11) Which of the following accounts are considered permanent accounts?
A) Inventory and Cost of Goods Sold
B) Land and Accounts Receivable
C) Accounts Payable and Service Revenue
D) Common Stock and Salary Expense
12) The entry to close expense account(s) includes a:
A) debit to the expense accounts.
B) credit to the expense accounts.
C) credit to Retained Earnings.
D) debit to Dividends.
13) The entry made to close Service Revenue would include a debit to:
A) Retained Earnings and a credit to Service Revenue.
B) Service Revenue and a credit to Retained Earnings.
C) Service Revenue and a credit to Dividends.
D) Service Revenue and a credit to Net Income.
14) The closing entry for the Salaries Expense account would include a debit to:
A) Salaries Expense and a credit to Retained Earnings.
B) Salaries Expense and a credit to Net Income.
C) Retained Earnings and a credit to Salaries Expense.
D) Net Income and a credit to Salaries Expense.
15) On a classified balance sheet:
A) Accounts Receivable is a current liability.
B) Salaries Payable is a long-term liability.
C) Notes Payable due in one year is a current liability.
D) Dividends is a current asset.
16) When preparing the financial statements for a company:
A) the report format of the income statement lists liabilities before assets.
B) the account format for the balance sheet lists the assets on the left and liabilities and stockholders' equity on the right.
C) the multiple-step balance sheet lists assets in order of their liquidity.
D) the single-step income statement reports a number of subtotals.
17) Which of the following is CORRECT regarding liquidity?
A) Liquidity measures how quickly an item can be paid.
B) Accounts receivable is the most liquid asset.
C) A balance sheet lists assets and liabilities in the order of relative liquidity.
D) Equipment is a highly liquid asset.
18) The following accounts are listed in order of liquidity:
A) Cash, Inventory, Accounts Receivable, Furniture
B) Cash, Accounts Receivable, Inventory, Furniture
C) Furniture, Cash, Accounts Receivable, Inventory
D) Furniture, Cash, Inventory, Accounts Receivable
19) When classifying assets and liabilities:
A) assets are classified as liquid and non-liquid.
B) for most businesses the operating cycle is two years.
C) furniture and fixtures are long-term assets.
D) current liabilities include accounts receivable.
20) When preparing the financial statements of a company:
A) liabilities are not classified on the balance sheet.
B) current assets are the most liquid assets.
C) the balance sheet must be prepared using the account format.
D) the income statement can be prepared using the multi-step or report format.