Question

In: Accounting

21) The basis for classifying assets as current or noncurrent is conversion to cash within

A. the accounting cycle or one year, whichever is longer.

B. the accounting cycle or one year, whichever is shorter.

C. the operating cycle or one year, whichever is longer.

D. the operating cycle or one year, whichever is shorter.

22) Which of the following is not a method to disclose information on the Balance Sheet:

A. Cross reference and contra items

B. Parenthetical explanations

C. Supporting schedules

D. All of these are methods of disclosing pertinent information.

23) The correct order to present current assets on the Balance Sheet is

A. cash, inventories, accounts receivable, prepaid items, marketable securities.

B. cash, marketable securities, accounts receivable, inventories, prepaid items.

C. cash, marketable securities, accounts receivable, prepaid items, inventories.

D. cash, marketable securities, inventories, prepaid items, accounts receivable.

24)Which of the following is NOT a contra account?

A.

Accumulated depreciation

B.

Premium on bonds payable

C.

Sales Discounts

D.

Treasury Stock

25) Which of the following is a limitation of the balance sheet?

a. Many items that are of financial value are omitted.

b. Judgments and estimates are used.

c. Current fair value is not reported.

d. All of these

26) The balance sheet is useful for analyzing all of the following except

a. liquidity.

b. solvency.

c. profitability.

d. financial flexibility.

Expert Solution

Question 21

The classification is based on C. One operating cycle or One year which ever is longer.

Question 22

D. All of these are methods to disclose information. Cross Referencing and Contra assets are used to establish direct relationships between certain assets and certain liabilities. Paranthetical explanations are used to provide explanations on complicated it3ems in the balance sheet. Supporting schedules are used to describe the sub items of each line item.

Question 23

Current assets are presented in the order of liquidity of the asset. Hence

B. Cash, Marketable securities, Accounts Receivable, Inventories, Prepaid Items

Question 24

B. Premium on bonds payable is an adjunct account rather than a contra account as it has a credit balance, the same as the main account - Bonds Payable.

Question 25

B. Judgements and estimates are used is the limitation. The balance sheet reports all items of financial value. It also reporst certain items in current fair value.

Question 26

The balance sheet does not provide information on C.Profitability. The income statement provides this information.

ekkarill92 answered 2 years ago

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