Exam 4: Completing the Accounting Cycle and Classifying Accounts

Current liabilities are cash and other resources that are expected to be sold,collected,or used within the longer of one year or the company's operating cycle.

Sharp has current assets of $15,000 and current liabilities of $9,500.Its current ratio is 1.6 to 1.

Using the information from Lucie Accounting (Ref 4-1),calculate the current ratio.

The ______________ refers to the steps in preparing financial statements for users.

The current ratio is used to evaluate the ability of a business to meet its short-term obligations.

The Unadjusted Trial Balance columns of a work sheet total $84,000.The Adjustments columns contain entries for the following: (1)Office supplies used during the period,$1,200. (2)Expiration of prepaid rent,$700. (3)Accrued salaries expense,$500. (4)Depreciation expense,$800. (5)Accrued repair service fees receivable,$400. The Adjusted Trial Balance columns total:

Asset,liability and revenue accounts are not closed as long as a company continues in business.

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

The Income Summary account is a permanent account that will be carried forward year after year.

The amounts below appeared in the Income Statement and Balance Sheet columns of a company's December 31 work sheet.In the space provided record the closing entries on December 31 (no explanations are necessary).

A work sheet is a tool of the accountant for bringing together information needed in preparing the statements,adjusting the accounts,and preparing closing entries.

Emilia Feridy,the proprietor of EF Services,withdrew a total of $50 for to pay for her daughter's swimming lessons.What is the entry needed to record this transaction?

The normal order for the asset section of a classified balance sheet is:

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

Harley Ravidson's current ratio is .9 to 1.The industry average current ratio is 1.2.Harley Davidson does not have a problem in covering its current liabilities because of its strong sales and position in its industry.

Using the following partial Excel work sheet for Cozy Motel,prepare the Income Statement,the Statement of Changes in Equity,and an unclassified Balance Sheet for the company.Assume the owner did not make any investments in the business during the year.

A post-closing trial balance shows:

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.

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

In a sole proprietorship,the Income Summary account is closed to the capital account