Chapter Questions
What document are financial statements prepared from?
What does the income statement report?
What does the statement of retained earnings show?
What does the balance sheet report?
Why are financial statements prepared in a specific order? What is that order?
What is a classified balance sheet?
Identify two asset categories on the classified balance sheet, and give examples of each category.
Identify two liability categories on the classified balance sheet, and give examples of each category.
What does liquidity mean?
How could a worksheet help in preparing financial statements?
If a business had a net loss for the year, where would the net loss be reported on the worksheet?
What is the closing process?
What are temporary accounts? Are temporary accounts closed in the closing process?
What are permanent accounts? Are permanent accounts closed in the closing process?
How is the Income Summary account used? Is it a temporary or permanent account?
What are the steps in the closing process?
If a business had a net loss for the year, what would be the closing entry to close Income Summary and transfer the net loss to the Retained Earnings account?
What types of accounts are listed on the post-closing trial balance?
List the steps of the accounting cycle.
What is the current ratio, and how is it calculated?
What are reversing entries? Are they required by GAAP?