ASHWORTH A01 ONLINE EXAM 6

Question 1 of 40 2.5/ 2.5 Points
It is the year end, but not the pay period end. How will this affect the balance sheet?
A. Assets will be increased.
B. Liabilities will be increased.
C. Owner's equity will be increased.
D. This has no effect on the period end balance sheet.
Question 2 of 40 2.5/ 2.5 Points
Which of the following would cause a liability to be credited and an expense to be debited?
A. recording the adjustment for the expiration of rent
B. recording the depreciation of equipment
C. recording the accrual of salaries incurred
D. purchasing equipment
Question 3 of 40 2.5/ 2.5 Points
When historical cost is used to record equipment, it would appear as the __________.
A. original cost on the balance sheet
B. residual value on the income statement
C. residual value on the balance sheet
D. original cost on the income statement
Question 4 of 40 2.5/ 2.5 Points
The adjustment to record supplies used during the period would be __________.
A. debit Supplies; credit Supplies Expense
B. debit Supplies Expense; credit Cash
C. debit Supplies Expense; credit Supplies
D. debit Supplies; credit Cash
Question 5 of 40 2.5/ 2.5 Points
It's the end of the accounting period and no electric bill has been received (but the expense has been incurred.; you should record an entry that __________.
A. increases the total assets and increases the total expenses
B. decreases the total assets and increases the total expenses
C. increases the total liabilities and increases the total expenses
D. decreases the total liabilities and increases the total expenses
Question 6 of 40 2.5/ 2.5 Points
As Prepaid Rent is used, the asset becomes a(n. __________.
A. liability
B. expense
C. contra-asset
D. revenue
Question 7 of 40 2.5/ 2.5 Points
The entry to record the expiration of part of the prepaid rent will __________.
A. decrease total assets and increase total expenses at the end of the month
B. decrease total assets and decrease total expenses at the end of the month
C. increase total assets and increase total expenses at the end of the month
D. increase total assets and decrease total expenses at the end of the month
Question 8 of 40 2.5/ 2.5 Points
The cost of an asset less accumulated depreciation equals __________.
A. residual value
B. book value
C. depreciation expense
D. None of the above answers are correct.
Question 9 of 40 2.5/ 2.5 Points
The depreciation of equipment will require an adjustment that results in __________.
A. total assets increasing and total expenses increasing
B. total assets increasing and total expenses decreasing
C. total assets and expenses decreasing
D. total assets decreasing and total expenses increasing
Question 10 of 40 2.5/ 2.5 Points
Which of the following would cause total assets to decrease and total expense to increase?
A. recording the depreciation of equipment
B. recording the consumption of supplies
C. recording the expiration of prepaid rent
D. All of the above would have that effect.
Question 11 of 40 2.5/ 2.5 Points
Bringing account balances up to date before preparing financial reports is called __________.
A. posting
B. adjusting
C. journalizing
D. analyzing
Question 12 of 40 2.5/ 2.5 Points
At the start of this year 18 months’ rent was paid. At the year's end, how will this affect the balance sheet?
A. Assets will be decreased.
B. Liabilities will be increased.
C. Owner's equity will be increased.
D. This has no effect on the period end balance sheet.
Question 13 of 40 2.5/ 2.5 Points
The capital balance amount shown in the balance sheet column of the worksheet represents __________.
A. the beginning capital plus net income
B. the beginning capital plus net income less withdrawal
C. the beginning capital less withdrawals
D. the beginning capital plus any investments to capital that occurred during the period
Question 14 of 40 2.5/ 2.5 Points
If the adjustment for Supplies used during the period was not made __________.
A. expenses would be too low
B. assets would be too low
C. expenses would be too high
D. revenue would be too high
Question 15 of 40 2.5/ 2.5 Points
If the Supplies account is not adjusted __________.
A. assets will be overstated and expenses will be understated
B. assets will be overstated and expenses will be overstated
C. assets will be understated and expenses will be overstated
D. assets will be understated and expenses will be understated
Question 16 of 40 2.5/ 2.5 Points
When historical cost is used in the accounting records, the book value of the asset is __________.
A. the original cost
B. the market value
C. original cost less accumulated depreciation
D. closed out
Question 17 of 40 2.5/ 2.5 Points
The order of the steps to prepare the worksheet are __________.
A. prepare the trial balance, complete adjustments, prepare the adjusted trial balance, extend the respective totals to the Income Statement and Balance Sheet columns
B. complete the adjustments, prepare the adjusted trial balance, prepare the trial balance, extend the respective totals to the Income Statement and Balance Sheet columns
C. extend the totals to the Income Statement and Balance Sheet columns, prepare the trial balance, complete the adjustments, prepare the adjusted trial balance
D. prepare the adjusted trial balance, complete the adjustments, prepare the trial balance, extend the respective totals to the Income Statement and Balance Sheet columns
Question 18 of 40 2.5/ 2.5 Points
An adjustment for Prepaid Rent would indicate __________.
A. the amount originally paid
B. the amount expired
C. the amount on hand
D. the amount of the trial balance
Question 19 of 40 2.5/ 2.5 Points
Not recording the Prepaid Rent used causes __________.
A. assets to be too high
B. assets to be too low
C. expenses to be too high
D. revenue to be too high
Question 20 of 40 2.5/ 2.5 Points
If Prepaid Rent for the period is not adjusted __________.
A. assets will be overstated and expenses will be overstated
B. assets will be overstated and expenses will be understated
C. assets will be understated and expenses will be overstated
D. assets will be understated and expenses will be understated
Part 2 of 2 - Lesson 7 Questions 45.0/ 50.0 Points
Question 21 of 40 2.5/ 2.5 Points
If management wishes to know the ability to pay off the upcoming debts of a business, they could use the __________.
A. debt to total assets
B. current ratio
C. inventory turnover ratio
D. times interest earned
Question 22 of 40 2.5/ 2.5 Points
Liquidity ratios measure __________.
A. how effectively a company is using its equity
B. how effectively a company is using its liabilities
C. a company's ability to pay shareholders
D. a company's ability to pay off short-term debts
Question 23 of 40 2.5/ 2.5 Points
How do you close the expense accounts?
A. debit Capital; credit the expense accounts
B. credit Capital; debit the expense accounts
C. credit Income Summary; debit the expense accounts
D. debit Income Summary; credit the expense accounts
Question 24 of 40 2.5/ 2.5 Points
Liquidity ratios measure __________.
A. how effectively a company is using its equity
B. how effectively a company is using its liabilities
C. a company's ability to pay shareholders
D. a company's ability to pay off short-term debts
Question 25 of 40 2.5/ 2.5 Points
If current assets are $60,000 and current liabilities are $50,000, the current ratio is __________.
A. 0.8:1
B. 8.3:1
C. 2.1:1
D. 1.2:1
Question 26 of 40 2.5/ 2.5 Points
Closing entries __________.
A. need not be journalized since they appear on the worksheet
B. need not be posted if the financial statements are prepared from the worksheet
C. are not needed if adjusting entries are prepared
D. must be journalized and posted
Question 27 of 40 2.5/ 2.5 Points
Which of the following is a non-depreciable asset?
A. desk chairs
B. land
C. computer
D. building
Question 28 of 40 2.5/ 2.5 Points
Closing entries are prepared __________.
A. to clear all temporary accounts to zero
B. to update the Capital balance
C. at the end of the accounting period
D. All of the above answers are correct.
Question 29 of 40 2.5/ 2.5 Points
The correct order for closing accounts is __________.
A. revenue, expenses, income summary, withdrawals
B. revenue, income summary, expenses, withdrawals
C. revenue, expenses, capital, withdrawals
D. revenue, capital, expenses, withdrawals
Question 30 of 40 2.5/ 2.5 Points
To close the Withdrawals account __________.
A. debit Withdrawals; credit Capital
B. debit Capital; credit Withdrawals
C. debit Withdrawals; credit Income Summary
D. debit Income Summary; credit Withdrawals
Question 31 of 40 2.5/ 2.5 Points
Assets that are not expected to provide benefits for a number of accounting periods are called __________.
A. current assets
B. fixed assets
C. long-term assets
D. property, plant, and equipment
Question 32 of 40 2.5/ 2.5 Points
Debt management ratios measure __________.
A. how effectively a company is using its cash
B. how well a company is using debt versus equity position
C. a company's ability to earn profit
D. a company's ability to meet payable obligations
Question 33 of 40 2.5/ 2.5 Points
Scott Company had a current ratio of 2.76:1 in Year 1 and 2.57:1 in Year 2. This change in current ratio indicates __________.
A. the company's debt paying ability has improved
B. the company's debt paying ability has weakened
C. the company's customers are paying their accounts sooner
D. the company is able to sell its inventory faster
Question 34 of 40 2.5/ 2.5 Points
Of the following accounts, which might appear in the adjusted trial balance, but not in the post-closing trial balance?
A. income summary
B. owner's capital
C. accounts payable
D. depreciation expense
Question 35 of 40 2.5/ 2.5 Points
If current assets are $75,000 and current liabilities are $15,000, the current ratio is __________.
A. 5:1
B. 0.2:1
C. 0.5:1
D. None of the above answers are correct.
Question 36 of 40 2.5/ 2.5 Points
Profitability ratios measure __________.
A. a company's ability to earn profits
B. a company's ability to meet short-term obligations
C. how well a company is using debt versus equity
D. how effectively a company is using its assets
Question 37 of 40 0.0/ 2.5 Points
Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called __________.
A. comparative financial statements
B. common-size statements
C. cash flow analysis
D. horizontal analysis
Question 38 of 40 2.5/ 2.5 Points
An account in which the balance is not carried over from one accounting period to the next is called a __________.
A. permanent account
B. real account
C. temporary account
D. zero account
Question 39 of 40 0.0/ 2.5 Points
A common-size comparative statement shows __________.
A. percentages
B. dollar increases/decreases
C. whole dollar amounts
D. None of the above answers are correct.
Question 40 of 40 2.5/ 2.5 Points
Which of the following assets would not be classified as property, plant, and equipment?
A. delivery truck
B. copyright
C. land
D. furniture

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Solution: ASHWORTH A01 ONLINE EXAM 6