Escolar Documentos
Profissional Documentos
Cultura Documentos
Date: …
Time: 3 hours
Utrecht University School of Economics Venue: …
Name: Version:
Student number:
A
Instructions:
• This exam contains 12 pages and consists of 25 multiple choice questions accounting for 50 marks
and 3 open problems for 50 marks, adding up to a total of 100 marks.
• Marks for the multiple-choice questions are awarded after taking into account a guessing correction,
as follows:
Marks earned = (50/25)*(#Right Questions– (#Wrong Questions/3))
• Empty / missing answers count as wrong answers!
• The correct answers of the Multiple Choice questions must be checked on the corresponding tick box
on the Multiple Choice form sheet. Check clearly the version number of your test and the other
information, especially your student ID, requested on the Multiple Choice form sheet!
• Students are allowed to hand in the exam and leave the room 1 hour after the start of the exam.
• The use of unannotated dictionaries - not containing written notes or comments - is allowed.
• All numbers are displayed in the US-decimal system: (.) for decimals and (,) as a thousand separator.
• The effects of taxes can be ignored, unless explicitly mentioned otherwise.
• Graphical or programmable calculators, mobile phones, smart watches, etc. are strictly
FORBIDDEN. Only plain calculators are allowed.
Having any of these devices in proximity of your table during the exam will be considered as a
fraudulent act and can lead to a declaration of nullification of the test result and being barred from
the retake. Mobile phones must be switched off and kept in your bag beyond physical reach.
Good Luck!
2. On December 1, 2015, Carrie's Day Care receives €3,000 in advance for an agreement to care for
Susan's children for the months of December, January, and February. Carrie's Day Care will make an
adjusting entry on December 31, 2015 to:
A) credit Revenue for €3,000.
B) debit Unearned Revenue for €1,000.
C) credit Revenue for €2,000.
D) credit Prepaid Revenue for €2,000.
3. When inventory is shipped from the seller to the buyer with shipping terms of FOB destination:
A) the seller has title to the goods while they are in transit.
B) the buyer will pay the transportation costs associated with the purchase.
C) title passes from the seller to the buyer when the goods leave the seller's shipping dock.
D) the goods will be included in the inventory of the buyer while in transit.
4. The selling price of a television is €1,000 and the cost to the retailer is €725. What is the retailer's
gross profit from the sale of the television?
A) €0
B) €275
C) €725
D) €1,000
5. On August 1, the Savage Company purchased €2,000 of inventory on account with credit terms of
2/10, net 30. Savage Company uses the perpetual inventory system. On August 15, the Savage Company
paid the amount due. What journal entry did they prepare on August 15?
A) debit Inventory for €2,000 and credit Accounts Payable for €2,000
B) debit Accounts Payable for €2,000, credit Purchase Discounts for €40 and credit Cash for €1,960
C) debit Accounts Payable for €2,000 and credit Cash for €2,000
D) debit Accounts Payable for €1,960 and credit Cash for €1,960
6. On May 1, the Santelle Company purchased €700 of inventory on account with credit terms of 2/10,
net 30. Santelle Company uses the perpetual inventory system. On May 2, the seller gave Santelle
Company a €100 allowance due to a product defect. What journal entry did Santelle Company prepare
on May 2?
A) debit Accounts Payable for €100 and credit Purchase Returns and Allowances for €100
B) debit Accounts Payable for €100 and credit Purchase Discounts for €100
C) debit Cash for €100 and credit Accounts Payable for €100
D) debit Accounts Payable for €100 and credit Inventory for €100
8. Under the allowance method, when a company determines that they will not be able to collect from a
particular customer, they will:
A) debit Uncollectible-Account Expense and credit Accounts Receivable.
B) debit Accounts Receivable and credit Allowance for Uncollectible Accounts.
C) debit Allowance for Uncollectible Accounts and credit Uncollectible Account Expense.
D) debit Allowance for Uncollectible Accounts and credit Accounts Receivable.
10. On January 2, 2015, Konrad Corporation acquired equipment for €300,000. The estimated life of the
equipment is 5 years or 40,000 hours. The estimated residual value is €20,000. If Konrad Corporation
uses the units of production method of depreciation, what will be the debit to Depreciation Expense for
the year ended December 31, 2016, assuming that during this period, the asset was used 9,000 hours?
A) €48,000
B) €56,000
C) €63,000
D) €67,500
11. On January 2, 2015, Kornis Corporation acquired equipment for €300,000. The estimated life of the
equipment is 5 years or 40,000 hours. The estimated residual value is €20,000. What is the balance in
Accumulated Depreciation on December 31, 2015, if Kornis Corporation uses the double-declining-
balance method of depreciation?
A) €56,000
B) €60,000
C) €112,000
D) €120,000
12. A company purchased a machine for €200,000 many years earlier. The accumulated depreciation on
the machine is €150,000. The machine is scrapped. Which journal entry is prepared to record the
disposal?
A) debit Loss on Disposal of Machine for €50,000, debit Accumulated Depreciation €50,000 and
credit Machine for €100,000
B) debit Accumulated Depreciation for €150,000 and credit Machine for €150,000
C) debit Accumulated Depreciation for €200,000, credit Machine for €150,000 and credit Gain on
Disposal of Machine for €50,000
D) debit Loss on Disposal of Machine for €50,000, debit Accumulated Depreciation for €150,000
and credit Machine for €200,000
14. Marvin Company purchased Marathon Company on August 31, 2014. Marvin Company recorded
goodwill in the purchase of Marathon Company. How will Marvin Company account for Marathon
Company's goodwill in future accounting periods?
A) Marvin Company will amortize the goodwill over a 40-year life.
B) If the value of the goodwill increases in subsequent years, Marvin Company will increase the
Goodwill account.
C) If the goodwill is impaired in subsequent years, Marvin Company will decrease the Goodwill
account.
D) Marvin Company is not allowed to change the value of the Goodwill account.
16. On June 15, Copps Stores (a German company), sold twenty-five computers, on account, to a
company located in Argentina for 3,000,000 pesos. On that date the peso was worth €0.079. On July 15,
when the peso was worth €0.070, payment was received. The journal entry on July 15 by Copps Stores
would include a:
A) credit to Cash €237,000.
B) credit to Accounts Receivable €210,000.
C) debit to Foreign-Currency Transaction Loss €27,000.
D) credit to Sales €210,000.
17. Lisa Laskowski Company reports the following information at the fiscal year end of December 31,
2015:
What was the average selling price for the common stock sold?
A) €0.088 per share
B) €0.10 per share
C) €0.895 per share
D) €1.805 per share
20. In 2015, Chen Corporation purchased treasury stock with a cost of €50,000. During the year, the
company declared and paid dividends of €10,000 and issued bonds payable for €1,000,000. Net Cash
Provided by Financing Activities for 2015 is:
A) €940,000.
B) €950,000.
C) €990,000.
D) €1,000,000.
21. Held-to-maturity investments in bonds are initially reported at ________ on the purchase date. On a
subsequent balance sheet date, the bonds are reported at ________.
A) cost; amortized cost.
B) amortized cost; fair value.
C) cost; fair value.
D) cost; lower of cost or market.
22. If 15% of the common stock of an investee company is purchased as a long-term investment, the
appropriate method of accounting for the investment is:
A) the equity method.
B) the consolidation method.
C) the available-for-sale method.
D) the lower of cost or market method.
23. Wolverine Corporation owns 29% of Buckeye Corporation. Net income for Buckeye for the year is
€250,000. The journal entry prepared by Wolverine Corporation is:
A) debit Equity-Method Investment for €72,500 and credit Cash for €72,500.
B) debit Equity-Method Investment for €72,500 and credit Equity-Method Investment Revenue for
€72,500.
C) debit Cash for €72,500 and credit Equity-Method Investment for €72,500.
D) debit Equity-Method Investment for €250,000 and credit Equity-Method Investment Revenue
for €250,000.
12/31/2015 12/31/2014
Cash €30,000 €80,000
Accounts Receivable, net 160,000 100,000
Inventory 100,000 70,000
Prepaid Rent 20,000 10,000
Total Current Assets €310,000 €260,000
Equipment, at cost €400,000 €200,000
Accumulated Depreciation (60,000) (50,000)
Total Assets €650,000 €410,000
Additional information:
1. The company reports net income of €100,000 and Depreciation Expense of €20,000 for the year
ending December 31, 2015.
2. Dividends declared and paid in 2015, €70,000.
3. Equipment with a cost of €20,000, with Accumulated Depreciation of €10,000 was sold for €3,000.
4. New equipment was purchased for cash.
Using the indirect method, prepare the statement of cash flows for the year ending December 31, 2015.
At the year-end (December, 31), the company ages its receivables and adjusts the balance in allowance
for Doubtful Accounts to correspond to the aging schedule. During the last month of 2017, the company
completed the following selected transactions:
Dec. 12: Purchased inventory from suppliers, on account for €8,000. (2 marks)
Dec. 18: Sold a transmission to Wheeler Dealers, on account for €2,300. The transmission was recorded
in inventory at cost for €1,200. (4 marks)
Dec. 19: Collected €5,400 from Misfit Garage on account. (2 marks)
Dec. 25: Wrote off as uncollectible the remaining €400 account receivable from Street Outlaws. This was
the only write-off in December. (2 marks)
Dec. 31: Adjusted the Allowance for Doubtful Accounts and recorded doubtful-account expense at year-
end, based on the aging of receivables, which follows: (4 marks)
Age of Accounts
Not yet 1-30 31-60 Over 60 Total
Customer
due days days days Balance
Gas Monkey Garage € 2,000 4,200 € 6,200
Misfit Garage 2,500 3,200 1,200 € 6,900
Wheeler Dealers 2,300 1,500 3,500 4,500 € 9,800
Totals 6,800 4,700 8,900 4,500 24,900
Est. percent uncollectible 1.00% 5.00% 12.00% 20.00%
• Acid test ratio = [Cash + Short-term investments + Net current receivables] / Current liabilities
• Accounts Payable turnover = Cost of goods sold /Average net accounts payable
• Return on ordinary shareholders’ Equity (ROE) = [Net income – Preference dividends] / [Average
shareholders’ equity – Preference equity]
• Earnings per Share = [Net income – Preference dividends] / weighted average of ordinary shares
outstanding.
• Price/Earnings ratio = Market price per ordinary share / Earnings per ordinary share
• Dividend yield = Dividend per ordinary (preference) share / Market price per ordinary
(preference) share
• Book value per ordinary share = [Total shareholders’ equity – Preference equity] / number of
ordinary shares outstanding.