17. The necessity of making adjusting entries relates mostly to the a economic entity assumption. b. time period assumption going concern assumption. d. monetary unit assumption 18. The preparation of closing entries a is an optional step in the accounting cycle. b. results in zero balances in all accounts at the end of the period so that they are ready for the following period's transactions. Cis necessary before financial statements can be prepared. d results in transferring the balances in all temporary accounts to Retained Earnings 19. Allowance for Doubtful Accounts is reported in the a. balance sheet as a contra asset b. balance sheet as a contra liability account c income statement under other expenses and losses d. income statement under other revenues and gains. 20. Current liabilities are obligations that are reasonably expected to be paid from Existing Creation of Other Current Assets Current Liabilities Yes Yes 21. Which of the following errors will cause a trial balance to be out of balance? The entry to record a payment on account was a not posted at all b. posted as a debit to Cash and a credit to Accounts Payable c. posted as a debit to Cash and a debit to Accounts Payable. d. posted as a debit to Accounts Receivable and a credit to Cash 22. Lawford Company's equipment account increased $400,000 during the period; the related accumulated depreciation increased $30,000. Now equipment was purchased at a cost of $700,000 and used equipment was sold at a loss of $20,000. Depreciation expense was $100,000. Proceeds from the sale of the used equipment were a $210.000 b. $250.000 C $280.000 d. $320,000 23. Which of the following would not be included in the operating activities section of a statement of cash flows? a Cash inflows from returns on loans (ie, interest) b. Cash inflows from returns on equity securities (ie, dividends) C Cash outflows to governments for taxes d. Cash outflows to reacquire treasury stock