Question 1

Explain the current ratio. Describe how it is used to evaluate a company.

Accepted Answer

The current ratio is current assets divided by current liabilities. It is used to evaluate a company's ability to pay its current debts with the amount of current assets available.

Question 2

The third closing entry is to close Withdrawals to Income Summary.

Accepted Answer

A) True 
 B)False  False

Question 3

Below is an alphabetical listing of General Ledger accounts with identifying numbers for Scott's Suntanning Parlour. Indicate the accounts debited and credited in each of the following transactions by placing the proper account identifying number(s) in the columns to the right of each transaction.
 $\begin{array}{|l|l|}
\hline \text { 1. Accounts Payable } & 10 . \text { Prepaid Insurance } \
\hline \text { 2. Accounts Receivable } & 11 \text { Rent Expense } \
\hline \text { 3. Accum depreciation, Suntan Equip } & 12 . \text { Salaries Expense } \
\hline \text { 4. Cash } & \text { 13. Salaries Payable } \
\hline \text { 5.Depreciation expense, Suntan Equip } & \text { 14. Suntaining Equipment } \
\hline \text { 6.Income Summary } & \text { 15. Suntanning Revenue } \
\hline \text { 7. Insurance Expense } & \text { 16. Scott Smith, Capital } \
\hline \text { 8.Office Supplies } & \text { 17. Scott Smith, Withdrawals } \
\hline \text { 9.Office Supplies Expense } &\
\hline
\end{array}$ \(\begin{array}{|l|l|l|l|}
\hline &&\text { Debit } & \text { Credit }\
\hline \text { (a) } & \text { Invested suntanning equipment and cash in a suntanning } & & \
&\text { business. } & -&- \
\hline \text { (b) } & \text { Rented a store and paid rent for one month. } & -&- \
\hline \text { (c) } & \text { Paid the premium on a two-year insurance policy. } & -&- \
\hline \text { (d) } & \text { Purchased office supplies for cash and recorded an asset } & -&- \
\hline \text { (e) } & \text { Rendered services to clients for cash } &-&- \
\hline \text { (f) } & \text { Scott Smith withdrew cash from the business for personal use. } & -&- \
\hline \text { (g) } & \text { Rendered services to clients on account. } & -&- \
\hline \text { (h) } & \text { Paid salaries. } & -&- \
\hline \text { (i) } & \text { Made an adjusting entry to record expired insurance. } & -&- \
\hline \text { (j) } & \text { Made an adjusting entry to record accrued salaries. } & -&- \
\hline \text { (k) } & \text { Made an adjusting entry to record office supplies used. } & -&- \
\hline \text { (l) } & \text { Made an adjusting entry to record depreciation on } &  \
&\text { suntanning equipment. }&-&- \
\hline \text { (m) } & \begin{array}{l}
\text { Closed the Income Summary account, which reflected } \
\text { a net loss. }
\end{array} & -&- \
\hline \text { (n) } & \text { Closed the owner's withdrawals account. } & -&- \
\hline
\end{array}\)

Accepted Answer

$$\begin{array} { | l | l | r | } 
\hline & { \text { Debit } } & \text { Credit } \
\hline \text { (a) } & 4,14 & 16 \
\hline \text { (b) } & 11 & 4 \
\hline \text { (c) } & 10 & 4 \
\hline \text { (d) } & 8 & 4 \
\hline \text { (e) } & 4 & 15 \
\hline \text { (f) } & 17 & 4 \
\hline \text { (g) } & 2 & 15 \
\hline \text { (h) } & 12 & 4 \
\hline \text { (i) } & 7 & 10 \
\hline \text { (j) } & 12 & 13 \
\hline \text { (k) } & 9 & 8 \
\hline \text { (l) } & 5 & 3 \
\hline \text { (m) } & 16 & 6 \
\hline \text { (n) } & 16 & 17 \
\hline
\end{array}$$

Question 4

Income Summary is a temporary account.

Accepted Answer

A) True 
 B)False

Question 5

The income summary has a zero balance after which step in the closing process

Accepted Answer

A)  Step 1 
B)  Step 2 
C)  Step 3 
D)  Step 4 
E)  The income summary is permanent and therefore not closed 
A)  Step 1 
B)  Step 2 
C)  Step 3 
D)  Step 4 
E)  The income summary is permanent and therefore not closed

Question 6

The closing process is a two-step process. First revenue, expense, and withdrawals are set to zero balance. Second, the process summarizes a period's assets and expenses.

Accepted Answer

A) True 
 B)False

Question 7

Current liabilities are listed in the order of liquidity.

Accepted Answer

A) True 
 B)False

Question 8

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming year and to update the owner's capital account for the events of the year just finished are

Accepted Answer

A)  Adjusting entries 
B)  Closing entries 
C)  Final entries 
D)  Work sheet entries 
E)  None of these answers is correct. 
A)  Adjusting entries 
B)  Closing entries 
C)  Final entries 
D)  Work sheet entries 
E)  None of these answers is correct.

Question 9

Reversing entries are prepared to adjust accrued assets and liabilities that were created by adjusting entries at the end of the previous reporting period.

Accepted Answer

A) True 
 B)False

Question 10

A trial balance prepared after the adjusting and closing entries have been posted, and which is the final step in the accounting cycle, is a(n)

Accepted Answer

A)  Unadjusted trial balance 
B)  Post-closing trial balance 
C)  Book of final entry 
D)  Adjusted trial balance 
E)  Work sheet 
A)  Unadjusted trial balance 
B)  Post-closing trial balance 
C)  Book of final entry 
D)  Adjusted trial balance 
E)  Work sheet

Question 11

Closing entries are normally entered in the General Journal and then recorded on the work sheet.

Accepted Answer

A) True 
 B)False

Question 12

Below is the year-end adjusted trial balance for Lucie Accounting.
  
-Using the information from Lucie Accounting (Ref 4-137), calculate the current ratio.

Accepted Answer

12,000 @#LAT-DLM& 13

Question 13

Property, plant and equipment and intangible assets are non-current assets used to produce or sell products and services.

Accepted Answer

A) True 
 B)False

Question 14

Closing entries accomplish the goal of reflecting revenues and expenses in the owner's capital account.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true?

Accepted Answer

A)  Journalizing consists of analyzing and recording transactions in T-accounts. 
B)  Preparing a post-closing trial balance helps to prove the accuracy of the adjusting and closing procedures. 
C)  The information on the work sheet can be used in place of preparing financial statements. 
D)  By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts. 
E)  All of these statements are true. 
A)  Journalizing consists of analyzing and recording transactions in T-accounts. 
B)  Preparing a post-closing trial balance helps to prove the accuracy of the adjusting and closing procedures. 
C)  The information on the work sheet can be used in place of preparing financial statements. 
D)  By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts. 
E)  All of these statements are true.

Question 16

The Income Summary account is

Accepted Answer

A)  The account from which the amount of profit or loss is transferred to the owners' capital accounts in a partnership 
B)  A temporary account 
C)  Used in the closing process to summarize the amounts of revenues and expenses 
D)  Not a permanent account 
E)  All of these 
A)  The account from which the amount of profit or loss is transferred to the owners' capital accounts in a partnership 
B)  A temporary account 
C)  Used in the closing process to summarize the amounts of revenues and expenses 
D)  Not a permanent account 
E)  All of these

Question 17

(A) In a sole proprietorship, Income Summary is closed to what account? (B) In following the steps of the accounting cycle, what two steps must be done before preparation of an unadjusted trial balance?

Accepted Answer

(A) Owner's capital

Question 18

A company had revenues of $75,000, withdrawals of $10,000 and expenses of $62,000 during an accounting period. Which of the following entries should not be journalized in the closing process?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Income Summary } & 13,000 & \
\hline \text { Capital } & & 13,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Capital } & 10,000 & \
\hline \text { Withdrawals } & & 10,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Revenues } & 75,000 & \
\hline \text { Income Summary } & & 75,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | l | l | } 
\hline \text { Income Summary } & 62,000 & \
\hline \text { Expenses } & & 62,000 \
\hline
\end{array}$$ 
E)  All of these should be journalized in the closing process. 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Income Summary } & 13,000 & \
\hline \text { Capital } & & 13,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Capital } & 10,000 & \
\hline \text { Withdrawals } & & 10,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Revenues } & 75,000 & \
\hline \text { Income Summary } & & 75,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | l | l | } 
\hline \text { Income Summary } & 62,000 & \
\hline \text { Expenses } & & 62,000 \
\hline
\end{array}$$ 
E)  All of these should be journalized in the closing process.

Question 19

In the blank space beside each numbered item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter "z" in the blank.

Accepted Answer

The answer of In the blank space beside each numbered...

Question 20

Given the following accounts and their adjusted balances before closing entries are posted, what amount will be posted to Bessie Cool, Capital in the process of closing the Income Summary account? Assume all accounts have normal balances. $$\begin{array} { | l | r | } 
\hline \text { Bessie Cool, capital } & \$ 7,000 \
\hline \text { Bessie Cool, withdrawals } & 9,600 \
\hline \text { Service Revenue } & 35,500 \
\hline \text { Rent expense } & 3,600 \
\hline \text { Salaries expense } & 7,200 \
\hline \text { Insurarace expense } & 920 \
\hline \text { Depreciation experse, equip. } & 500 \
\hline \text { Accumulated depreciation, equipment. } & 1,500 \
\hline
\end{array}$$

Accepted Answer

A)  $12,180 credit 
B)  $21,780 debit 
C)  $21,780 credit 
D)  $23,280 credit 
E)  $28,780 credit 
A)  $12,180 credit 
B)  $21,780 debit 
C)  $21,780 credit 
D)  $23,280 credit 
E)  $28,780 credit

Explain the current ratio. Describe how it is used to evaluate a company.

The third closing entry is to close Withdrawals to Income Summary.

Income Summary is a temporary account.

The income summary has a zero balance after which step in the closing process

The closing process is a two-step process. First revenue, expense, and withdrawals are set to zero balance. Second, the process summarizes a period's assets and expenses.

Current liabilities are listed in the order of liquidity.

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming year and to update the owner's capital account for the events of the year just finished are

Reversing entries are prepared to adjust accrued assets and liabilities that were created by adjusting entries at the end of the previous reporting period.

A trial balance prepared after the adjusting and closing entries have been posted, and which is the final step in the accounting cycle, is a(n)

Closing entries are normally entered in the General Journal and then recorded on the work sheet.

Below is the year-end adjusted trial balance for Lucie Accounting. -Using the information from Lucie Accounting (Ref 4-137), calculate the current ratio.

Property, plant and equipment and intangible assets are non-current assets used to produce or sell products and services.

Closing entries accomplish the goal of reflecting revenues and expenses in the owner's capital account.

Which of the following statements is true?

The Income Summary account is

(A) In a sole proprietorship, Income Summary is closed to what account? (B) In following the steps of the accounting cycle, what two steps must be done before preparation of an unadjusted trial balance?

A company had revenues of $75,000, withdrawals of $10,000 and expenses of $62,000 during an accounting period. Which of the following entries should not be journalized in the closing process?

In the blank space beside each numbered item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter "z" in the blank.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Property, Plant and Equipment Intangibles

Payroll Liabilities

Accounting Information Systems

Filters

Exam 4: Completing the Accounting Cycle and Classifying Accounts

Explain the current ratio. Describe how it is used to evaluate a company.

The third closing entry is to close Withdrawals to Income Summary.

Income Summary is a temporary account.

The income summary has a zero balance after which step in the closing process

The closing process is a two-step process. First revenue, expense, and withdrawals are set to zero balance. Second, the process summarizes a period's assets and expenses.

Current liabilities are listed in the order of liquidity.

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming year and to update the owner's capital account for the events of the year just finished are

Reversing entries are prepared to adjust accrued assets and liabilities that were created by adjusting entries at the end of the previous reporting period.

A trial balance prepared after the adjusting and closing entries have been posted, and which is the final step in the accounting cycle, is a(n)

Closing entries are normally entered in the General Journal and then recorded on the work sheet.

Below is the year-end adjusted trial balance for Lucie Accounting. -Using the information from Lucie Accounting (Ref 4-137), calculate the current ratio.

Property, plant and equipment and intangible assets are non-current assets used to produce or sell products and services.

Closing entries accomplish the goal of reflecting revenues and expenses in the owner's capital account.

Which of the following statements is true?

The Income Summary account is

(A) In a sole proprietorship, Income Summary is closed to what account? (B) In following the steps of the accounting cycle, what two steps must be done before preparation of an unadjusted trial balance?

A company had revenues of $75,000, withdrawals of $10,000 and expenses of $62,000 during an accounting period. Which of the following entries should not be journalized in the closing process?

In the blank space beside each numbered item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter "z" in the blank.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Property, Plant and Equipment Intangibles

Payroll Liabilities

Accounting Information Systems

Filters