Chapter 3: Fundamentals of Financial Accounting

Select all that apply All of the following are on an unclassified balance sheet: (Check all that apply).

total assets total liability

A classified balance sheet has several categories for assets and liabilities including: (Check all that apply.)

-Current assets -Plant assets -Long-term investments -Noncurrent (long-term) liabilities

A post-closing trial balance is a list of (permanent/temporary) accounts and their balances (after/before) all (adjusting/closing) entries have been journalized and posted.

permanent after closing

Which of the accounts below would appear in the equity section of a classified balance sheet?

retained earnings

The Income Summary account can be defined as which of the following? (Check all that apply.)

An account that contains a credit for the sum of all revenues A temporary account An account whose balance equals net income or net loss An account used during the closing process (temp acct only used for closing process/credit for total revenues (& gains), debit for total expenses (& losses)

Summarize the closing process by listing the closing entries in the order in which they would occur at the end of the accounting period. Step 1: Close Income Statement (credit/debit) ___________ Step 2: Close Income Statement (credit/debit) ____________ Step 3: Close (income summary/dividends) _____________ 4: Close (income summary/dividends) ____________________

Blank 1: credit 2: debit 3: income summary Blank 4: dividends

The following categories are on a classified balance sheet. List them in the order that they would appear

Current Asset Long-term investment Plant asset Intangible asset Current Liabilities Long term liabilities

What are current liabilities?

Current liabilities are reported in the order of those to be settled first. Current liabilities are liabilities due to be paid within one year. Current liabilities are usually settled by paying out current assets such as cash.

f throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Debit Unearned Legal Fees and credit Legal Fees Earned.

Define the Income Summary account.

It is a temporary account used during the closing process to summarize revenues and expenses.

Which of the following defines long-term liabilities?

Long-term liabilities are debts of a business that are not due to be settled within one year.

Identify which of the accounts below would be classified as a current asset. (check all that apply.)

Prepaid rent office supplies cash accounts receivable (things expected to be sold, collected or used) w/i approx 1 year)

Identify the accounts below that would be classified as current liabilities on a classified balance sheet.

accounts payable notes payable (due in three months) wages payable taxes payable interest payable unearned revenues unearned rent (due within one year or operating period whichever is longer)

Identify the accounts below that would be classified as long-term liabilities on a classified balance sheet. (Check all that apply.)

bonds payable (in 5 yrs) mortgage payable (not due within one year)

Current assets are

cash and other resources that are expected to be sold, collected or used within one year

Equity is the ____ (creditor's/litigator's/owner's) claim on the assets of a business. In a proprietorship, this claim is reported in the ____ (asset/equity/liability) section of a balance sheet in the ____ (retained earnings/revenue/cash) account

owner's/equity/retained earnings