Essay on ACCT1002 Mid Semester Practice

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1. The basic purpose of Generally Accepted Accounting Principles (GAAPs) is to:
a. Minimize the possibility of the business becoming insolvent
b. Ensure the financial statements include the type of information that is best suited to every type of business decision
c. Provide a framework for financial reporting that is understood by both the preparers and the users of financial statements
d. Eliminate the need for professional judgment in preparing financial statements 2. The accounting principle of matching is best demonstrated by
a. not recognizing any expense unless some revenue is realized.
b. associating effort (expense) with accomplishment (revenue).
c. recognizing prepaid rent received as revenue.
d. establishing an Appropriation for
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At December 31, the amount of unused supplies on hand was determined by physical count to amount to $1,460. The proper adjusting entry would be:
a. Debit Office Supplies Expense $1,460 and credit Office Supplies $1,460
b. Debit Accounts Payable $3,310 and credit Office Supplies $3,310
c. Debit Office Supplies $1,460 and credit Office Supplies Expense $1,460
d. Debit Office Supplies Expense $1,850 and credit Office Supplies
$1,850

14. Which of the following statements about the closing process is correct:
a. Balances in Income Statement accounts are reduced to zero
b. The owner’s capital account is updated to reflect the period’s net income and owner withdrawals
c. Temporary accounts are given different treatment than real accounts
d. All of the above statements are correct

15. Under the cash basis of accounting, revenues are recorded
a. when they are earned and realized.
b. when they are earned and realizable.
c. when they are earned.
d. when they are realized.
16. Which of the following appears on the Income Statement of a merchandising company, but not on the income Statement of a business that renders only services?
-4-

a. adverstising expense
b. rent revenue
c. gross profit
d. wages expense
17. Kangaroo Pizza reports net sales of $1,000,000, gross profit of $450,000, and net income of $80,000.

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