Accounting: What is Accounting?

QUESTION 1 

Salaries Payable, Accounts Payable, and Unearned Revenue are examples of __________. 

	a.	short-term investments
	b.	fixed assets
	c.	current liabilities
	d.	long-term liabilities

5 points    

QUESTION 2 

Which of the following statements is TRUE of the worksheet? 

	a.	The worksheet is a tool that takes the place of financial statement preparation.
	b.	The worksheet is a document used to summarize data to prepare financial statements.
	c.	The worksheet is a financial statement issued to the public to communicate the financial results of a company.
	d.	The worksheet is a type of journal.

5 points    

QUESTION 3 

A company has $120,000 in current assets; $550,000 in total assets; $90,000 in current liabilities, and $110,000 in total liabilities. Calculate the current ratio of the company. (Round your answer to two decimal places.) 

	a.	1.33
	b.	1.72
	c.	1.75
	d.	1.09

5 points    

QUESTION 4 

Refer to the following adjusted trial balance. 

Accounts	Debit	Credit
Cash	$1,700
Accounts Receivable	8,600
Office Supplies	400
Equipment	28,100
Accumulated Depreciation — Equipment		$2,000
Accounts Payable		1,200
Salaries Payable		950
Unearned Revenue		450
Smith, Capital		3,800
Smith, Withdrawals	1,000
Service Revenue		55,600
Salaries Expense	20,000
Supplies Expense	2,200
Depreciation Expense — Equipment	2,000
Total	$64,000	$64,000

There were no new capital contributions during the year. What will the balance of the Smith, Capital account be after the closing entries are posted? 

	a.	$34,200
	b.	$31,400
	c.	$35,200
	d.	$32,400

5 points    

QUESTION 5 

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

5 points    

QUESTION 6 

The balances of select accounts of Sandra Company as of December 31, 2018 are given below: 

	Debit	Credit
Building	$140,000
Cash	9,000
Office Supplies	1,200
Furniture	6,000
Prepaid Insurance	550
Accumulated Depreciation—Furniture		$4,000
Land	31,000
Accumulated Depreciation—Building		4,000
Accounts Receivable	2,000

The insurance has been prepaid until June 30, 2019. Determine the amount of total current assets reported on the balance sheet at December 31, 2018. 

	a.	$17,200
	b.	$10,200
	c.	$12,950
	d.	$10,750

5 points    

QUESTION 7 

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.

5 points    

QUESTION 8 

The current ratio measures __________. 

	a.	a company's ability to sell its long-term assets
	b.	a company's ability to pay current liabilities from its total assets
	c.	a company's ability to pay current liabilities from current assets
	d.	a company's profitability during a particular period

5 points    

QUESTION 9 

Patents, copyrights, and trademarks are examples of __________. 

	a.	short-term investments
	b.	fixed assets
	c.	long-term investments
	d.	intangible assets

5 points    

QUESTION 10 

Property, plant, and equipment are __________. 

	a.	presented in order of the category name, with Land being presented last
	b.	also called fixed or plant assets
	c.	either tangible or intangible assets
	d.	easily converted to cash

5 points    

QUESTION 11 

Your business advisor, a consulting company, uses reversing entries. On March 31, 2018, the bookkeeper journalized and posted the following adjusting entry to accrue Utilities Expense: 

Utilities Expense	100
Utilities Payable		100

Which of the following entries is the correct reversing entry to be prepared on April 1, 2018? 

	a .	Utilities Payable                         100         Utilities Expense           100
	b.	Utilities Expense                      100        Income Summary          100
	c.	Cash                        100        Utilities Expense                        100
	d.	Utilities Expense                        100        Accounts Receivable          100

5 points    

QUESTION 12 

Liquidity is a measure of how __________. 

	a.	quickly an asset may be converted into cash
	b.	long an asset can be used
	c.	easily an asset can be exchanged for another asset
	d.	quickly an asset appreciates in value

5 points    

QUESTION 13 

Adjusting journal entries are prepared __________. 

	a.		after preparing the adjusted trial balance
	b.		after preparing the unadjusted trial balance
	c.		after posting the closing entries
	d.		after preparing the financial statements

5 points    

QUESTION 14 

Which of the following accounts will be closed by debiting the Income Summary account? 

	a.	Owner, capital
	b.	Service revenue
	c.	Accounts receivable
	d.	Salaries expense

5 points    

QUESTION 15 

Brownstone Company has a current ratio of 4.00. This indicates that the company has $4 in __________. 

	a.	current liabilities for every $1 of current assets
	b.	total assets for every $1 of current liabilities
	c.	current assets for every $1 of current liabilities
	d.	total assets for every $1 of current assets

5 points    

QUESTION 16 

Reversing entries are __________. 

	a.	the exact opposite of a prior adjusting entry
	b.	dated the last day of the new period
	c.	required according to GAAP
	d.	expensive to record and time consuming

5 points    

QUESTION 17 

Which of the following is the most liquid asset? 

	a.	Building
	b.	Prepaid Expenses
	c.	Accounts Receivable
	d.	Cash

5 points    

QUESTION 18 

Which of the following is a permanent account? 

	a.	Wages expense
	b.	Salaries payable
	c.	Service revenue
	d.	Utilities expense

5 points    

QUESTION 19 

The net income of Hendley Company for the year is $25,000. Withdrawals during the year were $30,000. No new capital contributions were made during the year. Which of the following statements is TRUE? 

	a.	Hendley, Capital account decreases by $25,000.
	b.	Hendley, Capital account decreases by $5,000.
	c.	Hendley, Capital account increases by $30,000.
	d.	Hendley, Capital will remain the same.

5 points    

QUESTION 20 

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