Question 1

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

Accepted Answer

Long-term assets are those that will not be converted to cash or used up within the business's operating cycle or one year, whichever is greater. This includes assets such as property, plant, and equipment, intangible assets, and long-term investments. Current assets, on the other hand, are assets that are expected to be converted to cash within one year or within the business's operating cycle. Fully depreciated assets refer to assets that have reached the end of their useful life and have been fully depreciated on the company's financial statements. Current liabilities are obligations that are due within one year or within the business's operating cycle.

Question 2

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.

Accepted Answer

The order in which these statements are prepared is income statement,statement of owner's equity and balance sheet.The income statement is prepared first because net income is needed for the statement of owner's.The balance sheet is prepared last because this statement needs the ending balance of owner's equity.

Question 3

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

Accepted Answer

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

Question 4

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

Accepted Answer

Property, plant, and equipment are long-term assets that are not intended for sale, but rather used in the operations of the business. This makes them a type of plant asset. They are not categorized as current assets because they are not expected to be converted into cash within one year. They are also not classified as long-term investments because they are not held for the purpose of generating interest or dividends. Finally, they are not considered short-term investments because they are not expected to be sold within one year.

Question 5

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

Accepted Answer

Bonds held as an investment for more than a year would appear under long-term assets.

Question 6

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 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. This includes assets such as cash, accounts receivable, inventory, and prepaid expenses. Intangible, plant, and long-term assets are not necessarily expected to be converted to cash or used up within the next 12 months.

Question 7

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 includes the time it takes for a business to convert its inventory into cash by selling goods and services to customers and collecting payment. It starts with the purchase of inventory and ends with the collection of cash from customers. This cycle is important for businesses to manage their cash flow and working capital effectively.

Question 8

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

Accepted Answer

Cash is the most liquid asset as it is readily accepted in exchange for goods and services without any delay or loss in value. Buildings, prepaid expenses, and accounts receivable are all less liquid assets as they either cannot be easily converted into cash or may require some time and effort to do so.

Question 9

The financial statements are prepared from the ________.
A)adjusted trial balance
B)chart of accounts
C)statement of retained earnings
D)unadjusted trial balance

Accepted Answer

The financial statements are typically prepared from the adjusted trial balance, as this contains all necessary adjustments made to the accounts during the accounting period. The chart of accounts is simply a list of all accounts used by a company, and does not contain any actual financial information. The statement of retained earnings only shows changes in a company's retained earnings account, and is not a complete financial statement on its own. The unadjusted trial balance does not include any adjustments made during the accounting period, and thus does not provide an accurate representation of a company's financial position.

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

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

Accepted Answer

Bonds held as an investment for less than a year would appear under current assets, as they are expected to be converted into cash within a year.

Question 12

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 is a current asset as it represents money owed to the company that is expected to be collected within the current operating cycle, which is usually less than one year.

Question 13

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

Accepted Answer

The operating cycle is the time span required for a business to convert its inventory into cash, which includes both the time it takes to sell the inventory and the time it takes to collect payment from customers. It is not related to the repayment of long-term liabilities.

Question 14

In a 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 to cash within a year, while long-term assets are not expected to be converted to cash within a year. The classification of assets as current or long-term impacts the liquidity and stability of a company.

Question 15

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

Accepted Answer

In the account form of a balance sheet, assets are listed on the left side, while liabilities and stockholders' equity are listed on the right side.

Question 16

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

Accepted Answer

Liquidity is a measure of how easily and quickly an asset can be converted to cash. The debt ratio measures the degree of a company's leverage, the current ratio is a measure of a company's ability to pay its short-term obligations, and the accounting cycle refers to the process of recording and producing financial statements.

Question 17

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 obligations that a company must pay within a year or less, making them examples of current liabilities. Short-term investments and fixed assets are not liabilities, and long-term liabilities are obligations that must be paid beyond a year.

Question 18

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 is expected to be converted to cash within the next year (or operating cycle, if longer), as it represents amounts owed to the company by customers for goods or services rendered. Land, Equipment, and Buildings are typically considered long-term assets that are not expected to be converted to cash in the next year.

Question 19

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

Accepted Answer

The balance sheet reports the financial position of a company by listing its assets, liabilities, and stockholders' equity as of a specific date (usually the last day of the period). The income statement reports the company's revenues and expenses over a period of time, while the statement of owner's equity shows changes in the owner's investment in the company over time. The unadjusted trial balance is a preliminary report used to check the accuracy of a company's accounting records.

Question 20

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 all examples of intangible assets, meaning they have value but cannot be physically touched or seen.

Quiz 4: Completing the Accounting Cycle

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 ________.

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.

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

Property,plant,and equipment are categorized as ________.

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

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 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 ________.

Which of the following is the most liquid asset?

The financial statements are prepared from the ________.

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

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

Under which of the following categories would Accounts Receivable appear?

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

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

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

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

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

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) ?

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

Patents,copyrights,and trademarks are examples of ________.