Question 1

The normal order for the asset section of a classified balance sheet is
A) Current assets, prepaid expenses, long-term investments, intangible assets
B) Long-term investments, current assets, property, plant and equipment, intangible assets
C) Current assets, long-term investments, property, plant and equipment, intangible assets
D) Intangible assets, current assets, long-term investments, property, plant and equipment
E) Property, plant and equipment, intangible assets, long-term investments, current assets

Accepted Answer

The normal order for the asset section of a classified balance sheet is current assets first, then long-term investments, followed by property, plant and equipment, and finally intangible assets. This order reflects the general liquidity of assets, with the most liquid assets listed first.

Question 2

The following are the steps in the accounting cycle. List them in the order in which they are completed: Completing the work sheet Posting Preparing an unadjusted trial balance Journalizing Preparing the statements Closing the temporary accounts Adjusting the ledger accounts Preparing a post-closing trial balance

Accepted Answer

The answer of The following are the steps in the...

Question 3

The current ratio
A) Is current assets divided by current liabilities
B) Helps to assess a company's ability to pay its debts in the near future
C) Suggests there may be problems in a business if it is less than 1
D) Is a measure of a company's liquidity
E) All of these

Accepted Answer

All of the given options are true about the current ratio. It is calculated as current assets divided by current liabilities and helps to assess a company's ability to pay its debts in the near future. A current ratio less than 1 suggests there may be problems in a business and it is a measure of a company's liquidity.

Question 4

Reversing entries
A) Are optional
B) Are mandatory
C) Fix errors in journal entries
D) Are required by CRA
E) Are not posted to the ledger

Accepted Answer

Reversing entries are optional and are used to simplify the recording of transactions in the following accounting period. They can help avoid errors and reduce the likelihood of double-counting transactions. While they are not required by law or regulation, they are a useful tool for many businesses.

Question 5

Reversing entries are
A) Optional
B) Linked to accrued assets and liabilities that were created by adjusting entries at the end of the previous accounting period
C) Used to simplify a company's record keeping
D) Dated the first day of the next accounting period
E) All of these

Accepted Answer

Reversing entries are optional and can be used to simplify record keeping. They are linked to accrued assets and liabilities that were created by adjusting entries at the end of the previous accounting period. Additionally, reversing entries are dated the first day of the next accounting period.

Question 6

The alphabetized adjusted trial balance for SimCo Electrical Outfitters at August 31, 2020, is shown below. Identify how each account balance would be classified on a balance sheet given the following classification symbols:
 $$\begin{array} { | l | l | l | l | } 
\hline \text { CA } & \text { Curent assets } & \text { CL } & \text { Curent liabilities } \
\hline \text { PPE } & \text { Property, plart ard equipment } & \text { LTL } & \text { Long-term liabilities } \
\hline \text { IA } & \text { Intangible asset } & \text { OE } & \text { Equity } \
\hline \text { LTI } & \text { Long-term irvestment } & \text { NA } & \begin{array} { l } 
\text { Not applicable to a } \
\text { balance sheet }
\end{array} \
\hline
\end{array}$$

Accepted Answer

The answer of The alphabetized adjusted trial balance for SimCo...

Question 7

Current Liabilities
A) Are listed in order of liquidity
B) Are closed at the end of the accounting period to current assets
C) Are due to be settled within the shorter of one year or the operating cycle
D) Are listed in the order in which they are to be paid, with the first one listed to be paid first
E) Are due to be settled after one year or the operating cycle

Accepted Answer

The answer of Current Liabilities
A) Are listed in order of...

Question 8

Describe a work sheet and explain why it is useful.

Accepted Answer

The answer of Describe a work sheet and explain why...

Question 9

The ending balance of owner's capital is calculated as
A) Owner's capital account balance plus profit minus the withdrawals account balance
B) Owner's capital account balance minus loss plus the withdrawals account balance
C) Profit minus the withdrawals account balance
D) Assets plus liabilities
E) None of these answers is correct.

Accepted Answer

The ending balance of owner's capital is calculated by adding the beginning balance of the owner's capital account to the profit earned during the period and subtracting the withdrawals made by the owner during the period. This is represented by the formula: Owner's capital account balance + Profit - Withdrawals account balance = Ending balance of owner's capital.

Question 10

In the blank space beside each numbered item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter "z" in the blank.

Accepted Answer

The answer of In the blank space beside each numbered...

Question 11

The current ratio
A) Is used to measure a company's profitability
B) Is used to measure the relationship between assets and long-term debt
C) Measures the effect of operating income on profit
D) Is used to evaluate a company's ability to pay its short-term obligations
E) Only relates to non-current liabilities

Accepted Answer

The current ratio measures a company's ability to pay its short-term obligations or debts. It is calculated by dividing a company's current assets by its current liabilities. A high current ratio indicates that a company is likely able to meet its short-term debt obligations.

Question 12

Using the following partial Excel work sheet for Breakout Maze Co., prepare the Income Statement, the Statement of Changes in Equity, and an unclassified Balance Sheet for the company. Assume the owner did not make any investments in the business during the year.

Accepted Answer

The answer of Using the following partial Excel work sheet...

Question 13

Below is an alphabetical listing of General Ledger accounts with identifying numbers for Scott's Suntanning Parlour. Indicate the accounts debited and credited in each of the following transactions by placing the proper account identifying number(s) in the columns to the right of each transaction.
 $\begin{array}{|l|l|}
\hline \text { 1. Accounts Payable } & 10 . \text { Prepaid Insurance } \
\hline \text { 2. Accounts Receivable } & 11 \text { Rent Expense } \
\hline \text { 3. Accum depreciation, Suntan Equip } & 12 . \text { Salaries Expense } \
\hline \text { 4. Cash } & \text { 13. Salaries Payable } \
\hline \text { 5.Depreciation expense, Suntan Equip } & \text { 14. Suntaining Equipment } \
\hline \text { 6.Income Summary } & \text { 15. Suntanning Revenue } \
\hline \text { 7. Insurance Expense } & \text { 16. Scott Smith, Capital } \
\hline \text { 8.Office Supplies } & \text { 17. Scott Smith, Withdrawals } \
\hline \text { 9.Office Supplies Expense } &\
\hline
\end{array}$ \(\begin{array}{|l|l|l|l|}
\hline &&\text { Debit } & \text { Credit }\
\hline \text { (a) } & \text { Invested suntanning equipment and cash in a suntanning } & & \
&\text { business. } & -&- \
\hline \text { (b) } & \text { Rented a store and paid rent for one month. } & -&- \
\hline \text { (c) } & \text { Paid the premium on a two-year insurance policy. } & -&- \
\hline \text { (d) } & \text { Purchased office supplies for cash and recorded an asset } & -&- \
\hline \text { (e) } & \text { Rendered services to clients for cash } &-&- \
\hline \text { (f) } & \text { Scott Smith withdrew cash from the business for personal use. } & -&- \
\hline \text { (g) } & \text { Rendered services to clients on account. } & -&- \
\hline \text { (h) } & \text { Paid salaries. } & -&- \
\hline \text { (i) } & \text { Made an adjusting entry to record expired insurance. } & -&- \
\hline \text { (j) } & \text { Made an adjusting entry to record accrued salaries. } & -&- \
\hline \text { (k) } & \text { Made an adjusting entry to record office supplies used. } & -&- \
\hline \text { (l) } & \text { Made an adjusting entry to record depreciation on } &  \
&\text { suntanning equipment. }&-&- \
\hline \text { (m) } & \begin{array}{l}
\text { Closed the Income Summary account, which reflected } \
\text { a net loss. }
\end{array} & -&- \
\hline \text { (n) } & \text { Closed the owner's withdrawals account. } & -&- \
\hline
\end{array}\)

Accepted Answer

The answer of Below is an alphabetical listing of General...

Question 14

Indicate beside each of the following accounts whether the account is a temporary or permanent account.(a) Cash(b) Prepaid insurance(c) Unearned Revenue(d) Accounts receivable(e) Insurance expense(f) Smith, capital(g) Smith, withdrawals(h) Rent expense(i) Revenue(j) Supplies(k) Supplies expense(l) Depreciation expense, building(m) Accumulated depreciation, building

Accepted Answer

The answer of Indicate beside each of the following accounts...

Question 15

Using the following partial Excel work sheet for Pendulum Service Co., prepare the Income Statement, the Statement of Changes in Equity, and an unclassified Balance Sheet. Assume the owner did not make any investments in the business during the year.

Accepted Answer

The answer of Using the following partial Excel work sheet...

Question 16

Explain why closing entries are a necessary step in the accounting cycle.

Accepted Answer

The answer of Explain why closing entries are a necessary...

Question 17

(A) In a sole proprietorship, Income Summary is closed to what account? (B) In following the steps of the accounting cycle, what two steps must be done before preparation of an unadjusted trial balance?

Accepted Answer

The answer of (A) In a sole proprietorship, Income Summary...

Question 18

Which statement is true about liquidity? Prepaid Rent is
A) Less liquid than land
B) Less liquid than rent revenue
C) Less liquid that inventories
D) More liquid than cash
E) More liquid than inventories

Accepted Answer

Prepaid rent is considered less liquid than inventories because it cannot be quickly converted into cash or used to settle liabilities, whereas inventories can be sold to generate cash.

Question 19

Explain the purpose of closing entries and describe the closing process.

Accepted Answer

The answer of Explain the purpose of closing entries and...

Question 20

Calculate the current ratio in each of the following cases.
 $$\begin{array} { | l | r | r | } 
\hline & \text { Current Assets } & \text { Current Libilities } \
\hline \text { Case 1 } & \$ 60,000 & \$ 30,000 \
\hline \text { Case 2 } & \$ 150,000 & \$ 85,000 \
\hline \text { Case 3 } & \$ 57,000 & \$ 53,000 \
\hline \text { Case 4 } & \$ 130,000 & \$ 127,000 \
\hline \text { Case 5 } & \$ 70,000 & \$ 110,000 \
\hline
\end{array}$$

Accepted Answer

The answer of Calculate the current ratio in each of...

Quiz 4: Completing the Accounting Cycle and Classifying Accounts

The normal order for the asset section of a classified balance sheet is

The current ratio

Reversing entries

Reversing entries are

Current Liabilities