QUESTION 1The current ratio measures __________.A)a company’s ability to sell its long-term assetsB)a company’s ability to pay current liabilities from its total assetsC)a company’s ability to pay current liabilities from current assetsD)a company’s profitability during a particular periodQUESTION 2A company has $120,000 in current assets; $550,000 in total assets; $90,000 in current liabilities, and $110,000 in total liabilities. Calculate the current ratio of the company. (Round your answer to two decimal places.)A)1.33B)1.72C)1.75D)1.09QUESTION 3Adjusting journal entries are prepared __________.A)after preparing the adjusted trial balanceB)after preparing the unadjusted trial balanceC)after posting the closing entriesD)after preparing the financial statementsQUESTION 4Martinville Company earned revenues of $20,000 and incurred expenses of $4,000. Martinville withdrew $3,500 for personal use. What is the balance in the Income Summary account prior to closing net income or loss to the Martinville, Capital account?A)Debit balance of $16,000B)Debit balance of $12,500C)Credit balance of $16,000D)Credit balance of $20,000QUESTION 5Which of the following are temporary accounts that are closed at the end of the year?A)Assets, liabilities, and Owner, WithdrawalsB)Revenues, expenses, and Owner, WithdrawalsC)Assets, liabilities, and owner’s equityD)Revenues, expenses, and owner’s equityQUESTION 6Which of the following is a permanent account?A)Wages expenseB)Salaries payableC)Service revenueD)Utilities expenseQUESTION 7Liquidity is a measure of how __________.A)quickly an asset may be converted into cashB)long an asset can be usedC)easily an asset can be exchanged for another assetD)quickly an asset appreciates in valueQUESTION 8Which of the following accounts will be closed by debiting the Income Summary account?A)Owner, capitalB)Service revenueC)Accounts receivableD)Salaries expenseQUESTION 9Which of the following statements is TRUE of the worksheet?A)The worksheet is a tool that takes the place of financial statement preparation.B)The worksheet is a document used to summarize data to prepare financial statements.C)The worksheet is a financial statement issued to the public to communicate the financial results of a company.D)The worksheet is a type of journal.QUESTION 10Property, plant, and equipment are __________.A)presented in order of the category name, with Land being presented lastB)also called fixed or plant assetsC)either tangible or intangible assetsD)easily converted to cashQUESTION 11The financial statements are prepared from the __________.A)adjusted trial balanceB)chart of accountsC)statement of owner’s equityD)unadjusted trial balanceQUESTION 12Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business’s normal operating cycle if the cycle is longer than a year, are called __________ assets.A)intangibleB)plantC)long-termD)currentQUESTION 13The net income of Hendley Company for the year is $25,000. Withdrawals during the year were $30,000. No new capital contributions were made during the year. Which of the following statements is TRUE?A)Hendley, Capital account decreases by $25,000.B)Hendley, Capital account decreases by $5,000.C)Hendley, Capital account increases by $30,000.D)Hendley, Capital will remain the same.QUESTION 14Salaries Payable, Accounts Payable, and Unearned Revenue are examples of __________.A)short-term investmentsB)fixed assetsC)current liabilitiesD)long-term liabilitiesQUESTION 15Which financial statement is prepared last?A)Income statementB)Balance sheetC)Statement of owner’s equityD)The financial statements can be prepared in any order.QUESTION 16Brownstone Company has a current ratio of 4.00. This indicates that the company has $4 in __________.A)current liabilities for every $1 of current assetsB)total assets for every $1 of current liabilitiesC)current assets for every $1 of current liabilitiesD)total assets for every $1 of current assetsQUESTION 17The time span during which cash is paid for goods and services, which are then sold to customers from whom the business collects cash, is called the __________.A)production timeB)operating cycleC)accounting cycleD)sales time
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