Question : 83.All of the following regarding the current ratio true except: A.Current : 1236866

83.All of the following regarding the current ratio are true except:   

A.Current ratio is calculated by dividing current assets by current liabilities.

B.Current ratio helps to assess a company’s ability to pay its debts in the near future.

C.Current ratio does not affect a creditor’s decision on whether to allow a company to buy on credit.

D.Current ratio can affect a creditor’s decision about whether to lend money to a company.

E.Current ratio can reveal challenges in covering short-term obligations if it is less than 1.

84.The Unadjusted Trial Balance columns of a company’s work sheet shows the Store Supplies account with a balance of $750. The Adjustments columns shows a credit of $425 for supplies used during the period. The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:   

A.$325 debit.

B.$325 credit.

C.$425 debit.

D.$750 debit.

E.$425 credit.

85.An optional columnar working paper used to prepare a company’s unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements is a(n) :   

A.Adjusted trial balance.

B.Work sheet.

C.Post-closing trial balance.

D.Unadjusted trial balance.

E.General ledger.

86.Accumulated Depreciation and Service Fees Earned would be sorted to which respective columns in completing a work sheet?   

A.Balance Sheet and Statement of Owner’s Equity-Credit and Income Statement-Credit.

B.Balance Sheet and Statement of Owner’s Equity-Debit and Income Statement-Debit.

C.Income Statement-Debit and Income Statement-Credit.

D.Balance Sheet and Statement of Owner’s Equity-Debit and Balance Sheet and Statement of Owner’s Equity-Credit.

E.Balance Sheet and Statement of Owner’s Equity-Debit; and Income Statement-Credit.

87.Which of the following statements is incorrect?   

A.Working papers are useful aids in the accounting process.

B.On the work sheet, the effects of the accounting adjustments are shown on the account balances.

C.After the work sheet is completed, it can be used to help prepare the financial statements.

D.On the work sheet, the adjusted amounts are sorted into columns according to whether the accounts are used in preparing the unadjusted trial balance or the adjusted trial balance.

E.A worksheet is not a substitute for financial statements.

88.A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired rent of $200. This adjusting entry results in:   

A.$200 decrease in net income.

B.$200 increase in net income.

C.$200 difference between the debit and credit columns of the Unadjusted Trial Balance.

D.$200 of prepaid insurance.

E.An error in the financial statements.

89.Statements that show the financial statements as if proposed transactions had already occurred are called:   

A.Pro forma statements.

B.Professional statements.

C.Simplified statements.

D.Temporary statements.

E.Interim statements.

90.In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. The Balance Sheet columns will balance on completing the work sheet but with the wrong net income, if the amount sorted in error is:   

A.An expense amount placed in the Balance Sheet Credit column.

B.A revenue amount placed in the Balance Sheet Debit column.

C.A liability amount placed in the Income Statement Credit column.

D.An asset amount placed in the Balance Sheet Credit column.

E.A liability amount placed in the Balance Sheet Debit column.

91.If the Balance Sheet and Statement of Owner’s Equity columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Owner’s Equity Credit column, the cause could be:    

A.An expense entered in the Balance Sheet and Statement of Owner’s Equity Debit column.

B.A revenue entered in the Balance Sheet and Statement of Owner’s Equity Credit column.

C.An asset amount entered in the Income Statement and Statement of Owner’s Equity Debit column.

D.A liability amount entered in the Income Statement and Statement of Owner’s Equity Credit column.

E.An expense entered in the Balance Sheet and Statement of Owner’s Equity Credit column.

92.A company’s December 31 work sheet for the current period appears below. Based on the information provided, what is net income for the current period? 

A.$1,400.

B.$1,855.

C.$1,905.

D.$2,060.

E.$4,670.