Question 1. What is the key distinction between current and non-current assets?
- Current assets will be used up or converted to cash within one year or one operating cycle.
- Non-current assets are which do not lose their value over time.
- Current assets always have lower balances than non-current assets.
- Non-current assets will not be used until the future.
Question 2. Which of the following statements MOST precisely describes a classified balance sheet?
- Accounts are classified by their purchase dates.
- Account balances are listed from the highest amount to the lowest amount.
- Assets are listed in their order of liquidity.
- Assets are listed in alphabetical order.
Question 3. To what account is the balance in the Income summary account closed?
- The Withdrawal account
- The net income account
- The Capital account
- The Revenue account
Question 4. Which of the following accounts will still show a balance after the closing process is completed?
- Withdrawal account
- Expense accounts
- Accumulated depreciation account
- Service revenue account
Question 5. Which of the following is TRUE?
- Accrual accounting is required by generally accepted accounting principles.
- Accrual accounting records expenses when incurred. Cash-basis accounting records expenses when cash is paid.
- Accrual accounting records revenue when services are rendered. Cash-basis accounting records revenue when cash is received.
- All of the above are true.