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Exam 4: Completing the Accounting Cycle

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Question 31

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A worksheet is a substitute for the financial statements.

A) True
B) False

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Question 32

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The current ratio measures a company's ________.

A) overall ability to pay liabilities
B) ability to pay current liabilities from current assets
C) proportion of assets that are financed by debt
D) rate of cash flow

E) A) and D)
F) C) and D)

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Question 33

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A business starts each new time period with a zero beginning balance in permanent accounts.

The balance sheet is the first financial statement that is prepared at the end of the period.

Which of the following is a current asset that is expected to be converted to cash,sold,or consumed during the next year (or the normal operating cycle,if longer) ?

An account that is NOT closed at the end of the period is called a(n) ________.

The permanent accounts-assets,liabilities,and owner's equity-are closed to the Income Summary account.

The Depreciation Expense account is a temporary account.

The balances of select accounts of McMurray Company as of December 31,2018 are given below: The Unearned Revenue is the amount of cash received for services to be rendered in January 2019.Interest Payable will be paid on February 5,2019.What are the total long-term liabilities shown on the balance sheet at December 31,2018?

On December 31,2018,Absolute Services Company prepared the following accrual adjustment: The company paid salaries amounting to $1,500 on January 7,2019 for the two-week pay period that ended on January 6,2019.Journalize the entries for January 1,2019 and January 7,2019,assuming the company uses reversing entries.Omit explanations.

The operating cycle is the process by which companies produce their financial statements for a specific period.

The following is the adjusted trial balance as of December 31,2018 of Bravo Photography: Provide the closing entry for revenues.Omit explanation.

Which of the following is an example of an intangible asset?

The balance sheet section of the worksheet includes the asset and liability accounts and all equity accounts,including all revenues and expenses.

The following is the adjusted trial balance as of December 31,2019 of Brooks Design Studio: Prepare the closing entry for expenses.Omit explanation.

A current ratio that has increased from the prior period indicates an improvement in the company's ability to pay its current debts.

A balance sheet that lists the assets above the liabilities and owner's equity sections is a(n) ________ balance sheet.

A balance sheet prepared in the account form lists the assets at the top and the liabilities and owner's equity are positioned below the assets.

Adjusting journal entries are prepared ________.

On December 31,2018,Action Services Company prepared the following accrual adjustment: Action uses reversing entries.Prepare the reversing entry on January 1,2019.Omit explanation.