True/False and Multiple Choice 32. A fomm of balance sheet that shows the liabil

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True/False and Multiple Choice

32. A fomm of balance sheet that shows the liabilities and owner's equity sectiones section is called an account form of balance shect 33. Current assets include cash and ocher assets that will be converted into cash or consumed within below the assets one year or the normal operating cycle of the business, whichever is longer. 34. A balance sheet that classifies (or groups) items by similarities is called a classified balance sheet 35. Obligations that need not be paid for a long time, asually more than one year, are classified s current liabilities. 36. Assets, liabilities, and owner's equity sre closed at the end of the accounting period. 37. Net Sales- Cost of Goods Available-Gross Profit. 38. Gross Profit and Gross Margin mean the same thing 39. Ta get the Gross Profit %, divide Net Sales by the Gross Profit. 40, Income From Operations is Net Sales- Cost of Goods Sold 11. Gross Profit-Operating Expenses- Income From Operations 42. Other Revenues and Other Expenses are shown s paraely on a merchandisers(multiple-step) ncome Statement. MULTIPLE CHOICE 1. The owner's equity in a besiness amounted to $56,000 at the begining of the year and $100,00 at the end of the year. The owner had made no additional investments and had withdrawn $19,000 during the year. The net income for the year amounted to a $76,000 b, $67,000 c. $63,000 d. $188,000 e none of the above The total assets amounted to 524,000 and the total liabilities amounted to S the owners aquity is a $16,000 b. $42,000 c. $18,000 d. $24,000 e. none of the above 000. The amount of 2· The total revenue of the month of June amounted to S6500, total expenses amounted to $3.500; and withdrawals amounted to $600. The net income for the mooth amounted to a. $6,000 b. $2,400 3 c $3,000

Explanation / Answer

32 False as in account form of balance sheet assets are on left and liabilities and owners equity on right side 33 True as current assets are asset converted into cash within one year or accountig period whichever higher 34 True classied ba;ance divide the asset and liabilities according to groups 35 False as current liabilities are those which are paid within one year or operating cycle whichever longer 36 False , As revenue and expense accounts that is temporary accounts are closed at end of the year 37 False as net sales - cost of goods sold = gross profit 38 False as gross profit is net sales - cost of goods sold where as gross profit margin is gross proft / net sales 39 False Gross profit % = Gross profit / net sales 40 False Income from operations = Gross profit - operating expense 41 True Income from operations = Gross profit - operating expense 42 True multistep income statement shows other operating expense and revenue after income from operations 1 Ending owners equity 100000 Add Withdrawls 19000 119000 Less Beginning owners equity 56000 Net income 63000 So correct answer is C 2 Total assets 24000 Less Total liabilities 18000 Owners equity 6000 So correct answer is e none of above 3 Total revenue 6500 Less Total expense 3500 Net income 3000 So correct answer C

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