Accounting Chapter 4 True or False

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

False

Balance sheet accounts are not considered real accounts

False

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

False

Financial statements should be prepared im mediately after closing entries are journalized and posted.

False

For most businesses, the cash basis of accounting will provide adequate financial statements for user needs

False

Joumalizing and posting closing entries must be completed before financial statements can be prepared

False

Journalizing and posting closing entries must be completed before financial statements can be prepared

False

Office Equipment is an example of a current asset account

False

The current ratio is computed by dividing current liabilities by current assets

False

The post-closing trial balance will generally have fewer accounts than the adjusted trial balance

False

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

False

The drawing account is a temporary account

True

The last step of the accounting cycle is to prepare a post-closing trial balance

True

The work sheet is not considered a part of the formal accounting records

True

Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts

True

Accumulated Depreciation is a permanent account

True

After analyzing and recording transactions in the joural, the nest step would be to post the transactions to the ledger

True

After net income or loss is entered on the work sheet, the Debit column total must equal the Credit column total for the Balance Sheet pair of columns

True

All income statement accounts will be closed at the end of the period

True

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

True

Net income is closed to the owner's capital account

True

Prepaid Insurance is an example of a current asset

True

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

True

The ability to convert assets into cash is called liquidity

True

The balance sheet accounts are referred to as real or permanent accounts

True