Deck 4: Completing the Accounting Cycle

Question 1

Patents, copyrights, and trademarks are examples of:

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

Answer 1

D

Question 2

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

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

Answer 2

C

Question 3

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

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

Answer 3

C

Question 4

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 5

The financial statement that reports assets, liabilities, and owner's 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 6

The 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 7

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

Question 8

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

Question 9

Which of the following accounts are included in an income statement?

A) Land, Salaries Payable
B) Owner's Name, Capital, Owner's Contribution
C) Furniture, Cash
D) Service Revenue, Utilities Expense

Question 10

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

Question 11

The 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) long-term liabilities.
C) current assets.
D) current liabilities.

Question 12

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

Question 13

Which of the following assets is the most liquid?

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

Question 14

Property, plant and equipment are categorized as:

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

Question 15

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

Question 16

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

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

Question 17

The financial statements are prepared from the:

A) adjusted trial balance.
B) chart of accounts.
C) statement of owner's equity.
D) unadjusted trial balance.

Question 18

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 19

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

Question 20

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 21

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

Question 22

The balances of select accounts of Sandra Company as at December 31, 2015 are given below: $$\begin{array} { | l | r | } \hline \text { Notes Payable-short term } & \$ 1,200 \\\hline \text { Salaries Payable } & 4,000 \\\hline \text { Notes Payable-long term } & 25,000 \\\hline \text { Accounts Payable } & 3,200 \\\hline \text { Unearned Revenue } & 2,000 \\\hline \text { Interest Payable } & 2,500 \\\hline\end{array}$$

-Refer to the table above.The unearned revenue is the amount of cash received for services to be rendered in January, 2016. What are the total current liabilities shown on the balance sheet?

A) $5,700
B) $10,400
C) $12,900
D) $11,700

Question 23

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 24

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 25

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 26

The balances of select accounts of Sandra Company as at December 31, 2015 are given below: $$\begin{array} { | l | r | r | } \hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Building } & \$ 120,000 & \\\hline \text { Cash } & 5,000 & \\\hline \text { Office Supplies } & 700 & \\\hline \text { Furniture } & 3,000 & \\\hline \text { Prepaid Insurance } & 450 & \\\hline \text { Accumulated Depreciation-Furniture } & & \$ 1,000 \\\hline \text { Land } & 35,000 & \\\hline \text { Accumulated Depreciation-Building } & & 4,800 \\\hline \text { Accounts Receivable } & 2,500 & \\\hline\end{array}$$

-Refer to the table above.What are the total long-term assets that would be shown on the balance sheet?

A) $120,000
B) $152,200
C) $155,000
D) $158,000

Question 27

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

A) amounts
B) dates of purchase
C) liquidities
D) durabilities

Question 28

Which of the following is a plant asset?

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

Question 29

The amount of the Owner's Name, Withdrawals account is entered in the income statement columns on the worksheet.

Question 30

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

A) Accounts Payable
B) Land
C) Cash
D) Owner's Name, Capital

Question 31

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

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

Question 32

The balances of select accounts of Sandra Company as at December 31, 2015 are given below: $$\begin{array} { | l | r | } \hline \text { Notes Payable-short term } & \$ 1,200 \\\hline \text { Salaries Payable } & 4,000 \\\hline \text { Notes Payable-long term } & 25,000 \\\hline \text { Accounts Payable } & 3,200 \\\hline \text { Unearned Revenue } & 2,000 \\\hline \text { Interest Payable } & 2,500 \\\hline\end{array}$$

-Refer to the table above.The unearned revenue is the amount of cash received for services to be rendered in January, 2016. What are the total long-term liabilities shown on the balance sheet?

A) $1,200
B) $4,000
C) $5,200
D) $25,000

Question 33

Which of the following statements explains a classified balance sheet?

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 34

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

Question 35

The balances of select accounts of Sandra Company as at December 31, 2015 are given below: $$\begin{array} { | l | r | r | } \hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Building } & \$ 120,000 & \\\hline \text { Cash } & 5,000 & \\\hline \text { Office Supplies } & 700 & \\\hline \text { Furniture } & 3,000 & \\\hline \text { Prepaid Insurance } & 450 & \\\hline \text { Accumulated Depreciation-Furniture } & & \$ 1,000 \\\hline \text { Land } & 35,000 & \\\hline \text { Accumulated Depreciation-Building } & & 4,800 \\\hline \text { Accounts Receivable } & 2,500 & \\\hline\end{array}$$

-Refer to the table above.The insurance has been prepaid for the next half year. What are the total current assets that would be shown on the balance sheet?

A) $10,500
B) $5,700
C) $8,650
D) $6,150

Question 36

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

Question 37

A balance sheet that lists the assets above the liabilities and owner's equity sections is a(n):

A) report form balance sheet.
B) unclassified form balance sheet.
C) account form balance sheet.
D) audited form balance sheet.

Question 38

The assets which do not have a physical form are called:

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

Question 39

Buildings, land, and equipment are classified as:

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

Question 40

The Notes Payable that are due within two years are classified as:

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

Question 41

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 42

In which of the columns of the 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 trial balance credit column, the adjusted trial balance credit column and the balance sheet credit column
D) In the trial balance debit column, the adjusted trial balance debit column and the balance sheet debit column

Question 43

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 44

The worksheet helps accountants to:

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

Question 45

The Prepaid Rent in the worksheet's unadjusted trial balance column is $4,000. Prepaid Rent in the balance sheet column is $2,000. Which of the following entries would have caused this difference?

A) A $2,000 debit entry to Prepaid Rent in the worksheet's adjustments column
B) A $2,000 credit entry to Rent Expense in the worksheet's adjustments column
C) A $2,000 credit entry to Prepaid Rent in the worksheet's adjustments column
D) A $2,000 debit entry to Cash in the worksheet's adjustments column

Question 46

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

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

Question 47

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

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

Question 48

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

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

Question 49

The Interest Expense in the worksheet's unadjusted trial balance column is $3,000. Interest Expense in the income statement column is $7,000. Which of the following entries would have caused this difference?

A) A $7,000 credit to Interest Expense in the worksheet's adjustments column
B) A $7,000 credit to Interest Payable in the worksheet's adjustments column
C) A $4,000 debit to Interest Expense in the worksheet's adjustments column
D) A $4,000 credit to Interest Expense in the worksheet's adjustments column

Question 50

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

A) The company has a net loss.
B) The capital account increased during the period.
C) The company has net income.
D) The liabilities are greater than assets.

Question 51

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

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

Question 52

The adjusting process zeroes out all revenues and all expenses.

Question 53

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 54

Which of the following statements is true of the worksheet?

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

Question 55

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

Question 56

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 the financial statements.
C) The worksheet is a financial statement issued to the public to communicate the financial results of the company.
D) The worksheet is a journal.

Question 57

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

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

Question 58

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

Question 59

Which of the following is true of a completed worksheet?

A) The total debits in the 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 debits equal the total credits in each column.

Question 60

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 has a net income.
B) The company has a net loss.
C) The capital account decreased during the period.
D) The total liabilities exceed total assets.

Question 61

The Service Revenue account is a permanent account.

Question 62

The Office Supplies account is a temporary account.

Question 63

The Owner's Name, Capital account is a temporary account.

Question 64

The Depreciation Expense account is a temporary account.

Question 65

The Owner's Name, Capital account is a permanent account.

Question 66

In the last step of the closing process, the Owner's Name, Withdrawals account is closed to the Owner's Name, Capital account.

Question 67

The permanent accounts-assets, liabilities, and capital-are closed to the Owner's Name, Capital account.

Question 68

The Salaries Payable account is a permanent account.

Question 69

The Service Revenue account is a temporary account.

Question 70

The Salaries Expense account is a temporary account.

Question 71

The Office Supplies Expense account is a temporary account.

Question 72

The Accounts Payable account is a temporary account.

Question 73

The Accounts Receivable account is a permanent account.

Question 74

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

Question 75

The beginning balance in the Capital account of a company was $10,000. The revenues and expenses were $200,000 and $120,000, respectively. The owner withdrew $4,000 during the year. The ending balance in the Capital account was $86,000.

Question 76

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

Question 77

The Owner's Name, Withdrawals account is a permanent account.

Question 78

The Accumulated Depreciation account is a permanent account.

Question 79

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

Question 80

The Cash account is a temporary account.