Accounting Multiple Choice

Which is the normal sequence for preparation of the following financial statements: (1) balance sheet, (2) statement of retained earnings, and (3) income statement? A) 1, 2, 3 B) 2, 3, 1 C) 3, 2, 1 D) 3, 1, 2

C

Cash and other assets that a business can convert into cash or use up in one year or one operation cycle, whichever is longer, are called: A) current assets. C) intangible assets. B) plant assets. D) long-term investments.

A

Current liabilities would include all of the following except: A) Mortgage notes payable (due in five years). B) Accounts payable. C) Unearned rental fees. D) Salaries payable.

A

The current asset classification on a service company's balance sheet is likely to report all of the following except: A) Supplies on hand. C) Unearned service fees. B) Accounts receivable. D) Prepaid insurance.

C

Henry Company is preparing financial statements and has a mortgage note on its building, which is due in six months and will be paid in cash. The mortgage note payable will be recorded in the classified balance sheet under: A) Current liabilities. C) Accrued liabilities. B) Long-term liabilities. D) Property, plant, and equipment.

A

If closing entries were not prepared for a company: A) the financial statements would be unaffected. B) the accountant could not prepare financial statements. C) the net income or net loss for the period would be incorrect. D) errors in retained earnings would be self-correcting over time.

A

In evaluating a company's current ratio, all except which one of the following should be taken into account? A) The amount of the equity ratio B) The industry in which the company operates C) The cash-generating ability of the company D) The quality of the current assets

A

Net income of $12,000 would be shown on the work sheet as: A) a debit of $12,000 in the Income Statement columns. B) a credit in the Income Statement columns of $12,000. C) a debit in the Statement of Retained Earnings columns. D) the first figure in the debit column of the Income Statement columns.

A

Which account would probably have a smaller balance in the Adjusted Trial Balance columns than in the Trial Balance columns? A) Unearned Delivery Fees C) Accumulated Depreciation B) Supplies Expense D) Salaries Expense

A

Which of the following statements is FALSE concerning the work sheet? A) All the adjusting entries can be identified simply by looking at the Trial Balance columns. B) Adjusting journal entries can be prepared from the entries in the Adjustment columns. C) Closing entries can be prepared from the entries in the Income Statement columns and the dividends balance in the Statement of Retained Earnings debit column. D) The difference between the credit column total and the debit column total of the Income Statement columns represents the net income or net loss for the period.

A

Which of the following statements is true about the statement of retained earnings? A) It helps relate income statement information to the balance sheet. B) It is the final statement prepared at year-end. C) It is usually not prepared in a corporate form of business. D) All of the above statements are true.

A

If adjusting entries were not prepared for a company: A) the accountant could not estimate net income or net loss. B) the net income or net loss for the period would be incorrect. C) any errors in retained earnings would be self-correcting. D) the financial statements would not be affected.

B

In a classified balance sheet, which of the following would not be one of the normal subdivisions of the asset and liability categories? A) Property, plant and equipment C) Current assets B) Unearned rental fees D) Current liabilities

B

On a classified balance sheet, accumulated depreciation would be found under: A) long-term liabilities B) property, plant, and equipment C) current liabilities D) current assets

B

Which of the following classifications would be found on an unclassified balance sheet? A) Current Liabilities B) Assets C) Plant, property, and equipment D) None (the unclassified balance sheet has no classifications)

B

Bookkeeping machines (choose the false statement): A) supplemented manual systems. B) recorded recurring transactions such as sales on account. C) replaced computerized systems. D) were quite expensive.

C

Closing entries to close revenues and expenses can be obtained directly from which work sheet columns? A)Trial Balance B) Balance Sheet C) Income Statement D) Cannot be obtained directly from the work sheet.

C

Manual systems that permit the writing of a check and the simultaneous recording of the check in the cash disbursements journal were called: A) multiple journal systems. C) "one write" or pegboard systems. B) multiple ledger systems. D) Hancock check writing systems.

C

Which of the following would always appear in a statement of retained earnings? A) The ending balance for capital stock. B) The ending balance for total stockholders' equity. C) The beginning balance for retained earnings. D) The beginning balance for total stockholders' equity.

C

On a work sheet, a net loss would appear in the: A) Income Statement debit column only. B) Income Statement credit column only. C) Income Statement debit column and Statement of Retained Earnings credit column. D) Income Statement credit column and Statement of Retained Earnings debit column.

D

The Adjusted Trial Balance columns of a work sheet show Unearned Management Fees of $10,000. In which other work sheet column would the Unearned Management Fees appear? A) The Income Statement debit column. B) The Balance Sheet debit column. C) The Income Statement credit column. D) The Balance Sheet credit column.

D

The accounting functions of financial accountants using any type of accounting system include all but which one of the following? A) Observing, identifying, and measuring economic events B) Recording, classifying, and summarizing measurements C) Reporting economic events and interpreting financial statements D) Predicting the future outcomes of past management decisions

D

The final figure on the income statement is: A) gross margin. B) net income. C) net loss. D) either net income or net loss.

D

The post-closing trial balance contains which types of accounts? A) Expenses and revenues B) Assets C) Liabilities, Capital Stock, and Retained Earnings D) Two of the above statements are true

D

The work sheet is generally prepared after: A) adjusting and closing entries are journalized and posted. a post-closing trial balance is prepared. B) adjusting entries are journalized and posted, but before C) closing entries are journalized and posted. D) none of the above

D

Which of the following accounts is closed by an entry that includes a debit to Income Summary? A) Service Revenue B) Accounts Payable C) Dividends D) Rent Expense

D

Which of the following accounts is closed directly to the Retained Earnings account? A) Income Summary B) Depreciation Expense-Machinery C) Dividends D) Two of the above answers are correct.

D

Which of the following is true of the work sheet? A) Assets are extended into the Balance Sheet columns as credits. B) Revenues are extended into the Income Statement columns as debits. C) Liabilities are extended into the Balance Sheet columns as debits. D) Expenses are extended into the Income Statement column as debits.

D

Which of the following statements is true concerning the work sheet? A) The accounting process could not possibly be completed without preparing a work sheet. B) The work sheet must contain either 8 or 12 columns. C) An explanation of each adjustment must appear toward the bottom of the work sheet. D) Since the work sheet is an informal aid, the accountant can use any format desired or choose not to prepare a work sheet at all.

D