1. The following information was taken from the financial statements of Sunshine City: Total current assets $ 53,000 Property, plant, and equipment 6,000 Current liabilities 21,000 Long-term liabilities 4,000 Owner's equity 34,000 Beginning inventory 31,000 Ending inventory 33,000 Cost of goods sold 152,000 Net income 42,000 The inventory turnover (rounded to one decimal place) for Sunshine City is a. 3.0 times. b. 5.0 times. c. 4.8 times. d. 2.2 times.

2.

Assets that are used for several years in the operation of a business are called

a. current assets.

b. investments.

c. marketable securities.

d. property, plant, and equipment.

3.

Which of the following serves as an end-of-period accuracy check?

a. statement of owner's equity

b. balance sheet

c. income statement

d. post-closing trial balance

4.

The ability of a business to meet its current obligations may be determined by the

a. working ratio.

b. inventory turnover.

c. accounts receivable turnover.

d. current ratio.

5.

In a multiple-step income statement, operating expenses are subtracted from gross profit to compute

a. other income.

b. net loss.

c. income from operations.

d. net income.

6.

Which of the following accounts is used only at the close of the accounting period to adjust the merchandise inventory account and summarize the temporary owner's equity accounts?

a. Sales

b. Owner's Capital

c. Cost of Goods Sold

d. Income Summary

7.

The following information was taken from the financial statements of Collin's Inn:

Total current assets	$162,000
Average owner's equity	148,000
Beginning inventory	32,000
Ending inventory	36,000
Cost of goods sold	165,000
Net income	37,000

The return on owner's equity for Collin's Inn is

a. 25%.

b. 80%.

c. 27%.

d. 129%.

8.

The following information was taken from the financial statements of Ashley's Linens:

Total current assets	$ 53,000
Property, plant, and equipment	6,000
Current liabilities	21,000
Long-term liabilities	4,000
Owner's equity	34,000
Beginning inventory	31,000
Ending inventory	33,000
Cost of goods sold	152,000
Net income	42,000

The working capital of Ashley's Linens is

a. $33,000.

b. $34,000.

c. $32,000.

d. $38,000.

9.

The heading on a financial statement includes which of the following information, in the order shown?

a. the name of the business, the period of time the statement covers, and the name of the statement

b. the period of time the statement covers, the name of the statement, and the name of the business

c. the name of the statement, the period of time the statement covers, and the name of the business

d. the name of the business, the name of the statement, and the period of time the statement covers

10.

Those obligations that are due within one year or the normal operating cycle of the business and will be paid with money provided by the current assets are called

a. marketable securities.

b. long-term liabilities.

c. investments.

d. current liabilities.

11.

The third step in the closing process is to transfer the balance in which of the following accounts to the permanent owner's equity account?

a. Income Summary

b. Owner's Capital

c. Expense

d. Revenue

12.

A formal statement of the assets, liabilities, and owner's equity of a business at a specified date is known as a(n)

a. balance sheet.

b. statement of earnings.

c. income statement.

d. statement of profits and losses.

13.

Adjusting entries are made in the

a. cash payments journal.

b. general journal.

c. cash receipts journal.

d. sales journal.

14.

Accumulated depreciation amounts are shown as deductions from the

a. accounts payable account.

b. cost of building and equipment accounts.

c. accounts receivable account.

d. prepaid insurance account.

15.

After the temporary owner's equity and drawing accounts are transferred to the permanent owner's equity account, which of the following accounts will have a balance?

a. Owner's Capital

b. Revenues

c. Income Summary

d. Expenses