Question 1

Which of the following is NOT a balance sheet account?
A)Unearned Revenue
B)Prepaid Rent
C)Accumulated Depreciation - Building
D)Owner,Withdrawals

Accepted Answer

Owner, Withdrawals is a subcategory of the owner's equity account on the balance sheet, not a separate balance sheet account.

Question 2

Revenue may be called Profit and Net Income may be called Turnover in an income statement prepared under IFRS.

Accepted Answer

Revenue may be called Turnover and Net Income may be called Profit in an income statement prepared under IFRS.

Question 3

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 at the top and the liabilities and owner's equity below the assets.

Question 4

A net loss from the Balance Sheet decreases Owner,Capital.

Accepted Answer

A net loss from the income statement decreases Owner,Capital.

Question 5

Which financial statement is prepared last?
A)income statement
B)balance sheet
C)statement of owner's equity
D)The financial statements can be prepared in any order.

Accepted Answer

The balance sheet is prepared last as it summarizes the financial position of the company at a specific point in time by listing its assets, liabilities, and equity. This information is derived from the income statement and the statement of owner's equity, making it the final statement to be prepared.

Question 6

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 during which cash is paid for goods and services,which are then sold to customers from whom the business collects cash.

Question 7

Assets and liabilities are presented in a different order on a balance sheet prepared following IFRS than on a balance sheet prepared following U.S.GAAP.

Accepted Answer

Under IFRS, assets are presented in order of liquidity (with the most liquid assets listed first), while under U.S. GAAP, assets are generally presented in order of their expected conversion to cash within one year. Liabilities are presented in a similar manner under both standards, with the most short-term liabilities presented first.

Question 8

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

Accepted Answer

This is true. Current assets are those that can be easily converted to cash within a year, while long-term assets cannot be easily converted to cash or are expected to last longer than a year.

Question 9

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 a financial statement that reports the assets, liabilities, and owner's equity as of a specific date, usually the last day of the period. The income statement reports the revenues and expenses during the period, while the statement of owner's equity shows the changes in the owner's equity over a period of time. The unadjusted trial balance is a listing of all the accounts and their balances before any adjustments have been made.

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

In a balance sheet,prepared under IFRS guidelines,cash is often shown as one of the last assets listed.

Accepted Answer

Under IFRS guidelines, assets are usually listed in decreasing order of liquidity, with cash and cash equivalents being the most liquid assets. Therefore, cash is often shown as one of the last assets listed on a balance sheet prepared under IFRS guidelines.

Question 12

The balance sheet is the first financial statement that is prepared at the end of the period.

Accepted Answer

The income statement is the first financial statement that is prepared at the end of the accounting period.

Question 13

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

Accepted Answer

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

Question 14

The statement of owner's equity shows how the owner's equity changed during the period due to acquiring assets and paying liabilities.

Accepted Answer

The statement of owner's equity shows how owner's equity changed during the period due to net income (or net loss),owner's contributions and owner's withdrawals.

Question 15

In a classified balance sheet,assets are reported in the order of liquidity and liabilities are listed in the order in which they must be paid.

Accepted Answer

This statement is correct. In a classified balance sheet, assets are listed in order of liquidity (how quickly they can be converted into cash) and liabilities are listed in order of when they are due to be paid.

Question 16

Intangible assets are long-term assets that have no physical form and convey special rights.

Accepted Answer

Intangible assets include patents, trademarks, copyrights, goodwill, and other similar assets that have no physical existence but are valuable assets for a business.

Question 17

Liquidity is a measure of how quickly an item can be converted to net income.

Accepted Answer

Liquidity is a measure of how quickly an item can be converted to cash.

Question 18

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 to prepare the financial statements because it includes all necessary adjustments and account balances for the accounting period. The chart of accounts is a list of all accounts used by a company but does not provide specific balances or adjustments. The statement of owner's equity is a separate statement that shows changes in equity during the accounting period but does not include all necessary information for financial statement preparation. The unadjusted trial balance is a list of accounts and their balances before any adjustments have been made, and therefore does not include all necessary information for financial statement preparation.

Question 19

A classified balance sheet can be presented in either a report or an account form.Although either is acceptable,the report form is more popular.

Accepted Answer

While both forms are acceptable, the report form is more commonly used as it presents the information in a more user-friendly and understandable way.

Question 20

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 answer of List the order in which the balance...

Quiz 4: Completing the Accounting Cycle

Which of the following is NOT a balance sheet account?