Accounting Test Chapter 4 PDF

1. Closing entries are made in order to transfer profit (or loss) and Owner's Drawings to the Owner's Capital account. 2. The Owner's Capital account is A permanent account. 3. Which of the following is an example of a temporary account that will be closed to Income Summary at the en...

1. Closing entries are made in order to transfer profit (or loss) and Owner's Drawings to the Owner's Capital account. 2. The Owner's Capital account is A permanent account. 3. Which of the following is an example of a temporary account that will be closed to Income Summary at the end of the accounting period? Service Revenue 4. Closing entries are journalized and posted after the financial statements are prepared. 5. An error has occurred in the closing entry process if all the balance sheet accounts have zero balances. 6. On August 1, Marigold Club provided services on account for $860. Marigold Club received the entire balance on August 31 and recorded the payment by debiting Cash for $860 and crediting Service Revenue for $860. On the August 31 financial statements, assets and revenue will be overstated 7. Concord Company received a $150 cheque from a customer for the balance due on an account receivable. The transaction was erroneously recorded as a debit to Cash of $510 and a credit to Service Revenue of $510. The correcting entry is debit Service Revenue $510; credit Cash $360; credit Accounts Receivable $150. 8. Which of the following is the final step in the accounting cycle? Preparing a post-closing trial balance. 9. The first required step in the accounting cycle is analyzing transactions. 10. Which of the following steps in the accounting cycle would NOT generally be performed daily? Prepare adjusting entries 11. On a classified balance sheet of a Canadian company, current assets are customarily listed in the order of liquidity 12. Office equipment is classified on the balance sheet as property, plant, and equipment. 13. A current asset is expected to be realized in cash, sold, or consumed within one year of the balance sheet. 14. An intangible asset derives its value from the rights and privileges it provides the owner. 15. Liabilities are generally classified on a balance sheet as current liabilities and non-current liabilities. 16. The relationship between current assets and current liabilities is important in evaluating a company's liquidity 17. The current ratio is expressed as current assets divided by current liabilities. 18. Which of the following will be affected by a reclassification of liabilities from current to non current? working capital 19. Which of the following would NOT affect the acid test ratio decreasing accounts receivable from a collection on account 20. The current ratio is a measure of a company's liquidity