Question 1

Which of the following statements about a company's operating cycle is not true?

Accepted Answer

A)  Noncurrent items are those expected to come due within one year or the company's operating cycle. 
B)  The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services. 
C)  The length of a company's operating depends on its activities. 
D)  For a merchandiser selling products, the operating cycle is the time span between paying suppliers for merchandise and receiving cash from customers. 
E)  Most operating cycles are less than one year. 
A)  Noncurrent items are those expected to come due within one year or the company's operating cycle. 
B)  The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services. 
C)  The length of a company's operating depends on its activities. 
D)  For a merchandiser selling products, the operating cycle is the time span between paying suppliers for merchandise and receiving cash from customers. 
E)  Most operating cycles are less than one year.

Question 2

Balance sheet accounts are called ____________________ accounts because they carry their balances to the next accounting period, and are not closed as long as the company continues to own the asset, owe the liability and have equity.

Accepted Answer

The answer of Balance sheet accounts are called ____________________ accounts...

Question 3

A ____________________ helps in preparing financial statements, is useful in preparing interim statements, and is helpful in showing the effects of proposed transactions.

Accepted Answer

The answer of A ____________________ helps in preparing financial statements,...

Question 4

A company has current assets of $15,000 and current liabilities of $9,500. Its current ratio is 1.6.
$15,000/$9,500 = 1.6

Accepted Answer

A) True 
 B)False

Question 5

In the table below, indicate with an "X" in the proper column whether the account is a temporary (nominal) account or a permanent (real) account.

Accepted Answer

The answer of In the table below, indicate with an...

Question 6

Reversing entries are optional.

Accepted Answer

A) True 
 B)False

Question 7

The items that follow appeared in the Income Statement columns of the work sheet prepared for Armstrong Delivery Service at current year-end. In addition, L. Armstrong, Capital had a credit balance of $117,000 and L. Armstrong, Withdrawals had a debit balance of $30,000 at year end. Prepare closing journal entries for this company.

Accepted Answer

The answer of The items that follow appeared in the...

Question 8

Intangible assets are long-term resources that benefit business operations that usually lack physical form and have uncertain benefits.

Accepted Answer

A) True 
 B)False

Question 9

Another name for temporary accounts is:

Accepted Answer

A)  Real accounts. 
B)  Contra accounts. 
C)  Accrued accounts. 
D)  Balance column accounts. 
E)  Nominal accounts. 
A)  Real accounts. 
B)  Contra accounts. 
C)  Accrued accounts. 
D)  Balance column accounts. 
E)  Nominal accounts.

Question 10

Permanent accounts include all of the following except:

Accepted Answer

A)  Accumulated Depreciation - Equipment. 
B)  Prepaid Rent. 
C)  Unearned Consulting Revenue. 
D)  Accounts Payable. 
E)  Depreciation Expense - Equipment. 
A)  Accumulated Depreciation - Equipment. 
B)  Prepaid Rent. 
C)  Unearned Consulting Revenue. 
D)  Accounts Payable. 
E)  Depreciation Expense - Equipment.

Question 11

Which of the following statements is true?

Accepted Answer

A)  Owner's capital must be closed each accounting period. 
B)  A post-closing trial balance should include only permanent accounts. 
C)  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)  Closing entries are only necessary if errors have been made. 
A)  Owner's capital must be closed each accounting period. 
B)  A post-closing trial balance should include only permanent accounts. 
C)  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)  Closing entries are only necessary if errors have been made.

Question 12

An expense account is normally closed by debiting Income Summary and crediting the expense account.

Accepted Answer

A) True 
 B)False

Question 13

A classified balance sheet:

Accepted Answer

A)  Measures a company's ability to pay its bills on time. 
B)  Organizes assets and liabilities into important subgroups. 
C)  Presents revenues, expenses, and net income. 
D)  Reports operating, investing, and financing activities. 
E)  Reports the effect of profit and withdrawals on owner's capital. 
A)  Measures a company's ability to pay its bills on time. 
B)  Organizes assets and liabilities into important subgroups. 
C)  Presents revenues, expenses, and net income. 
D)  Reports operating, investing, and financing activities. 
E)  Reports the effect of profit and withdrawals on owner's capital.

Question 14

If in preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. The Balance Sheet columns will balance on completing the work sheet but with the wrong net income, if the amount sorted in error is:

Accepted Answer

A)  An expense amount placed in the Balance Sheet Credit column. 
B)  A revenue amount placed in the Balance Sheet Debit column. 
C)  A liability amount placed in the Income Statement Credit column. 
D)  An asset amount placed in the Balance Sheet Credit column. 
E)  A liability amount placed in the Balance Sheet Debit column. 
A)  An expense amount placed in the Balance Sheet Credit column. 
B)  A revenue amount placed in the Balance Sheet Debit column. 
C)  A liability amount placed in the Income Statement Credit column. 
D)  An asset amount placed in the Balance Sheet Credit column. 
E)  A liability amount placed in the Balance Sheet Debit column.

Question 15

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

Accepted Answer

A) True 
 B)False

Question 16

A company had revenues of $187,000 and expenses of $109,000 for the accounting period. The owner withdrew $37,000 during the year. Which of the following entries could not be a closing entry?

Accepted Answer

A)  Debit Income Summary $78,000; credit Owner's, Capital $78,000. 
B)  Debit Capital $37,000; credit Withdrawals $37,000. 
C)  Debit Revenues $187,000; credit Income Summary $187,000. 
D)  Debit Income Summary $109,000, credit Expenses $109,000. 
E)  Debit Income Summary $187,000; credit Revenues $187,000. 
A)  Debit Income Summary $78,000; credit Owner's, Capital $78,000. 
B)  Debit Capital $37,000; credit Withdrawals $37,000. 
C)  Debit Revenues $187,000; credit Income Summary $187,000. 
D)  Debit Income Summary $109,000, credit Expenses $109,000. 
E)  Debit Income Summary $187,000; credit Revenues $187,000.

Question 17

If all columns balance upon completion of a work sheet, you can be sure that no errors were made in preparing the work sheet.

Accepted Answer

A) True 
 B)False

Question 18

Closing entries are normally entered in the general journal and then posted to the work sheet.

Accepted Answer

A) True 
 B)False

Question 19

All of the following statements regarding the Income Statement columns on the worksheet are true except:

Accepted Answer

A)  The balances in the Income Statement credit column are revenues. 
B)  The balances in the Income Statement credit column are unearned revenues. 
C)  The balances in the Income Statement debit column are expenses. 
D)  The difference between the totals of the Income Statement columns is net income or net loss. 
E)  The net income or net loss from the Income Statement columns is entered in the Balance Sheet & Statement of Owner's Equity columns. 
A)  The balances in the Income Statement credit column are revenues. 
B)  The balances in the Income Statement credit column are unearned revenues. 
C)  The balances in the Income Statement debit column are expenses. 
D)  The difference between the totals of the Income Statement columns is net income or net loss. 
E)  The net income or net loss from the Income Statement columns is entered in the Balance Sheet & Statement of Owner's Equity columns.

Question 20

Which of the following statements is incorrect?

Accepted Answer

A)  Permanent accounts is another name for nominal accounts. 
B)  Temporary accounts carry a zero balance at the beginning of each accounting period. 
C)  The Income Summary account is a temporary account. 
D)  Real accounts remain open as long as the asset, liability, or equity items recorded in the accounts continue in existence. 
E)  The closing process applies only to temporary accounts. 
A)  Permanent accounts is another name for nominal accounts. 
B)  Temporary accounts carry a zero balance at the beginning of each accounting period. 
C)  The Income Summary account is a temporary account. 
D)  Real accounts remain open as long as the asset, liability, or equity items recorded in the accounts continue in existence. 
E)  The closing process applies only to temporary accounts.

Exam 4: Completing the Accounting Cycle

Which of the following statements about a company's operating cycle is not true?

Balance sheet accounts are called ____________________ accounts because they carry their balances to the next accounting period, and are not closed as long as the company continues to own the asset, owe the liability and have equity.

A ____________________ helps in preparing financial statements, is useful in preparing interim statements, and is helpful in showing the effects of proposed transactions.

A company has current assets of $15,000 and current liabilities of $9,500. Its current ratio is 1.6. $15,000/$9,500 = 1.6

In the table below, indicate with an "X" in the proper column whether the account is a temporary (nominal) account or a permanent (real) account.

Reversing entries are optional.

Intangible assets are long-term resources that benefit business operations that usually lack physical form and have uncertain benefits.

Another name for temporary accounts is:

Permanent accounts include all of the following except:

Which of the following statements is true?

An expense account is normally closed by debiting Income Summary and crediting the expense account.

A classified balance sheet:

If in preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. The Balance Sheet columns will balance on completing the work sheet but with the wrong net income, if the amount sorted in error is:

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

A company had revenues of $187,000 and expenses of $109,000 for the accounting period. The owner withdrew $37,000 during the year. Which of the following entries could not be a closing entry?

If all columns balance upon completion of a work sheet, you can be sure that no errors were made in preparing the work sheet.

Closing entries are normally entered in the general journal and then posted to the work sheet.

All of the following statements regarding the Income Statement columns on the worksheet are true except:

Which of the following statements is incorrect?

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

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