Question 1

The Owner's Name, Capital account is a permanent account.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is true if the income statement debit column exceeds the income statement credit column on a worksheet?

Accepted Answer

A)  The company has a net loss. 
B)  The capital account increased during the period. 
C)  The company has net income. 
D)  The liabilities are greater than assets. 
A)  The company has a net loss. 
B)  The capital account increased during the period. 
C)  The company has net income. 
D)  The liabilities are greater than assets.

Question 3

Only permanent accounts appear on the post-closing trial balance.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would be considered a long-term asset?

Accepted Answer

A)  Accounts Payable 
B)  Land 
C)  Cash 
D)  Owner's Name, Capital 
A)  Accounts Payable 
B)  Land 
C)  Cash 
D)  Owner's Name, Capital

Question 5

The Office Supplies account is a temporary account.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following accounts will have an ending balance after the closing process is completed?

Accepted Answer

A)  Owner's Name, Withdrawals 
B)  Rent Expense 
C)  Accumulated Depreciation-Furniture 
D)  Service Revenue 
A)  Owner's Name, Withdrawals 
B)  Rent Expense 
C)  Accumulated Depreciation-Furniture 
D)  Service Revenue

Question 7

Which of the following statements is an accurate interpretation of the current ratio?

Accepted Answer

A)  A current ratio of 1.5 or higher is considered a high-risk ratio. 
B)  A current ratio below 1.00 is considered a good and safe ratio. 
C)  A current ratio of 2.0 indicates strong ability to pay current liabilities. 
D)  A current ratio of 0.60 or lower is a good and safe ratio. 
A)  A current ratio of 1.5 or higher is considered a high-risk ratio. 
B)  A current ratio below 1.00 is considered a good and safe ratio. 
C)  A current ratio of 2.0 indicates strong ability to pay current liabilities. 
D)  A current ratio of 0.60 or lower is a good and safe ratio.

Question 8

A current ratio of 2.00 indicates that the company has $2 of:

Accepted Answer

A)  current liabilities for every $1 of current assets. 
B)  total assets for every $1 of current liabilities. 
C)  current assets for every $1 of current liabilities. 
D)  total assets for every $1 of current assets. 
A)  current liabilities for every $1 of current assets. 
B)  total assets for every $1 of current liabilities. 
C)  current assets for every $1 of current liabilities. 
D)  total assets for every $1 of current assets.

Question 9

The worksheet helps accountants to:

Accepted Answer

A)  make the adjusted trial balance. 
B)  prepare the financial statements. 
C)  prepare the unadjusted trial balance. 
D)  maintain books of accounts without a journal. 
A)  make the adjusted trial balance. 
B)  prepare the financial statements. 
C)  prepare the unadjusted trial balance. 
D)  maintain books of accounts without a journal.

Question 10

Asset and liability accounts are closed to the Income Summary account.

Accepted Answer

A) True 
 B)False

Question 11

Adjusting journal entries are prepared:

Accepted Answer

A)  after preparing the adjusted trial balance. 
B)  after preparing the unadjusted trial balance. 
C)  after posting the closing entries. 
D)  after preparing the financial statements. 
A)  after preparing the adjusted trial balance. 
B)  after preparing the unadjusted trial balance. 
C)  after posting the closing entries. 
D)  after preparing the financial statements.

Question 12

Which is a permanent account?

Accepted Answer

A)  Wages Expense 
B)  Salary Payable 
C)  Service Revenue 
D)  Utilities Expense 
A)  Wages Expense 
B)  Salary Payable 
C)  Service Revenue 
D)  Utilities Expense

Question 13

Closing journal entries are posted:

Accepted Answer

A)  throughout the accounting period. 
B)  before posting the adjusting entries. 
C)  after preparing the post closing trial balance. 
D)  after preparing the financial statements. 
A)  throughout the accounting period. 
B)  before posting the adjusting entries. 
C)  after preparing the post closing trial balance. 
D)  after preparing the financial statements.

Question 14

Which of the following categories of accounts are temporary accounts that are closed at the end of the year?

Accepted Answer

A)  Assets, liabilities and withdrawals 
B)  Revenues, expenses and withdrawals 
C)  Assets, liabilities and capital 
D)  Revenues, expenses and capital 
A)  Assets, liabilities and withdrawals 
B)  Revenues, expenses and withdrawals 
C)  Assets, liabilities and capital 
D)  Revenues, expenses and capital

Question 15

The Interest Expense in the worksheet's unadjusted trial balance column is $3,000. Interest Expense in the income statement column is $7,000. Which of the following entries would have caused this difference?

Accepted Answer

A)  A $7,000 credit to Interest Expense in the worksheet's adjustments column 
B)  A $7,000 credit to Interest Payable in the worksheet's adjustments column 
C)  A $4,000 debit to Interest Expense in the worksheet's adjustments column 
D)  A $4,000 credit to Interest Expense in the worksheet's adjustments column 
A)  A $7,000 credit to Interest Expense in the worksheet's adjustments column 
B)  A $7,000 credit to Interest Payable in the worksheet's adjustments column 
C)  A $4,000 debit to Interest Expense in the worksheet's adjustments column 
D)  A $4,000 credit to Interest Expense in the worksheet's adjustments column

Question 16

The Notes Payable that are due within two years are classified as:

Accepted Answer

A)  current liabilities. 
B)  current assets. 
C)  long-term liabilities. 
D)  long-term assets. 
A)  current liabilities. 
B)  current assets. 
C)  long-term liabilities. 
D)  long-term assets.

Question 17

Under which of the following categories would bonds held as investment for more than a year appear?

Accepted Answer

A)  Current assets 
B)  Long-term liabilities 
C)  Long-term assets 
D)  Current liabilities 
A)  Current assets 
B)  Long-term liabilities 
C)  Long-term assets 
D)  Current liabilities

Question 18

The adjusting process zeroes out all revenues and all expenses.

Accepted Answer

A) True 
 B)False

Question 19

The following contains information from the records of the Wellborn Engineers and Architects.  $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $Wellborn Engineers and Architects 
 $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $Selected Financial Information 
 $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $December 31, 2015 $$\begin{array} { | l | r | } 
\hline \text { Current Assets } & \$ 74,000 \
\hline \text { Current Liabilities } & 44,000 \
\hline \text { Long-term Assets } & 95,000 \
\hline \text { Long-term Liabilities } & 60,000 \
\hline \text { Total Revenues } & 50,000 \
\hline \text { Total Expenses } & 30,000 \
\hline
\end{array}$$ Calculate the current ratio.

Accepted Answer

A)  1.58 
B)  2.32 
C)  0.59 
D)  1.68 
A)  1.58 
B)  2.32 
C)  0.59 
D)  1.68

Question 20

Which of the following assets is the most liquid?

Accepted Answer

A)  Building 
B)  Prepaid Expenses 
C)  Accounts Receivable 
D)  Cash 
A)  Building 
B)  Prepaid Expenses 
C)  Accounts Receivable 
D)  Cash

Exam 4: Completing the Accounting Cycle

The Owner's Name, Capital account is a permanent account.

Which of the following statements is true if the income statement debit column exceeds the income statement credit column on a worksheet?

Only permanent accounts appear on the post-closing trial balance.

Which of the following would be considered a long-term asset?

The Office Supplies account is a temporary account.

Which of the following accounts will have an ending balance after the closing process is completed?

Which of the following statements is an accurate interpretation of the current ratio?

A current ratio of 2.00 indicates that the company has $2 of:

The worksheet helps accountants to:

Asset and liability accounts are closed to the Income Summary account.

Adjusting journal entries are prepared:

Which is a permanent account?

Closing journal entries are posted:

Which of the following categories of accounts are temporary accounts that are closed at the end of the year?

The Interest Expense in the worksheet's unadjusted trial balance column is $3,000. Interest Expense in the income statement column is $7,000. Which of the following entries would have caused this difference?

The Notes Payable that are due within two years are classified as:

Under which of the following categories would bonds held as investment for more than a year appear?

The adjusting process zeroes out all revenues and all expenses.

Which of the following assets is the most liquid?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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