Multiple Choice Questions on Accounting
19.The balance sheet reports:
A. Net income at a point in time.
B. Cash flows for a period of time.
C. Assets and equities at a point in time.
D. Assets and liabilities for a period of time.
20.Current assets include cash and all other assets expected to become cash or be consumed:
A.Within one year.
B.Within one operating cycle.
C.Within one year or one operating cycle, whichever is shorter.
D. Within one year or one operating cycle, whichever is longer.
21.Red Onion Restaurant classifies a six-month prepaid insurance policy as a current asset. Its rationale is based on:
A.Materiality.
B.Operating cycle.
C. Definition.
D. Liquidity.
22.An asset that is not expected to be converted to cash or consumed within one year or the operating cycle is:
A.Goodwill.
B.Accounts receivable.
C.Inventory.
D.Supplies.
23.Which of the following accounts are closed at the end of the accounting period?
A.Allowance for uncollectible accounts.
B.Unearned revenue.
C.Retained earnings.
D. Income tax expense.
24.Which is a shareholders' equity account in the balance sheet?
A. Accumulated depreciation.
B. Paid-in capital.
C.Dividends payable.
D.Marketable securities.
25.Rent collected in advance is:
A. An asset account in the balance sheet. B. A liability account in the balance sheet.
C. A shareholders' equity account in the balance sheet. D. A temporary account, not in the balance sheet at all.
26.Notes payable:
A.Is a current liability account.
B.Usually has a debit balance.
C.Is a noncurrent liability account.
D. Cannot determine its classification without additional information.
27.Which of the following is never a current liability account?
A.Accrued payroll
B.Dividends payable
C. Prepaid rent
D. Subscriptions collected in advance
28.New Oaks Winery requires two months to make wine, two years to age it, one month to bottle it, two months to sell it, and one month to collect the receivable. Its operating cycle is:
A.
A. Net income at a point in time.
B. Cash flows for a period of time.
C. Assets and equities at a point in time.
D. Assets and liabilities for a period of time.
20.Current assets include cash and all other assets expected to become cash or be consumed:
A.Within one year.
B.Within one operating cycle.
C.Within one year or one operating cycle, whichever is shorter.
D. Within one year or one operating cycle, whichever is longer.
21.Red Onion Restaurant classifies a six-month prepaid insurance policy as a current asset. Its rationale is based on:
A.Materiality.
B.Operating cycle.
C. Definition.
D. Liquidity.
22.An asset that is not expected to be converted to cash or consumed within one year or the operating cycle is:
A.Goodwill.
B.Accounts receivable.
C.Inventory.
D.Supplies.
23.Which of the following accounts are closed at the end of the accounting period?
A.Allowance for uncollectible accounts.
B.Unearned revenue.
C.Retained earnings.
D. Income tax expense.
24.Which is a shareholders' equity account in the balance sheet?
A. Accumulated depreciation.
B. Paid-in capital.
C.Dividends payable.
D.Marketable securities.
25.Rent collected in advance is:
A. An asset account in the balance sheet. B. A liability account in the balance sheet.
C. A shareholders' equity account in the balance sheet. D. A temporary account, not in the balance sheet at all.
26.Notes payable:
A.Is a current liability account.
B.Usually has a debit balance.
C.Is a noncurrent liability account.
D. Cannot determine its classification without additional information.
27.Which of the following is never a current liability account?
A.Accrued payroll
B.Dividends payable
C. Prepaid rent
D. Subscriptions collected in advance
28.New Oaks Winery requires two months to make wine, two years to age it, one month to bottle it, two months to sell it, and one month to collect the receivable. Its operating cycle is:
A.