5.6 Prepare a multi-step income statement and a classified balance sheet
1) Cost of goods sold is part of general and administrative expenses.
2) The statement of retained earnings for a merchandiser is prepared differently than that of a service business.
3) Long-term assets on the balance sheet represent assets that will last longer than one operating cycle of the business.
4) On the balance sheet, assets are listed in alphabetical order.
5) Current assets are listed on the balance sheet in:
A) alphabetical order.
B) order of liquidity.
C) ascending order of value.
D) descending order of value.
E) order of solvency.
6) A 25-year mortgage with regular monthly principal payments would be listed on the balance sheet as:
A) a current liability only.
B) a long-term liability only.
C) partly a current liability with the balance listed as a long-term liability.
D) a long-term asset.
E) a current asset.
7) What is the balance sheet form that lists assets above liabilities ?
A) Account form
B) Report form
C) Alphabetical form
D) Liquidity form
E) Solvency form
8) What type of income statement do most merchandising businesses prepare ?
9) What type of liabilities are wages payable, income taxes payable, and accounts payable?
10) Why is cash listed as the first current asset?