MIDSEMMultiple Choice PracticeQuesSOLNS copy.doc

MIDSEMMultiple Choice PracticeQuesSOLNS copy.doc - BSD110...

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BSD110 ACCOUNTING SOLUTIONS TO PRACTICE QUESTIONS FOR MID SEMESTER EXAM TOPICS 1 - 5 (Workings are supplied where more detailed calculations) QUESTION CORRECT ANSWER 1 b 2 a 3 d 4 c 5 d 6 b Working: OE at start is $16,000. Add the profit of $3000, add the owner’s investment of $5000 and deduct the drawings of $2000. This equals $22,000 which is the owner’s equity at the end of the year. Assets at the end of the year are $14000 greater than at the start thus = $54000. Liabilities at end = A – OE = $32000. 7 d 8 b Working: A –L at start of year = OE at start = $2,000. Add net profit (R –E) $3,200. Add Capital Contributed $23,000 less Capital Withdrawn $21,000 . This gives OE at the end of the period. = $7,200. = A - L at the end of the period Assets at the end are $40,000 therefore Liabilities are $32,800. 9 d Working: A –L =OE. Assets decrease by $24780 means OE decreases by $24780; Liabilities decrease by $15265 means OE increases by that amount. Net effect on OE is a decrease of the difference of $9515. 10 b 11 c 12 d 13 b 14 e 15 d (Net profit = Revenue less Expenses) 16 d 17 c 18 d 19 b 20 c Working: If an accrued expense is not recorded then an expense and a liability is not
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