1. Which of the following statements best describes generally accepted accounting principles?

a. They have been formulated in the public sector

b. They have been developed on the basis of such factors as usage and practical necessity
c. They are the same as laws within our legal system
d. They do not apply to small entities

2. Which accounting process is the recognition or non-recognition of business activities as

accounting events?

a. Identifying
b. Measuring
c. Recording
d. Communicating

3. The basic purpose of accounting is

a. To provide the information that the managers of an economic entity need to control its
operations
b. To provide information that the creditors of an economic entity can use in deciding
whether to make additional loans to the entity
c. To measure the periodic income of the economic entity
d. To provide quantitative financial information about an entity that is useful in making
rational economic decision