CHAPTER 3 SMARTBOOK

On a classified balance sheet, total liabilities represent the sum of _____ and long-term liabilities

current

Which of these is a long-term liability?

mortgage payable due in 20 years

On a classified balance sheet, the sum of current and long-term liabilities refers to ____ liabilities

total

Information reported in the statement of cash flows is Organized by these activities:

financing, operating, investing

A long-term liability:

is not due within the next year

Which of the following are characteristics of all balance sheet accounts?

Accounts are referred to as permanent, balances are carried forward from period to period

The classified balance sheet shows subtotals for current ________ and current _____

Assets - Liabilities

Which of the following expressions correctly calculates "total assets?"

Current assets plus long-term assets

True or false: total assets must always be equal to total liabilities less stockholders equity

False

A classified balance sheet _____

Groups assets and liabilities into current and long-term categories

Asset that can be quickly turned into cash has a characteristic of

Liquidity

The statement of stockholders equity includes these amounts

Net income, ending balance retained earnings, dividends for the period

Which of the following statements regarding the statement of cash flows are correct?

Reports cash receipts, the final financial statement that is typically prepared, reports cash disbursements

Reporting revenues only when cash is received and expenses only when cash is paid is called the ___ basis of accounting.

cash

The entries that transfer the balances of all temporary accounts to retained earnings are referred to as

closing entries

Revenues and expenses are reported in the

income statement

With respect to current assets, _____ refers to how quickly an asset can be converted to cash.

liquidity

Permanent accounts are found in:

only the balance sheet

Adam corporation uses the cash basis of accounting. Adam corporation should record expenses when

paid

Which of the following accounts should be classified as stockholders equity

retained earnings and common stock

Which of the following financial statements typically is prepared last

statement of cash flows

Closing entries move the balances from the _______ accounts into the retained earnings account

temporary

The sum of current and long-term assets reported on the balance sheet is referred to as

total assets