Chapter 13: Financial Statements and Closing Procedures

An adjusting entry to record depreciation expense will include a credit to a(n) _________ account. Multiple choice question. contra asset liability asset

contra asset

Entries that are made to reverse the effects of certain adjustments are called ----------entries.

reversing

A measure of a firm's ability to pay its current obligations, calculated by taking current assets less current liabilities, is called: Multiple choice question. liability turnover current ratio working capital

working capital

Net Income (loss) from Operations is computed by summing which of the following items: Multiple select question. - Cost of Goods Sold - Total Operating Expenses + Cost of Goods Sold - Gross Profit on Sales + Gross Profit on Sales + Total Operating Expenses

- Total Operating Expenses + Gross Profit on Sales

Sales ____________ = Net Sales Multiple choice question. - sales returns and allowances - sales discounts - sales returns and allowances + sales discounts + sales returns and allowances + sales discounts + sales returns and allowances - sales discounts

- sales returns and allowances - sales discounts

What are the components of Cost of Goods Sold? Check all that apply. Multiple select question. Sales Beginning Merchandise Inventory Net Delivered Cost of Purchases Ending Merchandise Inventory

Beginning Merchandise Inventory Net Delivered Cost of Purchases Ending Merchandise Inventory

What are the components of Cost of Goods Sold? Check all that apply. Multiple select question. Net Delivered Cost of Purchases Ending Merchandise Inventory Sales Beginning Merchandise Inventory

Net Delivered Cost of Purchases Ending Merchandise Inventory Beginning Merchandise Inventory

What are the components of the total Net Delivered Cost of Purchases? Check all that apply. Multiple select question. Purchases Freight In Purchase Returns and Allowances Cost of goods sold Purchase Discounts

Purchases Freight In Purchase Returns and Allowances Purchase Discounts

Identify which accounts would appear in a post-closing trial balance: Multiple select question. purchases drawing accounts payable cash owner's capital rent expense

accounts payable cash owner's capital

The ratio that measures the reasonableness of accounts receivable outstanding, and can be used to estimate the average collection period of accounts receivable is the ___________ ratio. Multiple choice question. accounts receivable collection current accounts receivable turnover working capital

accounts receivable turnover

The ratio that can be used to estimate the average collection period of accounts receivable is the ---------------

accounts receivable turnover ratio

Identify the temporary accounts below: Multiple select question. advertising expense drawing cash interest payable interest income salaries expense

advertising expense drawing interest income salaries expense

An adjusting entry for prepaid expenses will include a credit to a(n) _________ account. Multiple choice question. asset contra asset liability

asset

An adjusting entry for prepaid expenses will include a credit to a(n) _________ account. Multiple choice question. liability contra asset asset

asset

A balance sheet that divides the various assets and liabilities into groups, such as current assets and current liabilities, is called a ________ balance sheet. Multiple choice question. grouped divided classified

classified

A format by which revenues and expenses on the income statement, and assets and liabilities on the balance sheet, are divided into groups of similar accounts and a subtotal is given for each group is called a -------------- financial statement.

classified

A format by which revenues and expenses on the income statement, and assets and liabilities on the balance sheet, are divided into groups of similar accounts and a subtotal is given for each group is called a _______ financial statement. Multiple choice question. classified divided working

classified

Inventory Turnover is calculated by taking ________ divided by average inventory. Multiple choice question. net income gross profit cost of goods sold

cost of goods sold

Inventory Turnover is calculated by taking: Multiple choice question. cost of goods sold/ending inventory cost of goods sold/average inventory average inventory/cost of goods sold ending inventory/cost of goods sold

cost of goods sold/average inventory

A ratio that calculates the amount of dollars of current assets the company has for every dollar of current liabilities it has is called the------ ratio.

current

Items that will be converted into cash within one year or will be used within one year are considered _______ assets. Multiple choice question. long-term current limited

current

Items that will normally be converted into cash within one year, and items that will be used up within one year are considered ------------assets.

current

The current ratio is computed by taking: Multiple choice question. current assets - current liabilities current assets / current liabilities current liabilities / current assets current liabilities - current assets

current assets / current liabilities

A company has a current ratio of 1.40. This means that it has $1.40 of current assets for every dollar of _________. Multiple choice question. current liabilities total liabilities current equity total equity

current liabilities

After the first two closing entries are made, the income summary account has a $6,000 credit balance. The entry to close the income summary account will include which of the following entries: Multiple select question. debit to income summary credit to the owner's capital account credit to income summary debit to the owner's capital account

debit to income summary credit to the owner's capital account

After the first two closing entries are made, the income summary account has a $2,500 debit balance. The entry to close the income summary account will include which of the following entries: Multiple select question. debit to the owner's capital account credit to income summary credit to the owner's capital account debit to income summary

debit to the owner's capital account credit to income summary

Sales - Sales Returns and Allowances - Sales *********** = Net Sales

discounts

To calculate the current ratio, take current assets _______ current liabilities. Multiple choice question. plus divided by less multiplied by

divided by

Identify which accounts would appear in a post-closing trial balance: Multiple select question. equipment drawing rent expense accounts receivable merchandise inventory supplies expense

equipment accounts receivable merchandise inventory

Gross Profit Percentage is calculated as follows: Multiple choice question. gross profit multiplied by net income gross profit multiplied by net sales gross profit divided by net income gross profit divided by net sales

gross profit divided by net sales

The gross profit percentage calculates the amount of: Multiple choice question. net income from each sales dollar net income from each gross profit dollar gross profit from each sales dollar

gross profit from each sales dollar

The ratio that reveals the amount of gross profit from each sales dollar is called the ______. Multiple choice question. working capital net sales turnover gross profit percentage current ratio

gross profit percentage

Which of the following steps is last in the accounting cycle: Multiple choice question. prepare a postclosing trial balance prepare financial statements interpret the financial information

interpret the financial information

The ratio that shows the number of times inventory is replaced during the accounting period is called

inventory turnover

The ratio that shows the number of times inventory is replaced during the accounting period is called ___________. Multiple choice question. working capital current ratio inventory turnover

inventory turnover

Purchases plus Freight In minus Purchases Returns and Allowance plus/minus _______ equals Net Delivered Cost of Purchases Multiple choice question. minus Ending Merchandise Inventory minus Purchases Discounts plus Ending Merchandise Inventory plus Purchase Discounts

minus Purchases Discounts

Net sales includes which of the following computations: Multiple select question. minus sales minus sales discounts plus sales returns and allowances plus sales discounts minus sales returns and allowances plus sales

minus sales discounts minus sales returns and allowances plus sales

An income statement that provides subtotals for cost of goods sold, selling expenses, and general and administrative expenses is called a -------------------step income statement.

multi

A type of income statement on which several subtotals are computed before the net income is calculated, such as gross profit, is called a _______ income statement. Multiple choice question. multiple-step single-total multi-total single-step

multiple-step

A type of income statement on which several subtotals are computed before the net income is calculated, such as gross profit, is called a _______ income statement. Multiple choice question. multiple-step single-total single-step multi-total

multiple-step

The accounts receivable turnover ratio is calculated by taking ---------------divided by average accounts receivable.

net credit sales

The accounts receivable turnover ratio is calculated by taking: Multiple choice question. net credit sales / average accounts receivable net income / average accounts receivable average accounts receivable / net income average accounts receivable/ net credit sales

net credit sales / average accounts receivable

When there are more expenses than revenue, the excess of expenses over revenue is called

net loss

Gross Profit Percentage is calculated by taking gross profit divided by***

net sales

Assets that will be converted to cash within _______ are considered current assets. Multiple choice question. six months three months one year

one year

The financial statement that reports changes in the owner's financial interest during the period is the statement of

owner's equity

Working capital is a measure of a firm's ability to: Multiple choice question. purchase additional property and equipment pay its current obligations expand operations

pay its current obligations

Identify the items that are used to calculate net income: Multiple select question. plus expenses minus revenue plus revenue minus expenses

plus revenue minus expenses

Which of the following steps of the accounting cycle comes first from the list below: Multiple choice question. interpret the financial information prepare financial statements journalize and post closing entries prepare a post-closing trial balance journalize and post adjusting entries

prepare financial statements

Identify the temporary accounts below: Multiple select question. purchases accounts receivable rent expense sales equipment drawing

purchases rent expense sales drawing

Entries that are made to reverse the effects of certain adjustments are called ______ entries. Multiple choice question. reversing closing adjusting

reversing

Identify the temporary accounts below: Multiple select question. cash salaries expense advertising expense interest payable drawing interest income

salaries expense advertising expense drawing interest income

A type of income statement where only one computation is needed to determine the net income (total revenue - total expenses = net income) is called a ---------------step income statement.

single

The financial statement that reports net income and owner withdrawals for the period is called the ________. Multiple choice question. balance sheet income statement statement of owner's equity

statement of owner's equity

Net Income (or Net Loss) from Operations is computed by taking Gross Profit on Sales less ________. Multiple choice question. net sales cost of goods sold total operating expenses

total operating expenses

Net Income (or Net Loss) from Operations is computed by taking Gross Profit on Sales less ________. Multiple choice question. total operating expenses cost of goods sold net sales

total operating expenses