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70. Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owner's capital account for the events of the period just finished are referred to as: A. Adjusting entries. B. Closing entries. C. Final entries.
D. Work sheet entries. E. Updating entries.
71. The closing process is necessary in order to:
A. calculate net income or net loss for an accounting period.
B. ensure that all permanent accounts are closed to zero at the end of each accounting period.
C. ensure that the company complies with state laws.
D. ensure that net income or net loss and owner withdrawals for the period are closed into the owner's capital account.
E. ensure that management is aware of how well the company is operating.
72. Closing entries are required:
A. if management has decided to cease operating the business.
B. only if the company adheres to the accrual method of accounting. C. if a company's bookkeeper forgets to prepare reversing entries.
D. if the temporary accounts are to reflect correct amounts for each accounting period. E. in order to satisfy the Internal Revenue Service.
73. The recurring steps performed each reporting period, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the: A. Accounting period. B. Operating cycle. C. Accounting cycle. D. Closing cycle.
E. Natural business year.
74. Which of the following is the usual final step in the accounting cycle? A. Journalizing transactions.
B. Preparing an adjusted trial balance. C. Preparing a post-closing trial balance. D. Preparing the financial statements. E. Preparing a work sheet.
75. A classified balance sheet:
A. Measures a company's ability to pay its bills on time. B. Organizes assets and liabilities into important subgroups. C. Presents revenues, expenses, and net income.
D. Reports operating, investing, and financing activities.
E. Reports the effect of profit and withdrawals on owner's capital.
76. The assets section of a classified balance sheet usually includes:
A. Current assets, long-term investments, plant assets, and intangible assets. B. Current assets, long-term assets, revenues, and intangible assets. C. Current assets, long-term investments, plant assets, and equity.
D. Current liabilities, long-term investments, plant assets, and intangible assets. E. Current assets, liabilities, plant assets, and intangible assets.
77. The usual order for the asset section of a classified balance sheet is:
A. Current assets, prepaid expenses, long-term investments, intangible assets. B. Long-term investments, current assets, plant assets, intangible assets. C. Current assets, long-term investments, plant assets, intangible assets. D. Intangible assets, current assets, long-term investments, plant assets. E. Plant assets, intangible assets, long-term investments, current assets.
78. A classified balance sheet differs from an unclassified balance sheet in that A. a unclassified balance sheet is never used by large companies. B. a classified balance sheet normally includes only three subgroups.
C. a classified balance sheet presents information in a manner that makes it easier to calculate a company's current ratio.
D. a classified balance sheet will include more accounts than an unclassified balance sheet for the same company on the same date.
E. a classified balance sheet cannot be provided to outside parties.
79. Two common subgroups for liabilities on a classified balance sheet are: A. current liabilities and intangible liabilities. B. present liabilities and operating liabilities. C. general liabilities and specific liabilities. D. intangible liabilities and long-term liabilities. E. current liabilities and long-term liabilities.
80. The current ratio:
A. Is used to measure a company's profitability.
B. Is used to measure the relation between assets and long-term debt. C. Measures the effect of operating income on profit.
D. Is used to help evaluate a company's ability to pay its debts in the near future. E. Is calculated by dividing current assets by equity.
81. The current ratio:
A. Is calculated by dividing current assets by current liabilities.
B. Helps to assess a company's ability to pay its debts in the near future. C. Can reveal problems in a company if it is less than 1.
D. Can affect a creditor's decision about whether to lend money to a company. E. All of these.
AACSB: Communications AICPA BB: Industry AICPA FN: Risk Analysis Difficulty: Hard Learning Objective: A1
82. The Unadjusted Trial Balance columns of a company's work sheet show the
balance in the Office Supplies account as $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Balance Sheet columns of the work sheet is: A. $325 debit. B. $325 credit. C. $425 debit. D. $750 debit. E. $750 credit.
83. A 10-column spreadsheet used to draft a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements, and which is an optional tool in the accounting process is a(n) : A. Adjusted trial balance. B. Work sheet.
C. Post-closing trial balance. D. Unadjusted trial balance. E. General ledger.
