1.

The accounting process involves all of the following except

a. identifying economic events that are relevant to the business
b. communicating financial information to users by preparing financial reports
c. recording non-quantifiable economic events
d. analyzing and interpreting financial reports
2. Bookkeeping primarily involves which of the following parts of the accounting process?
a. Identification
b. Communication
c. Recording
d. Analysis
3. Which of the following would not be considered an internal user of accounting data for a
company?
a. President of the company
b. Production manager
c. Merchandise inventory clerk
d. President of the employees’ labor union
4. Which of the following would not be considered an external user of accounting data for a
company?
a. Taxing authority representative
b. Company officers
c. Creditors
d. Customers
5. Financial accounting provides economic and financial information for each of the
following except
a. creditors
b. investors
c. managers
d. other external users
6. The historical cost principle requires that companies record assets at their
a. appraisal value
b. cost
c. market price
d. list price
7. Harrod’s Inc. purchased land for $55000 in 2004. On December 31, 2014, an appraisal
determined the fair value of the land is $65000. If Harrod’s follows the historical cost
principle, in the 2014 financial statements, the land will be reported at a
a. $55000 on the statement of financial position
b. $65000 on the statement of financial position
c. $55000 on the income statement
d. $65000 on the income statement
8. Which of the following events cannot be quantified into dollars and cents and recorded as
an accounting transaction?
 a. The appointment of a new accounting firm to perform an audit
b. The purchase of a new computer
c. The sale of store equipment
d. Payment of income taxes
9. The assumption that enables accounting to quantify (measure) economic events is the
a. economic entity assumption
b. cost principle
c. historical cost principle
d. monetary unit assumption
10. The economic entity assumption requires that the activities
a. of different entities can be combined if all the entities are corporations
b. must be reported to the Securities and Exchange Commission
c. of a sole proprietorship cannot be distinguished from the personal economic events
of its owners
d. of an entity be kept separate from the activities of its owner
11. The basic accounting equation may be expressed as
a. Asset - Equity = Liabilities
b. Asset - Liabilities = Equity
c. Asset = Liabilities + Equity
d. All of these answer choices are correct
12. Liabilities
a. are future economic benefits
b. are existing debts and obligations
c. possess service potential
d. are things of value used by the business in its operation
13. Equity can be described as
a. creditorship claim on total assets
b. ownership claim on total assets
c. benefactor’s claim on total assets
d. debtor claim on total assets
14. When assets are distributed to the shareholders of a corporation, these distributions are
termed
a. depletions
b. consumptions
c. dividends
d. a credit line
15. All of the following transactions increase revenue except the
a. sale of additional ordinary shares by British Airways
b. sale of clothing by the French Connection
c. performance of accounting services by PricewaterhouseCoopers
d. sale of petroleum by Royal Dutch Shell
16. If total liabilities decreased by $35000 and equity increased by $10000 during a period
of time, then total assets must change by what amount and direction during that same
period?
a. $45000 increase
b. $25000 decrease
c. $25000 increase
d. $35000 decrease
17. As of December 31, 2020, Thames Company reported assets of $6480000, liabilities of
$1920000 and retained earnings of $3315000. Share capital reported on the December 31,
2020 statement of financial position is
a. $1245000
b. $1395000
c. $5235000
d. $9795000
18. On January 11, 2021, Britannica Corporation sold ordinary shares to investors for
$6550000. This transaction will increase assets and
a. decrease liabilities y $6550000
b. decrease equity by $6550000
c. increase revenues by $6550000
d. increase equity by $6550000
19. Burgundy Inc. purchased supplies on account for $26000. This transaction will
a. increase liabilities and decrease equity by $26000
b. increase assets and decrease equity by $26000
c. increase assets and increase liabilities by $26000
d. have no effect on the accounting equation
20. Sao Paulo Company performed services on account for $160000. This transaction will
a. increase assets and liabilities by $160000
b. increase assets and equity by $160000
c. increase liabilities and equity by $160000
d. have no effect on the accounting equation
21. Bennoit Corporation paid dividends totaling $295000 to its shareholders. This
transaction will decrease assets and
a. decrease equity by $295000
b. decrease liabilities by $295000
c. increase expenses by $295000
d. have no effect on the accounting equation
22. Gafisa Inc. performed services for $195000. The company collected $65000 in cash.
The balance will be collected in 30 days. Performing services for $195000 will increase
a. assets by $65000 and equity by $130000
b. assets by $65000, liabilities by $130000 and equity by $195000
c. liabilities and equity by $195000
d. assets and equity by $195000
23. On June 6, Wing Wah Inc. purchased supplies on account for $60000. On June 30, the
company paid half of the balance due. The June 30 payment will
a. decrease Cash and increase Supplies Expense by $60000
b. increase Cash and decrease Accounts Receivable by $30000
c. decrease Cash and decrease Accounts Payable by $30000
d. decrease Supplies and increase Supplies Expense by $30000
24. On November 4, Vivo Company performed services on account for $295000. On
November 26, the company collected the balance due. The November 26 transaction will
increase
a. Cash and Accounts Payable by $295000
b. Accounts Receivable and Service Revenue by $295000
c. Cash and decrease Accounts Receivable by $295000
d. Service Revenue and decrease Accounts Receivable by $295000
25. During March, Bindi Company earned revenue of $270000 on account of which
$178000 had been collected by the end of the month. The company incurred expenses of
$156000. The company paid all of its expenses in cash as well as paying dividends of
$46000. Net income (loss) for the month is
a. ($24000)
b. $22000
c. $68000
d. $114000
26. A T-account is
a. a way of depicting the basic form of an account
b. what the computer uses to organize bytes of information
c. a special account used instead of a trial balance
d. used for accounts that have both a debit and credit balance
27. Credits
a. decrease both assets and liabilities
b. decrease assets and increase liabilities
c. increase both assets and liabilities
d. increase assets and decrease liabilities
28. A debit to an asset account indicates
a. an error
b. a credit was made to a liability account
c. a decrease in the asset
d. an increase in the asset
29. The normal balance of any account is the
a. left side
b. right side
c. side which increases that account
d. side which decreases that account
30. The double-entry system requires that each transaction must be recorded
 a. in at least two different accounts
b. in two sets of books
c. in a journal and in a ledger
d. first as a revenue and then as an expense
31. Which of the following correctly identifies normal balances of accounts?
a.
Assets Debit

Liabilities Credit
Equity Credit

Revenues Debit
Expenses Credit
b.
Assets Debit

Liabilities Credit
Equity Credit

Revenues Credit
Expenses Credit
c.
Assets Credit

Liabilities Debit
Equity Debit

Revenues Credit
Expenses Debit
d.
Assets Debit

Liabilities Credit
Equity Credit

Revenues Credit
Expenses Debit
32. In recording an accounting transaction in a double-entry system
a. the number of debit accounts must equal the number of credit accounts
b. there must always be entries made on both sides of the accounting equation
 c. the amount of the debits must equal the amount of the credits
d. there must only be two accounts affected by any transaction
33. An accountant has debited an asset account for $1000 and credited a liability account for
$500. Which of the following would be an incorrect way to complete the recording of the
transaction?
a. Credit an asset account for $500
b. Credit another liability account for $500
c. Credit an equity account for $500
d. Debit an equity account for $500
34. Which of the following is not true of the terms debit and credit?
a. They can be abbreviated as Dr. and Cr.
b. They can be interpreted to mean increase and decrease
c. They can be used to describe the balance of an account
d. They can be interpreted to mean left and right
35. An awareness of the normal balances of accounts would help you spot which of the
following as an error in recording?
a. A debit balance in the dividends account
b. A credit balance in an expense account
c. A credit balance in a liability account
d. A credit balance in a revenue account
36. Taylor Industries purchased supplies for $1000. They paid $500 in cash and agreed to
pay the balance in 30 days. The journal entry to record this transaction would include a debit
to an asset account for $1000, a credit to a liability account for $500. Which of the
following would be the correct way to complete the recording of the transaction?
a. Credit an asset account for $500
b. Credit another liability account for $500
c. Credit the retained earnings account for $500
d. Debit the retained earnings account for $500
37. On June 1, 2017, Alma Inc. reported a cash balance of $18000. During June, Alma made
deposits of $4500 and made disbursements totaling $24000. What is the cash balance at the
end of June?
a. $1500 debit balance
b. $22500 debit balance
c. $1500 credit balance
d. $6000 credit balance
38. On January 1, 2017, LeAnna Industries reported retained earnings of $260000. During
2017, LeAnna had a net loss of $60000 and paid dividends of $40000. At December 31,
2017, the amount of retained earnings is
a. $260000
b. $280000
c. $200000
d. $160000
39. Ayala Company showed the following balances at the end of its first year

Cash $11000

Prepaid Insurance 500

Accounts Receivable 2500

Accounts Payable 2000

Notes Payable 6000

Share Capital-Ordinary 4000

Dividends 500

Revenues 15000
Expenses 12500
What did Ayala Company show as total credits on its trial balance?
a. $27500
b. $27000
c. $26500
d. $28000
40. During February 2017, its first month of operations, the owner of Alona Enterprises
invested cash of $125000. Alona had cash revenues of $20000 and paid expenses of
$35000. Assuming no other transactions impacted the cash account, what is the balance in
Cash at February 28?
a. $15000 credit
b. $110000 debit
c. $145000 debit
d. $90000 credit
41. At January 31, 2017, the balance in Bota Inc.’s supplies account was $2000. During
February, Bota purchased supplies of $2400 and used supplies of $3200. At the end of
February, the balance in the supplies account should be
a. $2000 debit
b. $2800 credit
c. $4400 debit
d. $1200 debit
42. In recording business transactions, evidence that an accounting transaction has taken
place is obtained from
a. business documents
b. the taxing authority
c. the public relations department
d. the IASB
43. Evidence that would not help with determining the effects of a transaction on the
accounts would be a(n)
a. cash register sales tape
b. bill
c. advertising brochure
d. check
44. The usual sequence of steps in the recording process is to analyze each transaction, enter
the transaction in the
a. journal and transfer the information to the ledger accounts
b. ledger and transfer the information to the journal
c. book of accounts and transfer the information to the journal
d. book of original entry and transfer the information to the journal
45. The steps in preparing a trial balance include all of the following except
a. listing the account titles and their balances
b. totaling the debit and credit columns
c. proving the equality of the two columns
d. transferring journal amounts to ledger accounts
46. Monthly and quarterly time periods are called
a. calendar periods
b. fiscal periods
c. interim periods
d. quarterly periods
47. The time period assumption states that
a. a transaction can only affect one period of time
b. estimates should not be made if a transaction affects more than one time period
c. adjustments to the enterprise’s accounts can only be made in the time period when
the business terminates its operations
d. the economic life of a business can be divided into artificial time periods
48. An accounting time period that is one year in length, but does not begin on January 1, is
referred to as
a. a fiscal year
b. an interim period
c. the time period assumption
d. a reporting period
49. Which of the following time periods would not be referred to as an interim period?
a. Monthly
b. Quarterly
c. Semi-annually
d. Annually
50. The revenue recognition principle dictates that revenue should be recognized in the
accounting records
a. when cash is received
 b. when the performance obligation is satisfied
c. at the end of the month
d. in the period that income taxes are paid
51. Ron’s Hot Rod Shop follows the revenue recognition principle. Ron services a car on
July 31. The customer picks up the vehicle on August 1 and mails the payment to Ron on
August 5. Ron receives the check in the mail on August 6. When should Ron show that the
revenue was earned?
a. July 31
b. August 1
c. August 5
d. August 6
52. A candy factory’s employees work overtime to finish an order that is sold and shipped
on February 28. The office sends a statement to the customer in early March and payment is
received by mid-March. The candy factory follows IFRS and applies the expense
recognition principle. The overtime wages should be expensed in
a. February
b. March
c. the period when the workers receive their checks
d. either in February or March depending on when the pay period ends
53. Under accrual-basis accounting
a. cash must be received before revenue is recognized
b. net income is calculated by matching cash outflows against cash inflows
c. events that change a company’s financial statements are recognized in the
period they occur rather than in the period in which cash is paid or received
d. the ledger accounts must be adjusted to reflect a cash basis of accounting before
financial statements are prepared under IFRS
54. The following is selected information from Alpha-Beta-Gamma Corporation for the
fiscal year ending October 31, 2017

Cash received from customers $600000

Revenue earned 660000

Cash paid for expenses 340000

Cash paid for computers on November 1, 2016 that 96000
will be used for 3 years (annual depreciation is
$32000)

Expenses incurred, including interest, but excluding 400000

any depreciation

Proceeds from a bank loan, part of which was used to 200000

pay for the computers
Based on the accrual basis of accounting, what is Alpha-Beta-Gamma Corporation’s net
income for the year ending October 31, 2017?
a. $388000
b. $228000
c. $124000
d. $260000
55. Wing Company had the following transactions during 2016
● Sales of $72000 on account
● Collected $32000 for services to be performed in 2017
● Accrued $10000 cash in salaries
● Purchased airline tickets for $4000 in December for a trip to take place in 2017
What is Wing’s 2016 net income using accrual accounting?
a. $62000
b. $94000
c. $90000
d. $58000
56. The expense recognition principle refers to
a. recognizing revenue in the period when it is earned
b. matching the revenue reported on the income statement with the receivable reported
on the statement of financial position
c. letting expenses follow revenues
d. dividing the life of the business into artificial time periods
57. Which of the following adjustments would require decreasing the liabilities reported on
the statement of financial position?
a. A company uses $400 worth of supplies during the year.
b. A company records $400 worth of depreciation on equipment.
c. A company has earned $400 of revenue collected at the beginning of the year.
d. A company records $400 of wages earned by employees that will be paid next year.
58. Adjusting entries
a. ensure that the revenue recognition and expense recognition principles are followed
b. are necessary to enable the financial statement to conform to International Financial
Reporting Standards (IFRS)
c. include both accruals and deferrals
d. all of these answer choices are correct
59. Expenses incurred but not yet paid or recorded are called
a. prepaid expenses
b. accrued expenses
c. interim expenses
d. unearned expenses
60. An asset-expense relationship exists with
a. liability accounts
b. revenue accounts
 c. prepaid expense adjusting entries
d. accrued expense adjusting entries
61. Accrued revenues are
a. received and recorded as liabilities before they are earned
b. earned and recorded as liabilities before they are received
c. earned but not yet received or recorded
d. earned and already received and recorded
62. Unearned revenues are
a. received and recorded as liabilities before they are earned
b. earned and recorded as liabilities before they are received
c. earned but not yet received or recorded
d. earned and already received and recorded
63. Which of the following reflect the balances of prepayment accounts prior to adjustment?
a. Statement of financial position accounts are understated and income statement
accounts are understated.
b. Statement of financial position accounts are overstated and income statement
accounts are overstated.
c. Statement of financial position accounts are overstated and income statement
accounts are understated.
d. Statement of financial position accounts are understated and income statement
accounts are overstated.
64. A law firm received $2000 cash for legal services to be rendered in the future. The full
amount was credited to the liability account Unearned Service Revenue. If the legal services
have been rendered at the end of the accounting period and no adjusting entry is made, this
would cause
a. expenses to be overstated
b. net income to be overstated
c. liabilities to be understated
d. revenues to be understated
65. The balance in the supplies account on June 1 was $5200, supplies purchased during
June were $3500 and the supplies on hand at June 30 were $2000. The amount to be used
for the appropriate adjusting entry is
a. $5500
b. $3500
c. $10700
d. $6700
66. Hercules Company purchased a computer for $4500 on December 1. It is estimated that
annual depreciation on the computer will be $900. If financial statements are to be prepared
on December 31, the company should make the following adjusting entry:
a. Debit Depreciation Expense, $900; Credit Accumulated Depreciation, $900.
b. Debit Depreciation Expense, $75; Credit Accumulated Depreciation, $75.
c. Debit Depreciation Expense, $3600; Credit Accumulated Depreciation, $3600.
 d. Debit Office Equipment, $4500; Credit Accumulated Depreciation, $4500.
67. Action Real Estate received a check for $24000 on July 1 which represents a 6-month
advance payment of rent on a building it rents to a client. Unearned Rent Revenue was
credited for the full $24000. Financial statements will be prepared on July 31. Action Real
Estate should make the following adjusting entry on July 31:
a. Debit Unearned Rent Revenue, $4000; Credit Rent Revenue, $4000.
b. Debit Rent Revenue, $4000; Credit Unearned Rent Revenue, $4000.
c. Debit Unearned Rent Revenue, $24000; Credit Rent Revenue, $24000.
d. Debit Cash, $24000; Credit Rent Revenue, $24000
68. Middle City College sold season tickets for the 2017 football season for $400000. A
total of 8 games will be played during September, October and November. In September,
three games were played. The adjusting journal entry at September 30
a. is not required. No adjusting entries will be made until the end of the season in
November.
b. will include a debit to Cash and a credit to Ticket Revenue for $100000.
c. will include a debit to Unearned Ticket Revenue and a credit to Ticket Revenue
for $150000.
d. will include a debit to Ticket Revenue and a credit to Unearned Ticket Revenue for
$133333
69. Bread Basket provides baking supplies to restaurants and grocery stores. During
December 2017, Bread Basket’s employees worked 2400 hours at an average rate of $15 per
hour. On December 31, 2017, Bread Basket has paid $21000 of salary expenses. If Bread
Basket fails to make the appropriate adjusting entry, which of the following is true regarding
its December 31, 2017 statement of financial position?
a. Equity is overstated by $21000
b. Equity is understated by $15000
c. Liabilities are understated by $15000
d. Liabilities are overstated by $21000
70. Bread Basket provides baking supplies to restaurants and grocery stores. On November
1, 2017, Bread Basket signed a $600000, 6-month note payable. The note requires Bread
Basket to pay interest at an annual rate of 6%. Assuming Bread Basket makes the
appropriate adjusting entry, what is the impact on its December 31, 2017 statement of
financial position?
a. An expense of $18000
b. An expense of $6000
c. A liability of $6000
d. An expense of $18000 and a liability of $18000
71. If the total debit column exceeds the total credit column of the income statement
columns on a worksheet, then the company has
a. earned net income for the period.
b. an error because debits do not equal credits.
c. suffered a net loss for the period.
 d. to make an adjusting entry.
72. A worksheet is a multiple column form that facilitates the
a. identification of events
b. measurement process.
c. preparation of financial statements.
d. analysis process.
The income statement and statement of financial position columns of Reed Company's
worksheet reflect the following totals:

Income statement Statement of financial position

Dr. Cr. Dr. Cr.

Totals $58000 $45000 $34000 $47000

73. The net income (or loss) for the period is
a. $45,000 income
b. $13,000 income
c. $13,000 loss
d. not determinable
74. To enter the net income (or loss) for the period into the above worksheet requires an
entry to the
a. income statement debit column and the statement of financial position credit column.
b. income statement credit column and the statement of financial position debit
column.
c. income statement debit column and the income statement credit column.
d. statement of financial position debit column and the statement of financial position
credit column.
75. Which of the following permanent account is changed during the closing process?
a. Share Capital-Ordinary
b. Retained Earnings
c. Unearned Service Revenue
d. None of these answer choices are correct
76. The permanent accounts appear on which financial statement?
a. Statement of Financial Position
b. Income Statement
c. Retained Earnings Statement
d. Statement of Cash Flows
77. Closing entries are made
a. in order to terminate the business as an operating entity
b. so that all assets, liabilities, and equity accounts will have zero balances when the
next accounting period starts
c. in order to transfer net income (or loss) and dividends to Retained Earnings
d. so that financial statements can be prepared
78. If Income Summary has a credit balance after revenues and expenses have been closed
into it, the closing entry for Income Summary will include a
a. debit to Retained Earnings
b. debit to Dividends
c. credit to Retained Earnings
d. credit to Dividends
79. Closing entries
a. are prepared before the financial statements
b. reduce the number of permanent accounts
c. cause the revenue and expense accounts to have zero balances
d. summarize the activity in every account
80. In preparing closing entries
a. each revenue account will be credited
b. each expense account will be credited
c. the retained earnings account will be debited if there is net income for the period
d. the dividends account will be debited
81. After closing entries are posted, the balance in the retained earnings account in the
ledger will be equal to
a. the beginning retained earnings reported on the retained earnings statement
b. the amount of the retained earnings reported on the statement of financial
position
c. zero
d. the net income for the period
The income statement for the month of June, 2017 of Taylor Enterprises contains the
following information:

Revenues ₤16000
Expenses:
Salaries and Wages Expense ₤4000
Rent Expense 3000
Supplies Expense 600
Advertising Expense 400
Insurance Expense 200

Total expenses 8200

Net income ₤7800
82. The entry to close the revenue account includes a
a. debit to Income Summary for ₤7,800
b. credit to Income Summary for ₤7,800
c. debit to Income Summary for ₤16,000
d. credit to Income Summary for ₤16,000
83. The entry to close the expense accounts includes a
 a. debit to Income Summary for ₤7,800
b. credit to Rent Expense for ₤3,000
c. credit to Income Summary for ₤8,200
d. debit to Salaries and Wages Expense for ₤2,000
84. After the revenue and expense accounts have been closed, the balance in Income
Summary will be
a. ₤0
b. a debit balance of ₤7,800
c. a credit balance of ₤7,800
d. a credit balance of ₤16,000
85. The entry to close Income Summary to Retained Earnings includes
a. a debit to Revenue for ₤16,000
b. credits to Expenses totaling ₤8,200
c. a credit to Income Summary for ₤7,800
d. a credit in Retained Earnings for ₤7,800
86. On June 1, 2017, Taylor reported Retained Earnings of ₤70,000. The company paid no
dividends during June. On June 30, 2017, the company will report Retained Earnings of
a. ₤70,000
b. ₤86,000
c. ₤77,800
d. ₤62,200
87. A post-closing trial balance will show
a. only permanent account balances
b. only temporary account balances
c. zero balances for all accounts
d. the amount of net income (or loss) for the period
88. Topeka Bike Company received a $920 check from a customer for the balance due. The
transaction was erroneously recorded as a debit to Cash $290 and a credit to Service
Revenue $290. The correcting entry is
a. debit Cash, $920; credit Accounts Receivable, $920
b. debit Cash, $630 and Accounts Receivable, $290; credit Service Revenue, $920
c. debit Cash, $630 and Service Revenue, $290; credit Accounts Receivable, $920
d. debit Accounts Receivable, $920; credit Cash, $630 and Service Revenue, $290
89. Farr Company paid the weekly payroll on January 2 by debiting Salaries and Wages
Expenses for $75,000. The accountant preparing the payroll entry overlooked the fact that
Salaries and Wages Expense of $45,000 had been accrued at year end on December 31. The
correcting entry is
a. Salaries and Wages Payable 45000
Cash 45000
b. Cash 30000
Salaries and Wages Expense 30000
c. Salaries and Wages Payable 45000
 Salaries and Wages Expense 45000
d. Cash 45000
Salaries and Wages Expense 45000
90. A lawyer collected $620 of legal fees in advance. He erroneously debited Cash for $260
and credited Accounts Receivable for $260. The correcting entry is
a. Cash 260
Accounts Receivable 360
Unearned Service Revenue 620
b. Cash 620
Service Revenue 620
c. Cash 360
Accounts Receivable 260
Unearned Service Revenue 620
d. Cash 360
Accounts Receivable 360
91. On May 25, Carlin Company received a $550 check from Andy Jeter for services to be
performed in the future. The bookkeeper for Carlin Company incorrectly debited Cash for
$550 and credited Accounts Receivable for $550. The amounts have been posted to the
ledger. To correct this entry, the bookkeeper should:
a. debit Cash $550 and credit Unearned Service Revenue $550
b. debit Accounts Receivable $550 and credit Service Revenue $550
c. debit Accounts Receivable $550 and credit Cash $550
d. debit Accounts Receivable $550 and credit Unearned Service Revenue $550
92. On March 8, Fernetti Company bought office supplies on account from the Flint
Company for $550. Fernetti Company incorrectly debited Equipment for $500 and credited
Accounts Payable for $500. The entries have been posted to the ledger. the correcting entry
should be:
a. Supplies 550
Accounts Payable 550
b. Supplies 550
Accounts Payable 500
Equipment 50
c. Supplies 550
Equipment 550
d. Supplies 550
Equipment 500
Accounts Payable 50
The following information (in thousands) is for Zháng Office Supplies:
93. The total amount of assets to be classified as current assets is
a. ¥1,160,000
b. ¥860,000
c. ¥720,000
d. ¥580,000
94. The total amount of assets to be classified as property, plant, and equipment is
a. ¥1,280,000
b. ¥680,000
c. ¥980,000
d. ¥760,000
95. The total amount of assets to be classified as investments is
a. ¥0
b. ¥600,000
c. ¥300,000
d. ¥720,000
96. The total amount of liabilities to be classified as current liabilities is
a. ¥280,000
b. ¥240,000
c. ¥600,000
d. ¥640,000
97. A current asset is
a. the last asset purchased by a business
b. an asset which is currently being used to produce a product or service
c. usually found as a separate classification in the income statement
d. an asset that a company expects to convert to cash or use up within one year
98. An intangible asset
a. does not have physical substance, yet often is very valuable
b. is worthless because it has no physical substance
c. is converted into a tangible asset during the operating cycle
d. cannot be classified on the statement of financial position because it lacks physical
substance
99. Which of the following would not be classified as a non-current liability?
a. Current maturities of long-term debt
b. Bonds payable
c. Mortgage payable
d. Lease liabilities
100. On a classified statement of financial position, current assets are customarily listed
a. in alphabetical order
b. with the largest dollar amounts first
c. in the reverse order of liquidity
d. in the order of acquisition