1. The net income (or loss) for the period:

a) is found by computing the difference between the trial balance totals and the adjusted trial balance totals.

b) is found by computing the difference between the income statement credit column and the balance sheet credit column on the workshet.

c) cannot be found on the worksheet.

d) is found by computing the difference between the income statement columns of the worksheet.

2. Omission of a prepaid expense adjusting entry will have the following effects:

Total Assets Total Expenses Total Owners' Equity

a. Overstated No Effect No Effect

b. No Effect Understated Overstated

c. Overstated Understated Overstated

d. Overstated No Effect Overstated

3. Short-term liquidity ratios include the:

a. acid-test ratio.

b. profit margin ratio.

c. debt to total assets ratio.

d. payout ratio.

4. Rainbow Paint reported sales of $500,000, total assets of $300,000, total owners' equity of $160,000, current assets of $100,000, current liabilities of $40,000, and cash of $30,000. In a common-size analysis of the balance sheet, cash would be shown as:

a. 6%.

b. 10%.

c. 30%.

d. 50%.