Q: Which formula correctly calculates the current ratio?

$$\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}$$

Question 1

Which of the following best describes the purpose of the closing process in accounting?

Accepted Answer

To zero out all temporary accounts and transfer their balances to permanent accounts

Question 2

A classified balance sheet organizes assets and liabilities into which categories?

Accepted Answer

Current and long-term assets; current and long-term liabilities

Question 3

Which account is NOT closed at the end of the accounting period?

Accepted Answer

Owner, Capital

Question 4

If Smart Touch Learning has $$12,200 in cash, 1$$,800 in accounts receivable, and $100 in supplies, what is the total current assets?

Accepted Answer

$14,100

Question 5

Which formula correctly calculates the current ratio?

Accepted Answer

$$	ext{Current Ratio} = \frac{	ext{Current Assets}}{	ext{Current Liabilities}}$$

Question 6

After closing entries are posted, which accounts will appear on the post-closing trial balance?

Accepted Answer

Only permanent accounts

Question 7

Which of the following is an example of a long-term asset?

Accepted Answer

Land

Question 8

What is the correct sequence of steps in the closing process?

Accepted Answer

Close revenues, close expenses, close income summary, close withdrawals

Question 9

If a company has a net loss, how is the Income Summary account closed?

Accepted Answer

Debit Owner, Capital and credit Income Summary for the amount of the net loss

Question 10

Which section of the worksheet includes only revenue and expense accounts?

Accepted Answer

Income Statement section

Question 11

Smart Touch Learning’s net income for the period is $$8,550. If the owner withdrew 5$$,000 and contributed $48,000, what is the ending capital balance?

Accepted Answer

$51,550

Question 12

Which of the following best describes liquidity?

Accepted Answer

How quickly and easily an account can be converted to cash

Question 13

Which account is used to summarize net income or net loss before closing to Owner, Capital?

Accepted Answer

Income Summary

Question 14

A company’s current assets are $$20,000 and current liabilities are 10$$,000. What is the current ratio?

Accepted Answer

$$\frac{20,000}{10,000} = 2.0$$

Question 15

Which of the following is NOT a current liability?

Accepted Answer

Notes Payable (due in 5 years)

Question 16

Which statement is prepared first in the accounting cycle?

Accepted Answer

Income Statement

Question 17

What is the main purpose of the post-closing trial balance?

Accepted Answer

To verify that all temporary accounts have been closed

Question 18

Which of the following is an intangible asset?

Accepted Answer

Copyright

Question 19

If the adjusted trial balance shows a $3,000 debit in Rent Expense, what is the closing entry for Rent Expense?

Accepted Answer

Debit Income Summary $$3,000; Credit Rent Expense 3$$,000

Question 20

Which of the following best describes the accounting cycle?

Accepted Answer

A series of steps to record and summarize financial transactions for a period

Completing the Accounting Cycle: Principles of Accounting Study Notes

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