Question 1

Cash and all other assets that may be reasonably expected to be converted to cash or consumed within one year or the normal operating cycle of the business are classified as

Accepted Answer

A)  temporary investments. 
B)  marketable securities. 
C)  current assets. 
D)  investments.

Question 2

The rough "rule of thumb" for a quick ratio is that the ratio should be about

Accepted Answer

A)  2 to 1. 
B)  1 to 1. 
C)  .1 to 1. 
D)  1 to .1.

Question 3

Match the terms with the definitions.
-Cash and all other assets expected to be converted into cash or consumed within one year or the normal operating cycle of the business, whichever is longer.

Accepted Answer

A) accounts receivable turnover 
B) average collection period 
C) reversing entry 
D) return on owner's equity 
E) current assets
F)current liabilities
G)current ratio
H)post-closing trial balance
I)Mortgage Payable
J)income from operations
K)interstatement analysis
L)mortgage
M)long-term liabilities

Question 4

A formal statement of the assets, liabilities, and owner's equity of a business at a specified date is known as a(n)

Accepted Answer

A)  balance sheet. 
B)  income statement. 
C)  statement of owner's equity. 
D)  statement of cash flows.

Question 5

If inventory is taken only at the end of each accounting period, the average inventory for the period can be calculated by adding the beginning and the ending inventories and dividing their sum by two.

Accepted Answer

A) True 
 B)False

Question 6

Reversing entries make possible the entering of the transactions of the succeeding accounting period in a routine manner.

Accepted Answer

A) True 
 B)False

Question 7

Match the terms with the definitions.
-Quick assets divided by current liabilities.

Accepted Answer

A) selling expenses 
B) quick assets 
C) average days to sell inventory 
D) book value 
E) property, plant, and equipment
F)operating cycle
G)quick ratio
H)general expenses
I)gross profit
J)net sales
K)multiple-step income statement
L)inventory turnover
M)liquidity

Question 8

Match the terms with the definitions.
-Current assets divided by current liabilities.

Accepted Answer

A) accounts receivable turnover 
B) average collection period 
C) reversing entry 
D) return on owner's equity 
E) current assets
F)current liabilities
G)current ratio
H)post-closing trial balance
I)Mortgage Payable
J)income from operations
K)interstatement analysis
L)mortgage
M)long-term liabilities

Question 9

The entries that transfer the balances of the temporary owner's equity accounts to the permanent owner's equity account are called

Accepted Answer

A)  adjusting entries. 
B)  closing entries. 
C)  reversing entries. 
D)  general journal entries.

Question 10

The number of times the accounts receivable turned over or were collected during the accounting period is called net credit sales for the period.

Accepted Answer

A) True 
 B)False

Question 11

Match the terms with the definitions.
-Refers to the speed with which an asset can be converted to cash.

Accepted Answer

A) selling expenses 
B) quick assets 
C) average days to sell inventory 
D) book value 
E) property, plant, and equipment
F)operating cycle
G)quick ratio
H)general expenses
I)gross profit
J)net sales
K)multiple-step income statement
L)inventory turnover
M)liquidity

Question 12

Liquidity refers to the speed with which the assets can be converted to cash.

Accepted Answer

A) True 
 B)False

Question 13

The quick ratio is determined by subtracting current liabilities from quick assets.

Accepted Answer

A) True 
 B)False

Question 14

Working capital is the difference between current assets and current liabilities.

Accepted Answer

A) True 
 B)False

Question 15

The Income Statement and Balance Sheet columns below are from the work sheet of the Mandle Company for the year ended December 31, 20--.  ​
Required:
Prepare a multi-step income statement for Mandle Company for the current fiscal year. Include separate sections for selling expenses and general expenses under the heading "Operating Expenses" by using the classifications provided in the Account Title column of the work sheet.

Accepted Answer

The answer of The Income Statement and Balance Sheet columns...

Question 16

Current assets include cash and all other assets that may be reasonably expected to be converted into cash or consumed within one year or the normal operating cycle of the business, whichever is longer.

Accepted Answer

A) True 
 B)False

Question 17

The current ratio is determined by subtracting current liabilities from current assets.

Accepted Answer

A) True 
 B)False

Question 18

Assets that are used for several years in the operation of a business are called

Accepted Answer

A)  marketable securities. 
B)  current assets. 
C)  investments. 
D)  property, plant, and equipment.

Question 19

The purpose of an income statement is to summarize the results of operations during an accounting period

Accepted Answer

A) True 
 B)False

Question 20

Accumulated depreciation amounts are shown as deductions from the

Accepted Answer

A)  cost of building and equipment accounts. 
B)  accounts receivable account. 
C)  accounts payable account. 
D)  prepaid insurance account.

Exam 15: Financial Statements and Year-End Accounting for a Merchandising Business

Cash and all other assets that may be reasonably expected to be converted to cash or consumed within one year or the normal operating cycle of the business are classified as

The rough "rule of thumb" for a quick ratio is that the ratio should be about

Match the terms with the definitions. -Cash and all other assets expected to be converted into cash or consumed within one year or the normal operating cycle of the business, whichever is longer.

A formal statement of the assets, liabilities, and owner's equity of a business at a specified date is known as a(n)

If inventory is taken only at the end of each accounting period, the average inventory for the period can be calculated by adding the beginning and the ending inventories and dividing their sum by two.

Reversing entries make possible the entering of the transactions of the succeeding accounting period in a routine manner.

Match the terms with the definitions. -Quick assets divided by current liabilities.

Match the terms with the definitions. -Current assets divided by current liabilities.

The entries that transfer the balances of the temporary owner's equity accounts to the permanent owner's equity account are called

The number of times the accounts receivable turned over or were collected during the accounting period is called net credit sales for the period.

Match the terms with the definitions. -Refers to the speed with which an asset can be converted to cash.

Liquidity refers to the speed with which the assets can be converted to cash.

The quick ratio is determined by subtracting current liabilities from quick assets.

Working capital is the difference between current assets and current liabilities.

Current assets include cash and all other assets that may be reasonably expected to be converted into cash or consumed within one year or the normal operating cycle of the business, whichever is longer.

The current ratio is determined by subtracting current liabilities from current assets.

Assets that are used for several years in the operation of a business are called

The purpose of an income statement is to summarize the results of operations during an accounting period

Accumulated depreciation amounts are shown as deductions from the