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