Chapter 4

Which of the following statements reports assets, liabilities, and owner’s equity as of the last day of the period?

• Unadjusted trial balance

• Income statement

• Statement of owner’s equity

• Balance sheet

Which situation indicates a net loss within the Income Statement portion of the Adjusted Trial Balance?

• Total credits exceed total debits.

• Total debits exceed total credits.

• Total debits equal total credits.

• None of the above.

Which of the following financial statements places each asset and each liability into a specific category?

• Classified balance sheet

• Statement of cash flows

• Income statement

• Statement of owner’s equity

The long-term assets that have no physical form are called _____ assets.

• plant

• intangible

• current

• fixed

An account that relates to a particular accounting period and is closed at the end of that period is called a(n) _____ account.

• long-term

• fictitious

• intangible

• temporary

Which of the following is a permanent account?

• Depreciation Expense

• Service Revenue

• Owner’s Withdrawals

• Accumulated Depreciation

The ________ account is a temporary account into which revenues and expenses are transferred prior to their final transfer into the Capital account.

• Closing

• Income Summary

• Balance Sheet

• Owner’s withdrawals

The process by which companies produce their financial statements for a specific period is called __________.

• the operating cycle

• journalizing of entries

• posting of entries

• the accounting cycle

Assets are listed on the balance sheet in the order of their ________.

• purchase date

• adjustments

• liquidity

• balance

Lisa Company has Cash of $800, Accounts Receivable of $750, Office Supplies of $500, and Plant Assets of $2,000. Lisa owes $390 on Accounts Payable and Salaries Payable of $600. Calculate the current ratio.

• 2.07

• 1.56

• 1.31

• 4.09