1. Which of the following statements is true about work sheets: a. They are required and must be prepared by all com- panies that produce financial statements b. They are optional working papers that can simplify the accountant's efforts in producing financial statements c. They are produced without the use of a computer d. They do not show the adjustments made to produce the adjusted trial balance 2. The closing process is: a. A required step at the end of the accounting period af- ter the financial statements are prepared b. An optional step used to analyze the financial state- ments at the end of an accounting period c. Performed at the beginning of the accounting period to close inactive customer accounts d. Performed to close the accounting system at the end of the business day justing entries 3. In the closing process temporary accounts are used for which of the following reasons: To record transactions temporarily preparing for ad- b. To keep track of one-time-only or unique transactions c. To close all accounts that are reset to zero to prepare for the next accounting period d. To manage period-end adjustments 4. An example of a permanent account is: Withdrawals b. Revenue c. Utilities Expense d. Cash 5. The Income Summary account is used for the following purpose: a. To transfer the permanent accounts to the owner's capital account at the end of an accounting period b. To keep track of the profitability of an organization during the accounting period c. To transfer the credit balances and debit balances in temporary accounts and to transfer the net balance to the owners' capital account d. To ensure the accounting software package is sum- marizing financial information correctly during the accounting period 6. The purpose of a post-closing trial balance is a. To list all permanent accounts and their balances after all closing entries are posted b. To list all temporary accounts and their balances after all closing entries are posted c. To record all year-end balances of accounts at the end of an accounting period d. To prepare financial statements at the end of an accounting period 7. A classified balance sheet involves a. Grouping assets and liabilities into current and non- current assets and liabilities b. Providing more detailed information regarding a com- pany's existing assets and liabilities c. Presenting the balance sheet in a specific format, based on the standard by industry d. Organizing the revenue and expense line items from largest to smallest 8. An operating cycle is a. The average time it takes to produce a product for a manufacturing-based company b. The average time it takes a company to pay off operat- ing expenses during a fiscal year c. The average length of time between paying employees (for a service-based organization) or purchasing inven- tory (for a merchandising company) and receiving cash from customers d. The average length of time between investing in R&D and the time to product development for a company 9. An example of a current asset is: a. Intangible assets b. Property, plant, and equipment c. Accounts payable d. Merchandise inventory 10. The current ratio provides information to users of finan- cial statements regarding Ability to pay for existing assets with day-to-day obligations b. Ability to pay day-to-day obligations with existing liquid assets c. The amount of debt outstanding compared to total equity in a business d. The amount of cash currently available to pay for all outstanding obligations of a business