Which of the following is NOT an actual step in the accounting cycle?

a.Financial statements are prepared.

b.Decisions are made after reviewing the financial statements.

c.Transactions are analyzed and recorded in the journal.

d.Closing entries are journalized and posted to the ledger.

The balance of the owner's drawing account on the adjusted trial balance of the end-of-period spreadsheet is reported on which of the following financial statements?

a.Income statement

b.Statement of owner's equity

c.Balance sheet

d.All of these choices are correct.

In the closing process, Owner's Capital was debited for $48,750 and credited for $79,100. The company has

a.incurred a net loss of $30,350.

b.earned a net income of $30,350.

c.incurred a net loss of $48,750.

d.earned a net income of $79,100.

Which of the following steps is optional in the accounting cycle?

a.An end-of-period spreadsheet is prepared.

b.Adjusting entries are journalized and posted to the ledger.

c.A post-closing trial balance is prepared.

d.An unadjusted trial balance is prepared.

Which of the following statements related to liquidity is true?

a.Liquidity is the ability of a business to pay its debts.

b.An increase in a company's current assets improves its liquidity.

c.A decrease in a company's working capital improves its liquidity.

d.Long-term assets are more liquid than current assets.

Which of the following accounts will be closed with a credit?

a.Depreciation Expense

b.Notes Payable

c.Fees Earned

d.Accumulated Depreciation

Based on the following information, determine the amount of equipment on the balance sheet. Total liabilities and owner's equity equals $44,850; total current assets equals $19,400; land equals $14,800; and accumulated depreciationequipment equals $1,050.

a.$11,700

b.$9,600

c.$3,550

d.None of these choices are correct.

Which of the following statements regarding the income statement is true?

a.Miscellaneous Expense is listed as the last expense item, regardless of its amount.

b.It is prepared using the account balances shown in the Adjusted Trial Balance columns of the end-of-period spreadsheet.

c.It must be prepared before the statement of owner's equity.

d.All of these choices are correct.

The account used to close the temporary accounts (revenues and expenses) before the finish of the accounting cycle is

a.Fees Earned.

b.the owner's capital account.

c.Net Income.

d.the owner's drawing account.

Which of the following statements regarding the end-of-period spreadsheet is true?

a.The difference in the totals of the Adjustments columns indicates the net income or loss for the period.

b.The Adjustments columns need not be totaled.

c.Closing entries are entered in the Adjustments columns.

d.Amounts are read across a row and added or subtracted to determine the amounts to insert in the Adjusted Trial Balance columns.

The ability to convert assets into cash is called

a.capitalization.

b.solvency.

c.currency.

d.liquidity

The following data were taken from the records of Menendez Company:

Current assets$5,100Property, plant, and equipment10,400Current liabilities3,300Long-term liabilities4,500Owner's equity7,700

What is Menendez Company's working capital?

a.1.00

b.$4,500

c.$1,800

d.$7,700

The listing of expenses on the income statement is ordered

a.alphabetically.

b.by size, beginning with the largest item and putting miscellaneous expense as the last item.

c.by account number in the general ledger.

d.by size, beginning with the smallest item.

A company's net income or net loss for a period is determined during which of the following steps of the accounting cycle?

a.When transactions are posted to the ledger

b.When an unadjusted trial balance is prepared

c.When a post-closing trial balance is prepared

d.When financial statements are prepared