Question 1

Patents, copyrights, and trademarks are examples of:
A) short-term investments.
B) fixed assets.
C) long-term investments.
D) intangible assets.

Accepted Answer

Patents, copyrights, and trademarks are intangible assets, as they are not physical in nature and cannot be directly touched or seen. They represent legal rights to use or protect ideas, creative works, or brand identities.

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

Accepted Answer

Liquidity refers to the measure of how quickly an item can be converted to cash. Debt ratio and current ratio are measures of a company's ability to pay its debts. Accounting cycle refers to the processes and steps involved in recording and reporting financial transactions.

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

Accepted Answer

Bonds held as investment for more than a year would appear under long-term assets as they are investments that are expected to be held for a period exceeding one year.

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.

Accepted Answer

The operating cycle is the time it takes for a business to convert its inventory (goods purchased or produced) into cash through the sale of those goods to customers. It includes both the time it takes to produce or acquire inventory as well as the time it takes to collect payment from customers.

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.

Accepted Answer

The balance sheet is the financial statement that reports assets, liabilities, and owner's equity as of the last day of the period. The income statement reports revenues and expenses for a period of time, not as of a particular date. The statement of owner's equity reports changes in the owner's equity account over a period of time, not as of a particular date. The unadjusted trial balance is a list of all accounts and their balances before any adjusting entries have been made.

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

Accepted Answer

Current assets are assets that can be expected to be converted to cash within the next 12 months or within the normal operating cycle of a business. These assets include cash, accounts receivable, inventory, and prepaid expenses. Intangible assets are non-physical assets, such as patents and trademarks. Plant assets are long-term assets, such as buildings and equipment. Long-term assets are assets that are not expected to be converted to cash within the next 12 months.

Question 7

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

Accepted Answer

The operating cycle refers to the time span required for a business to convert its inventory into cash. It includes the time required to purchase raw materials, manufacture products, sell them, and collect payment from customers. It does not directly relate to repaying long-term liabilities, although it can indirectly affect a business's ability to do so.

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

Accepted Answer

Accounts receivable is a current asset that represents amounts owed to the company by customers for goods or services already delivered. It is expected to be collected and converted to cash within the next year or operating cycle, making it a current asset. Land, equipment, and buildings are examples of fixed assets, which are long-term assets that are not expected to be converted to cash, sold or consumed within a year.

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

Accepted Answer

Only Service Revenue and Utilities Expense are accounts that are typically included in an income statement. Land, Salaries Payable, Owner's Name, Capital, Owner's Contribution, Furniture, and Cash are all balance sheet accounts.

Question 10

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

Accepted Answer

Prepaid Rent is classified as a current asset if it is expected to be used up during the next 12 months or within the business's normal operating cycle if longer.

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.

Accepted Answer

Long-term assets are assets that are expected to be held by the business for more than one year or one operating cycle, whichever is greater. These assets are not intended for sale and are not intended to be converted into cash within one year. Long-term assets include property, plant, and equipment, intangible assets, and investments in other companies.

Question 12

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

Accepted Answer

This statement is true. Current assets are those that are expected to be converted into cash within one year or within the normal operating cycle of a business, while long-term assets are expected to provide economic benefit for more than one year.

Question 13

Which of the following assets is the most liquid?
A) Building
B) Prepaid Expenses
C) Accounts Receivable
D) Cash

Accepted Answer

Cash is the most liquid asset because it can be easily and quickly converted into any other asset, whereas buildings, prepaid expenses, and accounts receivable may take more time and effort to convert into cash.

Question 14

Property, plant and equipment are categorized as:
A) current assets.
B) fixed assets.
C) long-term investments.
D) short-term investments.

Accepted Answer

Property, plant, and equipment are typically long-term and not intended for sale as part of normal operations, which categorize them as fixed assets rather than current assets, long-term investments, or 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.

Accepted Answer

The answer of A balance sheet prepared in the account...

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

Accepted Answer

Bonds held as investment for more than a year would appear as long-term assets on the balance sheet. Current assets refer to assets that are expected to be converted into cash within a year, while long-term liabilities refer to debts that are due beyond a year. Current liabilities refer to debts that are due within a year.

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.

Accepted Answer

The adjusted trial balance is used as the basis for preparing the financial statements as it reflects all the necessary adjustments and accruals needed for accurate financial reporting. The chart of accounts is simply a list of accounts used in recording transactions, the statement of owner's equity reports changes in owner's equity, and the unadjusted trial balance does not reflect all necessary adjustments.

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

Accepted Answer

Accounts receivable are amounts owed to a company by customers or clients for goods or services provided, and are considered current assets because they are expected to be converted into cash within one year.

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.

Accepted Answer

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

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.

Accepted Answer

Salaries Payable, Interest Payable, and Unearned Revenue are all examples of current liabilities. Current liabilities are obligations that a company must pay off within the next year.

Quiz 4: Completing the Accounting Cycle

Patents, copyrights, and trademarks are examples of:

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

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

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:

The financial statement that reports assets, liabilities, and owner's equity as of the last day of the period is called the:

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.

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

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) ?

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

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

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:

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

Which of the following assets is the most liquid?

Property, plant and equipment are categorized as:

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

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

The financial statements are prepared from the:

Under which of the following categories would Accounts Receivable appear?

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

Salaries Payable, Interest Payable, and Unearned Revenue are examples of: