expense?
a. Advertising expense.
b. Office salaries expense.
c. Freight-out.
d. Store supplies consumed.
3. Information in the income statement helps users to
a. evaluate the past performance of the enterprise.
b. provide a basis for predicting future performance.
c. help assess the risk or uncertainty of achieving future cash flows.
d. All of these.
4. In the closing entry, which of the following is true?
a. Dividend is closed to income summary
b. Withdrawal is closed to income summary
c. Capital is closed to income summary
d. All of the above
e. None of the above
5. In the closing entry, which of the following is true?
a. It makes real account zero
b. It closes revenues to a permanent account known as income summary.
 c. It closes expenses to an account known as income summary
d. None of the above
e. All of the above

6. The double-entry accounting system means

a. Each transaction is recorded with two journal entries.
b. Each item is recorded in a journal entry, then in a general ledger account.
c. The dual effect of each transaction is recorded with a debit and a credit.
d. More than one of the above.
7. Equity is not affected by all
a. cash receipts.
b. dividends.
c. revenues.
d. expenses.
8. Wave Inn is a resort located in Canada. Wave Inn collects cash when guest make a
reservation. During December 2011, Wave Inn collected $60,000 of cash and recorded
the receipt by recognizing unearned revenue. By the end of the month Wave Inn had
earned one third of this amount, the other two thirds will be earned during January
2012. The adjusting entry required at December 31, 2011 would impact the statement of
financial position by
a. Increasing Equity $40,000.
b. Decreasing Liabilities $20,000.
c. Increasing Assets $60,000.
d. Decreasing Equity $20,000.
9. Cara, Inc. purchased a building on January 1, 2011 for CHF500,000. The useful life of
the building is 10 years. The asset is reported on the December 31, 2011 statement of
financial position at CHF450,000. What was the impact of the adjusting entry recorded
by Cara, Inc.?
a. Decrease Equity CHF50,000.
b. Increase Liabilities CHF50,000.
c. Increase Assets CHF50,000.
 d. All of the choices are correct regarding the impact of Cara, Inc.’s adjusting
entry at December 31, 2011.

10. Big-Mouth Frog Corporation had revenues of $200,000, expenses of $120,000, and
dividends of $30,000. When Income Summary is closed to capital, the amount of the
debit or credit to capital is a:
a. debit of $50,000.
b. debit of $80,000.
c. credit of $50,000.
d. credit of $80,000.

Use the following information for questions 11 through 12:

The income statement of Dolan Corporation for 2011 included the following items:

Interest revenue €65,500

Salaries expense 85,000
Insurance expense 7,600

The following balances have been excerpted from Dolan Corporation's

statement of financial position:
December 31, 2011
Accrued interest receivable € 1,600
Accrued salaries payable 4,700
Prepaid insurance 1,100
11. The cash received for interest during 2011 was
a. €56,400.
b. €63,900.
c. €65,500.
d. €67,100.
12. The cash paid for salaries during 2011 was
a. €89,700.
b. €80,300.
c. €80,800.
d. €93,900.
13. Garcia Corporation received cash of R$18,000 on August 1, 2011 for one year's rent
in advance and recorded the transaction with a credit to Rent Revenue. The December
31, 2011 adjusting entry is
a. debit Rent Revenue and credit Unearned Rent, R$7,500.
b. debit Rent Revenue and credit Unearned Rent, R$10,500.
c. debit Unearned Rent and credit Rent Revenue, R$7,500.
d. debit Cash and credit Unearned Rent, R$10,500.

14. Which of the following is an example of an accrued expense?

a. Office supplies purchased at the beginning of the year and debited to an
expense account.
b. Property taxes incurred during the year, to be paid in the first quarter of
the subsequent year.
c. Depreciation expense.
d. Rent earned during the period, to be received at the end of the year.
15. An adjusting entry to record an accrued expense involves a debit to a(an):
a. expense account and a credit to a prepaid account.
b. expense account and a credit to Cash.
c. expense account and a credit to a liability account.
d. liability account and a credit to an expense account.
# III. Workout Questions (2.5 each)
1. What is the future value of a $1000 is invested at an annual interest rate of 5% for 5
years compounded quarterly?
2. What is the future value of an ordinary annuity of $1,000 per year for 5 years, with an
annual interest rate of 4% compounded semi-annually?
 Answer Sheet
Name: ---------------------------------------ID------------------Section----------------------

I. True or False
1. -----------2. ------------ 3. ----------4. -----------5. ----------6.
----------7. -----------8. ----------9. ----------10. ---------
II. Multiple Choice
1. ----------2. ------------ 3. ----------4. -----------5. ----------6.
----------7. -----------8. ----------9. ----------10. --------- 11. --------
12. -------13. -------14. -------15. --------
III. Workout