Question 1

Match the terms with the definitions.
-Those expenses directly associated with selling activities.

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)current ratio
H)general expenses
I)gross profit
J)net sales
K)multiple-step income statement
L)inventory turnover
M)liquidity

Question 2

A formal statement of the results of the operation of a business during an accounting period is called a(n)

Accepted Answer

A)  statement of changes. 
B)  balance sheet. 
C)  statement of condition. 
D)  income statement.

Question 3

Net sales minus cost of goods sold equals

Accepted Answer

A)  operating income. 
B)  operating expenses. 
C)  other expenses. 
D)  gross profit.

Question 4

Match the terms with the definitions.
-The number of times the merchandise inventory turned over, or was sold, during the accounting period.

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)current ratio
H)general expenses
I)gross profit
J)net sales
K)multiple-step income statement
L)inventory turnover
M)liquidity

Question 5

Gross sales less sales returns and allowances is called net sales.

Accepted Answer

A) True 
 B)False

Question 6

The information needed in journalizing the closing entries is obtained from the

Accepted Answer

A)  accounts receivable ledger. 
B)  general journal. 
C)  work sheet. 
D)  income statement.

Question 7

The difference between current assets and current liabilities represents the amount of capital the firm has to work with for current operations.

Accepted Answer

A) True 
 B)False

Question 8

The heading on a financial statement includes which of the following information, in the order shown?

Accepted Answer

A)  the name of the business, the period of time the statement covers, and the name of the statement 
B)  the name of the statement, the period of time the statement covers, and the name of the business 
C)  the period of time the statement covers, the name of the statement, and the name of the business 
D)  the name of the business, the name of the statement, and the period of time the statement covers

Question 9

Match the terms with the definitions.
-Cash and all other current assets that can be converted into cash quickly.

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)current ratio
H)general expenses
I)gross profit
J)net sales
K)multiple-step income statement
L)inventory turnover
M)liquidity

Question 10

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 11

The single-step form of income statement lists all revenue items and their totals first, followed by all expense items and their totals, to produce a difference that is either net income or net loss.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following serves as an end-of-period accuracy check?

Accepted Answer

A)  statement of owner's equity 
B)  income statement 
C)  balance sheet 
D)  post-closing trial balance

Question 13

Adjusting entries are made in the

Accepted Answer

A)  sales journal. 
B)  general journal. 
C)  cash receipts journal. 
D)  cash payments journal.

Question 14

Match the terms with the definitions.
-Assets that are expected to be used for more than one year in the operation of a business.

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)current ratio
H)general expenses
I)gross profit
J)net sales
K)multiple-step income statement
L)inventory turnover
M)liquidity

Question 15

Match the terms with the definitions.
-Gross profit minus operating expenses on a multiple-step income statement.

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)quick ratio
H)post-closing trial balance
I)Mortgage Payable
J)income from operations
K)interstatement analysis
L)mortgage
M)long-term liabilities

Question 16

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 17

Information needed in journalizing the first three closing entries is obtained from which of the following work sheet columns?

Accepted Answer

A)  Trial Balance 
B)  Adjustments 
C)  Adjusted Trial Balance 
D)  Income Statement

Question 18

Long-term liabilities are obligations that will extend beyond one year or the normal operating cycle, whichever is longer.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Match the terms with the definitions.
-Those obligations that are due within one year or the normal operating cycle of the business, whichever is longer, and will require the use of current assets.

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)quick ratio
H)post-closing trial balance
I)Mortgage Payable
J)income from operations
K)interstatement analysis
L)mortgage
M)long-term liabilities

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

Match the terms with the definitions. -Those expenses directly associated with selling activities.

A formal statement of the results of the operation of a business during an accounting period is called a(n)

Net sales minus cost of goods sold equals

Match the terms with the definitions. -The number of times the merchandise inventory turned over, or was sold, during the accounting period.

Gross sales less sales returns and allowances is called net sales.

The information needed in journalizing the closing entries is obtained from the

The difference between current assets and current liabilities represents the amount of capital the firm has to work with for current operations.

The heading on a financial statement includes which of the following information, in the order shown?

Match the terms with the definitions. -Cash and all other current assets that can be converted into cash quickly.

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

The single-step form of income statement lists all revenue items and their totals first, followed by all expense items and their totals, to produce a difference that is either net income or net loss.

Which of the following serves as an end-of-period accuracy check?

Adjusting entries are made in the

Match the terms with the definitions. -Assets that are expected to be used for more than one year in the operation of a business.

Match the terms with the definitions. -Gross profit minus operating expenses on a multiple-step income statement.

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

Information needed in journalizing the first three closing entries is obtained from which of the following work sheet columns?

Long-term liabilities are obligations that will extend beyond one year or the normal operating cycle, whichever is longer.

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

Match the terms with the definitions. -Those obligations that are due within one year or the normal operating cycle of the business, whichever is longer, and will require the use of current assets.