Deck 4: Completing the Accounting Cycle

Question 1

Which of the following is a current asset that is expected to be converted to cash, sold, or consumed during the next year (or the normal operating cycle, if longer)?

A) Land
B) Equipment
C) Building
D) Accounts Receivable

Answer 1

D

Question 2

In a balance sheet, assets are classified as either current or long term, depending on their liquidity.

Answer 2

True

Question 3

A balance sheet prepared in the account form lists the assets at the top and the liabilities and stockholders' equity below.

Answer 3

False

Question 4

All assets that will not be converted to cash or used up within the business's operating cycle or one year, whichever is greater, are called ________.

A) long-term assets
B) fully depreciated assets
C) current assets
D) current liabilities

Question 5

The operating cycle is the time span required for a business to repay its long-term liabilities.

Question 6

Which of the following is the most liquid asset?

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

Question 7

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

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

Question 8

Salaries Payable, Interest Payable, and Unearned Revenue are examples of ________.

A) short-term investments
B) fixed assets
C) current liabilities
D) long-term liabilities

Question 9

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

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

Question 10

Property, plant, and equipment are categorized as ________.

A) current assets
B) plant assets
C) long-term investments
D) short-term investments

Question 11

Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business's normal operating cycle if the cycle is longer than a year, are called ________ assets.

A) intangible
B) plant
C) long-term
D) current

Question 12

The financial statement that reports assets, liabilities, and stockholders' equity as of the last day of the period is called the ________.

A) income statement
B) statement of owner's equity
C) balance sheet
D) unadjusted trial balance

Question 13

Prepaid Rent is always classified as a long-term asset.

Question 14

Under which of the following categories would Accounts Receivable appear?

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

Question 15

A balance sheet prepared in the report form lists the assets on the left and the liabilities and stockholders' equity on the right.

Question 16

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 ________.

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

Question 17

List the order in which the balance sheet, statement of owner's equity and income statement are prepared. Briefly discuss why this order is necessary.

Question 18

Patents, copyrights, and trademarks are examples of ________.

A) short-term investments
B) fixed assets
C) long-term investments
D) intangible assets

Question 19

The financial statements are prepared from the ________.

A) adjusted trial balance
B) chart of accounts
C) statement of retained earnings
D) unadjusted trial balance

Question 20

Which of the following is a measure of how quickly an item can be converted to cash?

A) Debt ratio
B) Current ratio
C) Liquidity
D) Accounting cycle

Question 21

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

A) Accounts Payable
B) Land
C) Cash
D) Common Stock

Question 22

The worksheet helps accountants to ________.

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

Question 23

A balance sheet that lists the assets above the liabilities and stockholders' equity sections is a(n) ________ balance sheet.

A) report form
B) unclassified form
C) account form
D) audited form

Question 24

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

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

Question 25

The balances of select accounts of Stephanie Company as of December 31, 2016 are given below. What amount of total long-term assets would be shown on the balance sheet?

A) $100,000
B) $131,500
C) $132,000
D) $139,000

Question 26

The balances of select accounts of Sandra Company as of December 31, 2016 are given below: The insurance has been prepaid until June 30, 2017. Determine the amount of total current assets reported on the balance sheet.

A) $12,300
B) $5,700
C) $8,600
D) $6,300

Question 27

Buildings, land, and equipment are classified as ________.

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

Question 28

Which of the following is a plant asset?

A) Equipment
B) Patents
C) Trademark
D) Accounts Receivable

Question 29

Which of the following is an example of an intangible asset?

A) Equipment
B) Plant
C) Property
D) Copyright

Question 30

Liquidity is a measure of how ________.

A) quickly an asset may be converted into cash
B) long an asset can be used
C) easily an asset can be exchanged for another asset
D) short an operating cycle is

Question 31

Use the Adjusted Trial Balance for Anderson Service Company to prepare the classified balance sheet at September 30, 2016. Use the report form. You must compute the ending balance of Owner's Equity.
Anderson Service Company
Adjusted Trial Balance
September 30, 2016
Balance

Question 32

The balances of select accounts of McCarthy Company as of December 31, 2016 are given below: The Unearned Revenue is the amount of cash received for services to be rendered in January 2017. Interest Payable will be paid on February 5, 2017. What are the total long-term liabilities shown on the balance sheet?

A) $1,300
B) $5,000
C) $5,400
D) $21,000

Question 33

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

Question 34

Under which of the following categories would Accounts Payable appear?

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

Question 35

For each account listed, identify the category in which it would appear on a classified balance sheet.

Question 36

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

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 37

The balances of select accounts of Janet Company as of December 31, 2016 are given below: The Unearned Revenue is the amount of cash received for services to be rendered in January, 2017. The Interest Payable is due on February 15, 2017. What are the total current liabilities shown on the balance sheet?

A) $5,400
B) $11,300
C) $13,700
D) $12,400

Question 38

Assets with no physical form are called ________.

A) current assets
B) intangible assets
C) long-term investments
D) mortgaged investments

Question 39

Notes Payable due within two years are classified as ________.

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

Question 40

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

Question 41

Which of the following accounts would appear in the balance sheet debit column?

A) Unearned Revenue
B) Accumulated Depreciation
C) Service Revenue
D) Prepaid Insurance

Question 42

Which of the following accounts would appear in the balance sheet credit column?

A) Prepaid Insurance
B) Buildings
C) Unearned Revenue
D) Service Revenue

Question 43

Where does net income appear on a worksheet?

A) Net income appears only in the income statement debit column.
B) Net income appears in the balance sheet credit column and in the income statement debit column.
C) Net income appears in the income statement credit column and in the balance sheet debit column.
D) Net income appears only in the balance sheet credit column.

Question 44

Which of the following accounts would appear in the income statement debit column?

A) Unearned Revenue
B) Service Revenue
C) Depreciation Expense
D) Prepaid Insurance

Question 45

Which of the following is true of a completed worksheet?

A) The total debits in the unadjusted trial balance column equal the total debits in the adjusted trial balance column.
B) The total debits in the income statement column equal the total credits in the balance sheet column.
C) The total debits in the income statement column equal the total debits in the balance sheet column.
D) The total of all the debit columns is equal to the total of all the credit columns.

Question 46

Prepaid Rent in the worksheet's unadjusted trial balance column is $6,000. Prepaid Rent in the balance sheet column is $5,000. Which of the following entries would have caused this difference?

A) a $1,000 debit entry to Prepaid Rent in the worksheet's adjustments column
B) a $1,000 credit entry to Rent Expense in the worksheet's adjustments column
C) a $1,000 credit entry to Prepaid Rent in the worksheet's adjustments column
D) a $1,000 credit entry to Rental Revenue in the worksheet's adjustments column

Question 47

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

A) The company made a net profit.
B) The company incurred a net loss.
C) The owner's capital account decreased during the period.
D) An error was made.

Question 48

Which of the following adjusted balances would appear in the balance sheet credit column of a worksheet?

A) Rent Revenue
B) Insurance Expense
C) Salaries Payable
D) Equipment

Question 49

Net income is entered as the balancing amount on the debit side of the income statement columns and the credit side of the balance sheet columns of the worksheet.

Question 50

Which of the following statements is true of the worksheet?

A) Net income is recorded in the income statement credit column.
B) Net income is recorded in the adjusted trial balance debit column.
C) Net income is recorded in the income statement debit column.
D) Net income is recorded in the balance sheet debit column.

Question 51

Which of the following accounts would appear in the income statement credit column?

A) Service Revenue
B) Prepaid Insurance
C) Unearned Revenue
D) Depreciation Expense

Question 52

The Interest Expense in the worksheet's unadjusted trial balance column is $3,500. Interest Expense in the income statement column is $14,000. Which of the following entries would have caused this difference?

A) a $14,000 credit to Interest Expense in the worksheet's adjustments column
B) a $14,000 credit to Interest Payable in the worksheet's adjustments column
C) a $10,500 debit to Interest Expense in the worksheet's adjustments column
D) a $10,500 credit to Interest Expense in the worksheet's adjustments column

Question 53

The balance sheet section of the worksheet includes the asset and liability accounts and all equity accounts.

Question 54

The ending balances in the Owner, Capital and Owner, Withdrawals accounts are shown on the income statement columns of the worksheet.

Question 55

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

A) The company incurred a net loss.
B) The owner's capital account increased during the period.
C) The company made a net profit.
D) An error was made.

Question 56

The balance sheet section of the worksheet includes the asset and liability accounts and all equity accounts except revenues and expenses.

Question 57

An income statement includes ________.

A) Land and Salaries Payable
B) Owner's Capital and Owner's Withdrawals
C) Furniture and Cash
D) Service Revenue and Utilities Expense

Question 58

The following is the adjusted trial balance from the worksheet for Tuttle Photography. Using the information provided in the worksheet above, prepare an income statement for Tuttle Photography.

Question 59

Which of the following statements is true of the worksheet?

A) The worksheet is a ledger.
B) The worksheet is a document used to summarize data to prepare financial statements.
C) The worksheet is a financial statement issued to the public to communicate the financial results of a company.
D) The worksheet is a journal.

Question 60

In the worksheet, the adjusted balance of the Service Revenue account appears in the credit column of the income statement.

Question 61

The Accumulated Depreciation account is a permanent account.

Question 62

The Owner, Capital account is a temporary account.

Question 63

The permanent accounts-assets, liabilities, and stockholders' equity-are closed to the Owner, Capital account.

Question 64

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

Question 65

In which of the columns of a worksheet would a net loss be found?

A) in the balance sheet credit column and the income statement debit column
B) in the balance sheet debit column and the income statement credit column
C) in the unadjusted trial balance credit column, the adjusted trial balance credit column, and the balance sheet credit column
D) in the unadjusted trial balance debit column, the adjusted trial balance debit column, and the balance sheet debit column

Question 66

Permanent accounts are not closed at the end of the accounting period.

Question 67

The Accounts Payable account is a temporary account.

Question 68

The Service Revenue account is a temporary account.

Question 69

The Supplies Expense account is a temporary account.

Question 70

As a part of the closing process, revenues and expenses may be closed to a temporary account called the Net Income (Loss) account.

Question 71

The Depreciation Expense account is a temporary account.

Question 72

Revenue and expense accounts are closed to the Income Summary account.

Question 73

The Office Supplies account is a temporary account.

Question 74

In the closing process, the Owner,Withdrawals account is closed to the Owner, Capital account.

Question 75

The closing process helps in measuring each period's net income separately from all other periods.

Question 76

The Accounts Receivable account is a permanent account.

Question 77

The Salaries Payable account is a permanent account.

Question 78

In which of the columns of the worksheet would Net Income be found?

A) the unadjusted trial balance credit column, the adjusted trial balance credit column, and the balance sheet credit column
B) the unadjusted trial balance debit column, the adjusted trial balance debit column, and the balance sheet debit column
C) the balance sheet debit column and the income statement credit column
D) the balance sheet credit column and the income statement debit column

Question 79

The adjusting process zeroes out all revenue accounts and all expense accounts.

Question 80

The Cash account is a temporary account.