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Exam 13: Financial Statements and Closing Procedures

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Question 21

True/False

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Current assets provide the funds needed to pay bills and meet expenses.

A) True
B) False

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Question 22

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Which of the following statements is not correct?

A) The gross profit percentage is calculated by dividing the gross profit for the year by the net sales for the year.
B) The average inventory is calculated by adding the beginning inventory to the ending inventory and dividing the sum by 2.
C) A current ratio of 3.5 to 1 means that a firm has $3.50 in current liabilities for every $1 of current assets.
D) All of the above statements are correct.

E) B) and D)
F) None of the above

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Question 23

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The entry to reverse an adjustment for accrued interest expense includes a debit to ____________________.

Which of the following accounts is not closed?

Which of the following is not a current asset?

A gross profit percentage of 45 percent means that for every $1 of net sales, gross profit amounts to ____________________.

Which of the following should be classified as a General and Administrative Expense on a Multi-Step Income Statement?

A classified income statement showed net sales of $435,000, cost of goods sold of $188,000, and total operating expenses of $165,000 for the fiscal year ended June 30, 2013. 1. What was the gross profit on sales? 2. What was the net income from operations?

The owner of a firm had capital of $170,000 on January 1, 2014, and made withdrawals of $66,000 during 2014. The business earned a net income of $90,000 for the year. 1. What amount of capital was shown as of December 31, 2014, on the statement of owner's equity? 2. How much was the increase or decrease in capital for the year?

Which of the following accounts is not closed?

Which of the following would not be classified as a Current Asset?

When several subtotals and totals are computed before the net income is presented, the income statement is referred to as a ____________________ income statement.

Jeannine Coulson is the owner of a book store. During the year she made withdrawals of cash totaling $9,000. What accounts are debited and credited to close the owner's drawing account?

If ____________________ entries are recorded, there is no need to examine each transaction in the new fiscal period to see whether a portion applies to a past period and then divide the amount of the transaction between the two periods.

A firm had merchandise inventory of $60,000 on January 1, 2014, and had purchases of $90,000, freight in of $1,200, purchases returns and allowances of $4,600, and purchases discounts of $2,000 during 2014. The firm had merchandise inventory of $54,000 on December 31, 2014. 1. What net delivered cost of purchases was shown for the year ended December 31, 2014, on the classified income statement? 2. What was the cost of goods sold?

A net loss for the period and withdrawals by the owner cause a ____________________ in capital.

Gross profit on sales is calculated by subtracting

Allyse Petry is the owner of a boutique. During the year she made withdrawals of cash totaling $25,000. What accounts are debited and credited to close the owner's drawing account?

The adjusted trial balance data given below is from Cameron White Company's worksheet for the year ended December 31, 2013. The balance of the Notes Payable account consists of notes that are due within a year. The mortgage extends for more than a year. Prepare a classified balance sheet as of December 31, 2013. The ending capital for the period from the statement of owner's equity is $56,150. $\begin{array} { | l | r | r | } \hline { \text { ADJUSTED TRIAL BALANCE } } \\\hline { \text { ACCOUNT NAME } } & { \text { DEBIT } } & \text { CREDIT } \\\hline \text { Cash } & \$ 7,700 & \\\hline \text { Petty Cash Fund } & 100 & \\\hline \text { Notes Receivable } & 2,000 & \\\hline \text { Accounts Receivable } & 13,500 & \\\hline \text { Allowance for Doubtful Accounts } & & \$ 1,100 \\\hline \text { Merchandise Inventory } & 51,000 & \\\hline \text { Office Supplies } & 450 & \\\hline \text { Prepaid Insurance } & 1,900 & \\\hline \text { Land } & 8,000 & \\\hline \text { Building } & 28,000 & \\\hline \text { Accumulated Depreciation - Building } & & 7,000 \\\hline \text { Store Equipment } & 6,500 & \\\hline \text { Accumulated Depreciation - Store Equipment } & & 2,500 \\\hline \text { Office Equipment } & 4,500 & \\\hline \text { Accumulated Depreciation - Office Equipment } & & 1,500 \\\hline \text { Notes Payable--Short-Term } & & 12,500 \\\hline \text { Accounts Payable } & & 16,500 \\\hline \text { Interest Payable } & & 400 \\\hline \text { Mortgage Payable } & & 26,000 \\\hline\end{array}$

The ____________________ of a building is the portion of the original cost that has not yet been depreciated.