Question 1

Which of the following best describes the primary purpose of preparing a work sheet in the accounting cycle?

Accepted Answer

To link accounts and adjustments to financial statements and reduce the risk of errors

Question 2

Which of the following accounts would NOT appear on a post-closing trial balance?

Accepted Answer

Consulting Revenue

Question 3

A company has current assets of $$12,000 and current liabilities of 8$$,000. What is its current ratio? 
$$	ext{Current Ratio} = \frac{	ext{Current Assets}}{	ext{Current Liabilities}}$$

Accepted Answer

$$1.5$$

Question 4

Which of the following is a characteristic of a classified balance sheet?

Accepted Answer

It separates assets and liabilities into current and noncurrent categories.

Question 5

Which of the following is an example of a long-term investment on a classified balance sheet?

Accepted Answer

Notes Receivable due in 3 years

Question 6

After closing entries are posted, which of the following statements is TRUE?

Accepted Answer

All temporary accounts have zero balances.

Question 7

Which of the following is the correct order for the steps in preparing a work sheet?

Accepted Answer

Enter unadjusted trial balance, enter adjustments, prepare adjusted trial balance, sort to financial statements, total and balance columns

Question 8

Which of the following best explains the purpose of reversing entries?

Accepted Answer

To simplify recordkeeping for accrued revenues and expenses

Question 9

A company’s classified balance sheet reports the following: Cash $$5,000; Accounts Receivable 3$$,000; Equipment $$20,000; Accumulated Depreciation 2$$,000; Accounts Payable $4,000. What is the company’s total current assets?

Accepted Answer

$$8,000$$

Question 10

Which of the following is NOT a benefit of using a work sheet?

Accepted Answer

It is a required report for external users.

Question 11

Which of the following accounts is considered a plant asset?

Accepted Answer

Equipment

Question 12

If a company’s current assets are $$33,532$$ million and current liabilities are $$23,098$$ million, what is the current ratio? 
$$	ext{Current Ratio} = \frac{	ext{Current Assets}}{	ext{Current Liabilities}}$$

Accepted Answer

$$1.45$$

Question 13

Which of the following is an intangible asset?

Accepted Answer

Copyright

Question 14

Which of the following is the correct closing entry to close the revenue account with a $$7,850$$ credit balance?

Accepted Answer

Debit Consulting Revenue $$7,850$$; Credit Income Summary $$7,850$$

Question 15

Which of the following is a current liability?

Accepted Answer

Accounts Payable

Question 16

A company’s adjusted trial balance shows: Salaries Expense $$1,050$$, Rent Expense $$600$$, Consulting Revenue $$7,850$$, Withdrawals $$200. $$What is the balance in the Income Summary account after closing revenues and expenses?

Accepted Answer

$$6,200$$ credit

Question 17

Which of the following best describes the effect of reversing entries on the accounting process?

Accepted Answer

They simplify the recording of subsequent cash payments or receipts related to accrued items.

Question 18

Which of the following is NOT a step in the closing process?

Accepted Answer

Close Owner’s Capital to Withdrawals

Question 19

Which of the following would be classified as a noncurrent liability?

Accepted Answer

Bonds Payable due in 10 years

Question 20

A company’s post-closing trial balance includes: Cash $$4,275$$, Accounts Receivable $$1,800$$, Supplies $$8,670$$, Prepaid Insurance $$2,300$$, Equipment $$26,000$$, Accumulated Depreciation $$300$$, Accounts Payable $$6,200$$, Salaries Payable $$210$$, Unearned Consulting Revenue $$2,750$$, C. Taylor, Capital $$33,585. $$What is the total of all debit balances?

Accepted Answer

$$43,045$$

Completing the Accounting Cycle: Structured Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards