HTM 141 Chapter 4&5 test

Which of the following would not be classified as a long-term liability? a. Current maturities of long-term debt b. Bonds payable c. Mortgage payable d. Lease liabilities

Current maturities of long-term debt

The final closing entry to be journalized is typically the entry that closes the a. Revenue accounts. b. Dividends account. c. Retained Earnings account. d. Expense accounts.

Dividends account

The Dividends account is a permanent account whose balance is carried forward to the next accounting period. True False

False

A liability is classified as a current liability if it is to be paid from current assets within the next year or operating cycle, whichever is longer. True False

True

After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances True False

True

Correcting entries are made any time an error is discovered even though it may not be at the end of an accounting period. True False

True

If total credits in the income statement columns of a work sheet exceed total debits, the enterprise has net income. True False

True

Liabilities are generally classified on a balance sheet as a. small liabilities and large liabilities. b. present liabilities and future liabilities. c. tangible liabilities and intangible liabilities. d. current liabilities and long-term liabilities.

current liabilities and long-term liabilities

Liabilities are generally classified on a balance sheet as a. small liabilities and large liabilities. b. present liabilities and future liabilities. c. tangible liabilities and intangible liabilities. d. current liabilities and long-term liabilities.

current liabilities and long-term liabilities.

An intangible asset a. is worthless because it has no physical substance. b. derives its value from the rights and privileges it provides the owner. c. is converted into a tangible asset during the operating cycle. d. cannot be classified on the balance sheet because it lacks physical substance.

derives its value from the rights and privileges it provides the owner.

In preparing closing entries a. each revenue account will be credited. b. each expense account will be credited. c. the Retained Earnings account will be debited if there is net income for the period. d. the Dividends account will be debited.

each expense account will be credited

A current asset is A. the last asset purchased by a business. B. an asset which is currently being used to produce a product or service. C. usually found as a separate classification in the income statement. D. expected to be realized in cash, sold or consumed within one year of the balance sheet or the company's operating cycle, whichever is longer.

expected to be realized in cash, sold or consumed within one year of the balance sheet or the company's operating cycle, whichever is longer.

The information for preparing a trial balance on a work sheet is obtained from a. financial statements. b. general ledger accounts. c. general journal entries. d. business documents

general ledger accounts

The net income (or loss) for the period a. is found by computing the difference between the income statement credit column and the balance sheet credit column on the work sheet. b. cannot be found on the work sheet. c. is found by computing the difference between the income statement columns of the work sheet. d. is found by computing the difference between the trial balance totals and the adjusted trial balance totals.

is found by computing the difference between the income statement columns of the work sheet.

Closing entries are a. an optional step in the accounting cycle. b. posted to the ledger accounts from the work sheet. c. made to close permanent or real accounts. d. journalized in the general journal.

journalized in the general journal.

The relationship between current assets and current liabilities is important in evaluating a company's a. profitability. b. liquidity. c. market value. d. accounting cycle.

liquidity

A correcting entry a. must involve one balance sheet account and one income statement account. b. is another name for a closing entry. c. may involve any combination of accounts. d. is a required step in the accounting cycle.

may involve any combination of accounts

A post-closing trial balance will show a. only permanent account balances. b. only temporary account balances. c. zero balances for all accounts. d. the amount of net income (or loss) for the period

only temporary account balances.

The balance in the Income Summary account before it is closed will be equal to a. the net income or loss on the income statement. b. the beginning balance in the Retained Earnings account. c. the ending balance in the Retained Earnings account. d. zero.

the net income or loss on the income statement.