Question 1

Office Equipment is an example of a current asset account.

Accepted Answer

Office Equipment is considered a long-term asset or fixed asset, not a current asset, because it is expected to be used for more than one year.

Question 2

Prepaid expenses that benefit a relatively short period of time are listed on the balance sheet as current assets.

Accepted Answer

Prepaid expenses are considered current assets if they are expected to benefit the company within one year or less. This is because they represent an advance payment for goods or services that will be consumed or utilized by the company in the near future. As a result, they are listed on the balance sheet as a current asset until they are fully used up or expire.

Question 3

Common stock and dividends are reported in the stockholders' equity section of the balance sheet.

Accepted Answer

False

Question 4

Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements.

Accepted Answer

Once the adjusted trial balance is in balance, the next step is to use the account balances to prepare the financial statements.

Question 5

When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are simply added to the account title column.

Accepted Answer

When accounts needed for adjustments are not present on the unadjusted trial balance, they are added to the account title column to ensure all relevant accounts are included for accurate financial reporting.

Question 6

The usual presentation of the retained earnings statement is (1) Beginning balance, (2) Net income or loss, (3) Dividends, (4) Stockholders' contributions, (5) Ending balance.

Accepted Answer

The usual presentation of the retained earnings statement does not include "Stockholders' contributions" as part of its format. It typically includes (1) Beginning balance, (2) Net income or loss, (3) Dividends, and (4) Ending balance. Stockholders' contributions are generally recorded in a separate equity account, not in retained earnings.

Question 7

Accrued taxes payable are generally reported on the balance sheet as a current liability.

Accepted Answer

Accrued taxes payable are typically due within one year and are therefore reported as a current liability on the balance sheet.

Question 8

There is really no benefit in preparing financial statements in any particular order.

Accepted Answer

Financial statements should be prepared in a specific order, such as starting with the income statement, followed by the statement of retained earnings, balance sheet, and statement of cash flows. This order ensures that one statement flows into the next and presents a complete picture of a company's financial performance and position.

Question 9

Accrued expenses are ordinarily listed on the balance sheet as current assets.

Accepted Answer

Accrued expenses are listed on the balance sheet as current liabilities, not as current assets. They represent expenses that have been incurred but not yet paid or recorded.

Question 10

Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities.

Accepted Answer

Current liabilities are those that are due within one year or less and are usually paid off using current assets such as cash, accounts receivable, or inventory. Examples of current liabilities include accounts payable, short-term loans, and salaries and wages payable.

Question 11

After analyzing transactions, the next step would be to post the transactions in the ledger.

Accepted Answer

The answer of After analyzing transactions, the next step would...

Question 12

Cross-referencing is useful in assuring that the debits and credits are in balance.

Accepted Answer

The answer of Cross-referencing is useful in assuring that the...

Question 13

On the income statement, miscellaneous expenses are usually presented as the last item without regard to the dollar amount.

Accepted Answer

Miscellaneous expenses are typically listed last on the income statement, as they are not large enough to warrant their own category and are grouped together regardless of the specific dollar amount.

Question 14

Prepaid Insurance is an example of a current asset.

Accepted Answer

Prepaid insurance is considered a current asset because it represents an expense that has been paid in advance and will be consumed in the near future (typically within one year).

Question 15

Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as current assets.

Accepted Answer

Unearned revenues are listed as current liabilities on the balance sheet because they represent money received for services or products that have yet to be delivered or performed.

Question 16

Land is an example of a plant asset.

Accepted Answer

Land is a type of plant asset because it is a tangible asset that is used in the production of plants or crops. Other examples of plant assets include machinery, equipment, and buildings used for agricultural purposes.

Question 17

The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings.

Accepted Answer

A classified balance sheet has subheadings to break down the assets, liabilities, and equity into more detailed categories, while a non-classified balance sheet does not have these subheadings.

Question 18

Accrued revenues are ordinarily listed on the balance sheet as current liabilities.

Accepted Answer

Accrued revenues are listed on the balance sheet as current assets, not current liabilities.

Question 19

The amount of the net income for a period appears on both the income statement and the balance sheet for that period.

Accepted Answer

The answer of The amount of the net income for...

Question 20

Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets.

Accepted Answer

Current assets are assets that can be converted into cash within one year or less, not longer than one year as stated in the statement.

Quiz 4: The Accounting Cycle