Question Details

ACCT/510 ACCT510 ACCT 510 CHAPTER 4 MULTIPLE CHOICE QUESTIONS PART 8

CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE

MULTIPLE CHOICE QUESTIONS


121. Which of the following liabilities are not related to the operating cycle?
a. Wages payable
b. Accounts payable
c. Utilities payable
d. Bonds payable


122. Intangible assets include each of the following except
a. copyrights.
b. goodwill.
c. land improvements.
d. patents.


123. It is not true that current assets are assets that a company expects to
a. realize in cash within one year.
b. sell within one year.
c. use up within one year.
d. acquire within one year.


124. The operating cycle of a company is the average time that is required to go from cash to
a. sales in producing revenues.
b. cash in producing revenues.
c. inventory in producing revenues.
d. accounts receivable in producing revenues.


125. On a classified balance sheet, current assets are customarily listed
a. in alphabetical order.
b. with the largest dollar amounts first.
c. in the order of liquidity.
d. in the order of acquisition.


126. Intangible assets are
a. listed under current assets on the balance sheet.
b. not listed on the balance sheet because they do not have physical substance.
c. noncurrent resources.
d. listed as a long-term investment on the balance sheet.


127. The relationship between current assets and current liabilities is important in evaluating a
company's
a. profitability.
b. liquidity.
c. market value.
d. accounting cycle.
Completing the Accounting Cycle 4 - 19


128. The most important information needed to determine if companies can pay their current
obligations is the
a. net income for this year.
b. projected net income for next year.
c. relationship between current assets and current liabilities.
d. relationship between short-term and long-term liabilities.
Use the following information for questions 129-137.
The following items are taken from the financial statements of Cerner Company for the year
ending December 31, 2008:
Accounts payable $ 18,000
Accounts receivable 11,000
Accumulated depreciation - equipment 28,000
Advertising expense 21,000
Cash 15,000
Cerner, Capital (1/1/08) 102,000
Cerner, Drawing 14,000
Depreciation expense 12,000
Insurance expense 3,000
Note payable, due 6/30/09 70,000
Prepaid insurance (12-month policy) 6,000
Rent expense 17,000
Salaries expense 32,000
Service revenue 133,000
Supplies 4,000
Supplies expense 6,000
Equipment 210,000


129. What is the company- net income for the year ending December 31, 2008?
a. $133,000
b. $42,000
c. $28,000
d. $12,000


130. What is the balance that would be reported for owner- equity at December 31, 2008?
a. $102,000
b. $130,000
c. $144,000
d. $158,000


131. What are total current assets at December 31, 2008?
a. $26,000
b. $32,000
c. $36,000
d. $218,000


132. What is the book value of the equipment at December 31, 2008?
a. $238,000
b. $210,000
c. $182,000
d. $170,000


4 - 20 Test Bank for Accounting Principles, Eighth Edition


133. What are total current liabililites at December 31, 2008?
a. $18,000
b. $70,000
c. $88,000
d. $0


134. What are total long-term liabilities at December 31, 2008?
a. $0
b. $70,000
c. $88,000
d. $90,000


135. What is total liabilities and owner- equity at December 31, 2008?
a. $176,000
b. $190,000
c. $218,000
d. $232,000


136. The sub-classifications for assets on the company- classified balance sheet would
include all of the following except:
a. Current Assets.
b. Property, Plant, and Equipment.
c. Intangible Assets.
d. Long-term Assets.


137. The current assets should be listed on Cerner- balance sheet in the following order:
a. cash, accounts receivable, prepaid insurance, equipment.
b. cash, prepaid insurance, supplies, accounts receivable.
c. cash, accounts receivable, prepaid insurance, supplies.
d. equipment, supplies, prepaid insurance, accounts receivable, cash.


138. Which statement about long-term investments is not true?
a. They will be held for more than one year.
b. They are not currently used in the operation of the business.
c. They include investments in stock of other companies and land held for future use.
d. They can never include cash accounts.


139. What is the order in which assets are generally listed on a classified balance sheet?
a. Current and long-term
b. Current; property, plant, and equipment; long-term investments; intangible assets
c. Current; property, plant, and equipment; intangible assets; long-term investments
d. Current; long-term investments; property, plant, and equipment; intangible assets


140. These are selected account balances on December 31, 2008.
Land (location of the corporation- office building) $100,000
Land (held for future use) 150,000
Corporate Office Building 600,000
Inventory 200,000
Equipment 450,000
Office Furniture 100,000
Accumulated Depreciation 300,000
Completing the Accounting Cycle 4 - 21
What is the total amount of property, plant, and equipment that will appear on the balance
sheet?
a. $1,300,000
b. $1,100,000
c. $1,600,000
d. $950,000


141. The following selected account balances appear on the December 31, 2008 balance
sheet of Ming Co.
Land (location of the corporation- office building) $150,000
Land (held for future use) 225,000
Corporate Office Building 900,000
Inventory 300,000
Equipment 675,000
Office Furniture 150,000
Accumulated Depreciation 450,000
What is the total amount of property, plant, and equipment that will be reported on the
balance sheet?
a. $1,950,000
b. $1,650,000
c. $2,400,000
d. $1,425,000


a142. A reversing entry
a. reverses entries that were made in error.
b. is the exact opposite of an adjusting entry made in a previous period.
c. is made when a business disposes of an asset it previously purchased.
d. is made when a company sustains a loss in one period and reverses the effect with a
profit in the next period.


a143. If a company utilizes reversing entries, they will
a. be made at the beginning of the next accounting period.
b. not actually be posted to the general ledger accounts.
c. be made before the post-closing trial balance.
d. be part of the adjusting entry process.
Additional Multiple Choice Questions


144. The steps in the preparation of a worksheet do not include
a. analyzing documentary evidence.
b. preparing a trial balance on the worksheet.
c. entering the adjustments in the adjustment columns.
d. entering adjusted balances in the adjusted trial balance columns.


145. Balance sheet accounts are considered to be
a. temporary owner's equity accounts.
b. permanent accounts.
c. capital accounts.
d. nominal accounts.


4 - 22 Test Bank for Accounting Principles, Eighth Edition


146. Income Summary has a credit balance of $12,000 in J. Sawyer Co. after closing revenues
and expenses. The entry to close Income Summary is
a. credit Income Summary $12,000, debit J. Sawyer, Capital $12,000.
b. credit Income Summary $12,000, debit J. Sawyer, Drawing $12,000.
c. debit Income Summary $12,000, credit J. Sawyer, Drawing $12,000.
d. debit Income Summary $12,000, credit J. Sawyer, Capital $12,000.


147. The post-closing trial balance contains only
a. income statement accounts.
b. balance sheet accounts.
c. balance sheet and income statement accounts.
d. income statement, balance sheet, and owner's equity statement accounts.


148. Which of the following is an optional step in the accounting cycle?
a. Adjusting entries
b. Closing entries
c. Correcting entries
d. Reversing entries
149. Which one of the following statements concerning the accounting cycle is incorrect?
a. The accounting cycle includes journalizing transactions and posting to ledger
accounts.
b. The accounting cycle includes only one optional step.
c. The steps in the accounting cycle are performed in sequence.
d. The steps in the accounting cycle are repeated in each accounting period.


150. Correcting entries are made
a. at the beginning of an accounting period.
b. at the end of an accounting period.
c. whenever an error is discovered.
d. after closing entries.


151. On September 23, Pitts Company received a $350 check from Mike Moluf for services to
be performed in the future. The bookkeeper for Pitts Company incorrectly debited Cash
for $350 and credited Accounts Receivable for $350. The amounts have been posted to
the ledger. To correct this entry, the bookkeeper should
a. debit Cash $350 and credit Unearned Service Revenue $350.
b. debit Accounts Receivable $350 and credit Unearned Service Revenue $350.
c. debit Accounts Receivable $350 and credit Cash $350.
d. debit Accounts Receivable $350 and credit Service Revenue $350.


152. All of the following are owner's equity accounts except
a. the Capital account.
b. Capital Stock.
c. Investment in Stock.
d. Retained Earnings.


Completing the Accounting Cycle 4 - 23


153. Current liabilities
a. are obligations that the company is to pay within the forthcoming year.
b. are listed in the balance sheet in order of their expected maturity.
c. are listed in the balance sheet, starting with accounts payable.
d. should not include long-term debt that is expected to be paid within the next year.


a154. The use of reversing entries
a. is a required step in the accounting cycle.
b. changes the amounts reported in the financial statements.
c. simplifies the recording of subsequent transactions.
d. is required for all adjusting entries.