QUIZ 4

Question 1

Assets = liabilities + owner’s equity is known as the:

Answer 1

fundamental accounting equation

Question 2

the line item on the balance sheet that reports the value of a company’s assets that are cash or can be converted into cash immediately.

Answer 2

Cash and cash equivalents

Question 3

highly liquid investment securities

Answer 3

cash equivalents

Question 4

Operating activities are _____ ________ operations

Answer 4

routine business operations

Question 5

The amounts on the balance sheet are carried forward to the next accounting period

Answer 5

TRUE

Question 6

The amounts on the income statement are transferred to what account at the end of the acct period?

Answer 6

Capital

Question 7

revenue and expenses are permanent accounts

Answer 7

FALSE
they are nominal/temporary accounts. permanent accounts are assets, liabilities, and equity bc they dont close at the end of the acct period and is carried on to the next.

Question 8

The accumulated depreciation account is closed to the income summary account.

Answer 8

Only nominal accounts are closed to the income summary account. Assets, liabilities, owner’s equity and their corresponding contra-asset accounts are not closed to income summary account.

Question 8

At the end of the accounting period, prepaid expenses are reported on the Statement of Profit or Loss as expenses.

Answer 8

Prepaid expenses are reported on the Statement of Financial Position as current assets.

Question 9

The purpose of the reversing entries is to simplify the recording of certain kinds of recurring transactions.
Correct Answer

Answer 9

true

Question 10

Beginning inventory plus net purchases would equal to the Cost of Goods Available for Sale.

Answer 10

Beginning inventory plus net cost of purchases would equal to the Cost of Goods Available for Sale.

Question 11

Cash receipts from lenders shall be presented as cash inflow from operating activities section of the Statement of Cash Flows.

Answer 11

Financing activity