Question 1

Which of the following accounts will be closed by debiting the Income Summary account?

Accepted Answer

A)  Depreciation Expense 
B)  Accounts Payable 
C)  Service Revenue 
D)  Accumulated Depreciation 
A)  Depreciation Expense 
B)  Accounts Payable 
C)  Service Revenue 
D)  Accumulated Depreciation A

Question 2

The smaller the current ratio,the higher the firm's ability to repay its current debts.

Accepted Answer

A) True 
 B)False  False

Question 3

Olsteen Company earned revenues of $61,000 and incurred expenses of $71,000.No withdrawals were taken.The owner did not make any new capital contributions during the year.The company is a sole proprietorship.Which of the following statements is correct?

Accepted Answer

A)  The entry to close Income Summary is the same regardless of a net income or a net loss. 
B)  Olsteen, Capital will be debited for $10,000 and Income Summary will be credited for $10,000. 
C)  The entries to close revenues and expenses will differ if there is a net loss. 
D)  The entry to close Income Summary requires a debit to the Income Summary account. 
A)  The entry to close Income Summary is the same regardless of a net income or a net loss. 
B)  Olsteen, Capital will be debited for $10,000 and Income Summary will be credited for $10,000. 
C)  The entries to close revenues and expenses will differ if there is a net loss. 
D)  The entry to close Income Summary requires a debit to the Income Summary account. B

Question 4

The statement of owner's equity shows how the owner's equity changed during the period due to acquiring assets and paying liabilities.

Accepted Answer

A) True 
 B)False

Question 5

The time span during which cash is paid for goods and services,which are then sold to customers from whom the business collects cash,is called the ________.

Accepted Answer

A)  production time 
B)  operating cycle 
C)  accounting cycle 
D)  sales time 
A)  production time 
B)  operating cycle 
C)  accounting cycle 
D)  sales time

Question 6

The balance sheet is the first financial statement that is prepared at the end of the period.

Accepted Answer

A) True 
 B)False

Question 7

Regarding a classified balance sheet,which of the following statements is correct?

Accepted Answer

A)  Accounts are classified by their purchase dates. 
B)  Account balances are listed from the highest amount to the lowest amount. 
C)  Assets are listed in the order of their liquidity. 
D)  Assets are listed in alphabetical order. 
A)  Accounts are classified by their purchase dates. 
B)  Account balances are listed from the highest amount to the lowest amount. 
C)  Assets are listed in the order of their liquidity. 
D)  Assets are listed in alphabetical order.

Question 8

The Depreciation Expense account is a temporary account.

Accepted Answer

A) True 
 B)False

Question 9

Assets are listed in the order of their ________ on the balance sheet.

Accepted Answer

A)  magnitude 
B)  dates of purchase 
C)  liquidity 
D)  durability 
A)  magnitude 
B)  dates of purchase 
C)  liquidity 
D)  durability

Question 10

The Salaries Expense account is a temporary account.

Accepted Answer

A) True 
 B)False

Question 11

Calculate the current ratio using the following information: (Round your answer to two decimal places.) $$\begin{array} { l l } 
\text { Cash } & \$ 6,000 \
\text { Accounts Receivable } & 1,300 \
\text { Prepaid Rent } & 1,100 \
\text { Larid } & 20,000 \
\text { Equipment } & 4,000 \
\text { Accurnulated Depreciation } & 1,200 \
\text { Accounts Payable } & 3,000 \
\text { Salaries Payable } & 1,000 \
\text { Notes Payable-long term } & 9,000
\end{array}$$

Accepted Answer

A)  2.10 
B)  2.80 
C)  1.53 
D)  1.83 
A)  2.10 
B)  2.80 
C)  1.53 
D)  1.83

Question 12

Preparing the worksheet is a required step of the accounting cycle.

Accepted Answer

A) True 
 B)False

Question 13

When a business uses a computerized accounting system,the software automatically closes the books.

Accepted Answer

A) True 
 B)False

Question 14

The formula for computing the current ratio is ________.

Accepted Answer

A)  Current ratio = Total Current assets / Total assets 
B)  Current ratio = Total Current assets / Total liabilities 
C)  Current ratio = Total Current assets / Total Owner's Equity 
D)  Current ratio = Total Current assets / Total Current liabilities 
A)  Current ratio = Total Current assets / Total assets 
B)  Current ratio = Total Current assets / Total liabilities 
C)  Current ratio = Total Current assets / Total Owner's Equity 
D)  Current ratio = Total Current assets / Total Current liabilities

Question 15

The last two columns generally found on the right side of the worksheet are the income statement columns.

Accepted Answer

A) True 
 B)False

Question 16

The beginning balance in the Woodlands,Capital account of Woodlands Technologies Company was $74,000.The revenues and expenses amounted to $55,000 and $37,000,respectively.During the year,the owner did not make withdrawals or capital contributions.The Woodlands,Capital account will have $129,000 at the end of the year.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements concerning the worksheet is correct?

Accepted Answer

A)  When a worksheet is used, there is no need to make journal entries. 
B)  A worksheet consists of seven sections. 
C)  Section 5 (Income Statement) and Section 6 (Balance Sheet) are optional. 
D)  A completed worksheet is a substitute for the financial statements. 
A)  When a worksheet is used, there is no need to make journal entries. 
B)  A worksheet consists of seven sections. 
C)  Section 5 (Income Statement) and Section 6 (Balance Sheet) are optional. 
D)  A completed worksheet is a substitute for the financial statements.

Question 18

Net income (loss)is the difference between the total debits and the total credits in the income statement columns of the worksheet.

Accepted Answer

A) True 
 B)False

Question 19

Liquidity is a measure of how quickly an item can be converted to net income.

Accepted Answer

A) True 
 B)False

Question 20

The steps of the accounting cycle are followed throughout the accounting period.

Accepted Answer

A) True 
 B)False

Exam 4: Completing the Accounting Cycle

Which of the following accounts will be closed by debiting the Income Summary account?

The smaller the current ratio,the higher the firm's ability to repay its current debts.

Olsteen Company earned revenues of $61,000 and incurred expenses of $71,000.No withdrawals were taken.The owner did not make any new capital contributions during the year.The company is a sole proprietorship.Which of the following statements is correct?

The statement of owner's equity shows how the owner's equity changed during the period due to acquiring assets and paying liabilities.

The time span during which cash is paid for goods and services,which are then sold to customers from whom the business collects cash,is called the ________.

The balance sheet is the first financial statement that is prepared at the end of the period.

Regarding a classified balance sheet,which of the following statements is correct?

The Depreciation Expense account is a temporary account.

Assets are listed in the order of their ________ on the balance sheet.

The Salaries Expense account is a temporary account.

Calculate the current ratio using the following information: (Round your answer to two decimal places.) Cash \ 6,000 Accounts Receivable 1,300 Prepaid Rent 1,100 Larid 20,000 Equipment 4,000 Accurnulated Depreciation 1,200 Accounts Payable 3,000 Salaries Payable 1,000 Notes Payable-long term 9,000

Preparing the worksheet is a required step of the accounting cycle.

When a business uses a computerized accounting system,the software automatically closes the books.

The formula for computing the current ratio is ________.

The last two columns generally found on the right side of the worksheet are the income statement columns.

Which of the following statements concerning the worksheet is correct?

Net income (loss)is the difference between the total debits and the total credits in the income statement columns of the worksheet.

Liquidity is a measure of how quickly an item can be converted to net income.

The steps of the accounting cycle are followed throughout the accounting period.

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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