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1. Davenport University ACCT 510 Chapter
4 Part 8
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ACCT 510 CHAPTER 4MULTIPLE CHOICE QUESTIONS PART8
COMPLETING THE ACCOUNTINGCYCLE
MULTIPLE CHOICE QUESTIONS
121. Which of the followingliabilitiesare notrelatedtothe operatingcycle?
a. Wagespayable
b. Accountspayable
c. Utilitiespayable
d. Bondspayable
122. Intangible assetsinclude eachof the followingexcept
a. copyrights.
b. goodwill.
c. landimprovements.
d. patents.
123. It is nottrue that currentassetsare assetsthata companyexpectsto
a. realize incashwithinone year.
b. sell withinone year.
c. use up withinone year.
d. acquire withinone year.
124. The operatingcycle of a companyisthe average time thatisrequiredtogo fromcash to
a. salesinproducingrevenues.

2. b. cash inproducingrevenues.
c. inventoryinproducing revenues.
d. accountsreceivable inproducingrevenues.
125. On a classifiedbalance sheet,currentassetsare customarilylisted
a. inalphabetical order.
b. withthe largestdollaramountsfirst.
c. in the orderof liquidity.
d. inthe order of acquisition.
126. Intangible assetsare
a. listedundercurrentassetsonthe balance sheet.
b. notlistedonthe balance sheetbecause theydonothave physical substance.
c. noncurrentresources.
d. listedasa long-terminvestmentonthe balance sheet.
127. The relationshipbetweencurrentassetsandcurrentliabilitiesisimportantinevaluatinga
company's
a. profitability.
b. liquidity.
c. marketvalue.
d. accountingcycle.
Completingthe AccountingCycle 4– 19
128. The mostimportantinformationneededtodetermine if companiescanpaytheircurrent
obligationsisthe
a. netincome forthisyear.
b. projectednetincome fornextyear.
c. relationshipbetweencurrentassetsandcurrentliabilities.
d. relationshipbetweenshort-termandlong-termliabilities.
Use the followinginformationforquestions129–137.
The followingitemsare takenfromthe financial statementsof CernerCompanyforthe year
endingDecember31,2008:
Accountspayable $ 18,000
Accountsreceivable 11,000
Accumulateddepreciation–equipment28,000
Advertisingexpense21,000
Cash 15,000
Cerner,Capital (1/1/08) 102,000
Cerner,Drawing14,000
Depreciationexpense 12,000
Insurance expense3,000
Note payable,due 6/30/09 70,000
Prepaidinsurance (12-monthpolicy) 6,000

3. Rentexpense 17,000
Salariesexpense 32,000
Service revenue133,000
Supplies4,000
Suppliesexpense 6,000
Equipment210,000
129. What is the company’snetincome forthe yearendingDecember31,2008?
a. $133,000
b. $42,000
c. $28,000
d. $12,000
130. What is the balance that wouldbe reportedforowner’sequityatDecember31,2008?
a. $102,000
b. $130,000
c. $144,000
d. $158,000
131. What are total current assetsat December31, 2008?
a. $26,000
b. $32,000
c. $36,000
d. $218,000
132. What is the bookvalue of the equipmentatDecember31,2008?
a. $238,000
b. $210,000
c. $182,000
d. $170,000
4 - 20 TestBank for AccountingPrinciples,EighthEdition
133. What are total current liabililitesatDecember31,2008?
a. $18,000
b. $70,000
c. $88,000
d. $0
134. What are total long-termliabilitiesatDecember31,2008?
a. $0

4. b. $70,000
c. $88,000
d. $90,000
135. What is total liabilitiesandowner’sequityatDecember31,2008?
a. $176,000
b. $190,000
c. $218,000
d. $232,000
136. The sub-classificationsforassetsonthe company’sclassifiedbalance sheetwould
include all of the followingexcept:
a. CurrentAssets.
b. Property,Plant,andEquipment.
c. Intangible Assets.
d. Long-termAssets.
137. The currentassetsshouldbe listedonCerner’sbalance sheetinthe followingorder:
a. cash, accountsreceivable,prepaidinsurance,equipment.
b. cash,prepaidinsurance,supplies,accountsreceivable.
c. cash, accountsreceivable,prepaidinsurance,supplies.
d. equipment,supplies,prepaidinsurance,accounts receivable,cash.
138. Which statementaboutlong-terminvestmentsisnottrue?
a. Theywill be heldformore thanone year.
b. Theyare notcurrentlyusedinthe operationof the business.
c. Theyinclude investmentsinstockof othercompaniesandland heldforfuture use.
d. Theycan neverinclude cashaccounts.
139. What is the orderin whichassetsare generallylistedonaclassifiedbalance sheet?
a. Currentand long-term
b. Current;property,plant,andequipment;long-terminvestments;intangible assets
c. Current;property,plant,andequipment;intangibleassets;long-terminvestments
d. Current;long-terminvestments;property,plant,andequipment;intangible assets
140. These are selectedaccountbalancesonDecember31, 2008.
Land (locationof the corporation’soffice building) $100,000
Land (heldforfuture use) 150,000
Corporate Office Building600,000
Inventory200,000
Equipment450,000
Office Furniture 100,000

5. AccumulatedDepreciation300,000
Completingthe AccountingCycle 4- 21
What isthe total amountof property,plant,andequipmentthatwill appearonthe balance
sheet?
a. $1,300,000
b. $1,100,000
c. $1,600,000
d. $950,000
141. The followingselectedaccountbalancesappearonthe December31, 2008 balance
sheetof Ming Co.
Land (locationof the corporation’soffice building) $150,000
Land (heldforfuture use) 225,000
Corporate Office Building900,000
Inventory300,000
Equipment675,000
Office Furniture 150,000
AccumulatedDepreciation450,000
What isthe total amountof property,plant,andequipmentthatwill be reportedonthe
balance sheet?
a. $1,950,000
b. $1,650,000
c. $2,400,000
d. $1,425,000
a142. A reversingentry
a. reversesentriesthatwere made inerror.
b. isthe exact opposite of anadjustingentrymade inapreviousperiod.
c. is made whena businessdisposesof anassetit previouslypurchased.
d. ismade whena companysustainsa lossinone periodandreversesthe effectwitha
profitinthe nextperiod.
a143. If a companyutilizesreversingentries,theywill
a. be made at the beginningof the nextaccountingperiod.
b. notactuallybe postedto the general ledgeraccounts.
c. be made before the post-closingtrial balance.
d. be part of the adjustingentryprocess.
Additional MultipleChoice Questions
144. The stepsinthe preparationof a worksheetdonotinclude
a. analyzingdocumentaryevidence.
b. preparingatrial balance on the worksheet.
c. enteringthe adjustmentsinthe adjustmentcolumns.
d. enteringadjustedbalancesinthe adjustedtrial balance columns.

6. 145. Balance sheetaccountsare consideredtobe
a. temporaryowner'sequityaccounts.
b. permanentaccounts.
c. capital accounts.
d. nominal accounts.
4 - 22 TestBank for AccountingPrinciples,EighthEdition
146. Income Summary has a creditbalance of $12,000 inJ. SawyerCo.afterclosingrevenues
and expenses.The entrytoclose Income Summaryis
a. creditIncome Summary$12,000, debitJ.Sawyer,Capital $12,000.
b. creditIncome Summary$12,000, debitJ.Sawyer,Drawing$12,000.
c. debitIncome Summary$12,000, creditJ. Sawyer,Drawing$12,000.
d. debitIncome Summary$12,000, creditJ. Sawyer,Capital $12,000.
147. The post-closingtrial balance containsonly
a. income statementaccounts.
b. balance sheetaccounts.
c. balance sheetandincome statementaccounts.
d. income statement,balance sheet,andowner'sequitystatementaccounts.
148. Which of the followingisanoptional stepinthe accountingcycle?
a. Adjustingentries
b. Closingentries
c. Correctingentries
d. Reversingentries
149. Which one of the followingstatementsconcerningthe accountingcycle isincorrect?
a. The accountingcycle includesjournalizingtransactionsandpostingtoledger
accounts.
b. The accountingcycle includesonlyone optionalstep.
c. The stepsinthe accountingcycle are performedinsequence.
d. The stepsinthe accountingcycle are repeatedineachaccountingperiod.
150. Correctingentriesare made
a. at the beginningof anaccountingperiod.
b. at the endof an accountingperiod.
c. wheneveranerrorisdiscovered.
d. afterclosingentries.
151. On September23,PittsCompanyreceiveda$350 check fromMike Moluf for servicesto

7. be performedinthe future.The bookkeeperforPittsCompanyincorrectlydebitedCash
for $350 and creditedAccountsReceivable for$350. The amountshave beenpostedto
the ledger.Tocorrect thisentry,the bookkeepershould
a. debitCash$350 and creditUnearnedService Revenue $350.
b. debitAccountsReceivable $350 andcreditUnearnedService Revenue$350.
c. debitAccountsReceivable $350 and creditCash$350.
d. debitAccountsReceivable $350 andcreditService Revenue $350.
152. All of the followingare owner'sequityaccountsexcept
a. the Capital account.
b. Capital Stock.
c. Investmentin Stock.
d. RetainedEarnings.
Completingthe AccountingCycle 4– 23
153. Currentliabilities
a. are obligationsthatthe companyistopay withinthe forthcomingyear.
b. are listedinthe balance sheetinorderof theirexpectedmaturity.
c. are listedinthe balance sheet,startingwithaccountspayable.
d. shouldnotinclude long-termdebtthatisexpectedtobe paidwithinthe nextyear.
a154. The use of reversingentries
a. isa requiredstepinthe accountingcycle.
b. changesthe amountsreportedinthe financial statements.
c. simplifiesthe recordingof subsequenttransactions.
d. isrequiredforall adjustingentries.
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