Exam 15: Financial Statements and Year-End Accounting for a Merchandising Business

Current liabilities include those obligations that will extend beyond one year or the normal operating cycle, whichever is longer.

Match the terms with the definitions. -Those obligations that will extend beyond one year or the normal operating cycle, whichever is longer.

The following information was taken from the financial statements of Brandon's Motor Shop: Total current assets $ 53,000 Property, plant, and equipment 6,000 Current liabilities 21,000 Long-term liabilities 4,000 Owner's equity 34,000 Beginning inventory 31,000 Ending inventory 33,000 Cost of goods sold 152,000 Net income 42,000 ​ The current ratio for Brandon's Motor Shop is closest to

The single-step form of income statement lists all revenue items and their totals first, followed by all expense items and their totals, to produce a difference that is either net income or net loss.

Match the terms with the definitions. -The length of time generally required for a business to buy inventory, sell it, and collect the cash.

Match the terms with the definitions. -Gross sales less sales returns and allowances and sales discounts.

All adjusting entries should be reversed.

A quick ratio of 1.5 to 1 indicates that quick assets are more than adequate to meet current obligations.

The information needed in journalizing the closing entries is obtained from the

Current assets are listed on the balance sheet from the most liquid to least liquid.

The purpose of the post-closing trial balance is to prove that the general ledger is in balance at the beginning of the new accounting period.

Match the terms with the definitions. -An account that is used to reflect an obligation that is secured by a mortgage on certain property.

Match the terms with the definitions. -Cash and all other current assets that can be converted into cash quickly.

The cost of a building less its accumulated depreciation represents the undepreciated cost.

The ability of a business to meet its current obligations may be evaluated with the return on owner's equity ratio.

Net sales minus cost of goods sold equals

Information needed in journalizing the first three closing entries is obtained from which of the following work sheet columns?

Match the terms with the definitions. -The number of times the merchandise inventory turned over, or was sold, during the accounting period.

The third step in the closing process is to transfer the balance in which of the following accounts to the permanent owner's equity account?

Match the terms with the definitions. -The opposite of the adjusting entry. It is made on the first day of the next accounting period and simplifies recording transactions in the new period.