38) Which of the following statements regarding intangible assets is incorrect?
A) Intangible assets have no physical form.
B) Intangible assets are valuable because of the special rights they carry.
C) Intangible assets are not reported on the balance sheet.
D) Intangible assets include the exclusive right to produce or sell an invention.
39) A balance sheet that lists the assets above the liabilities and stockholders’ equity sections is a(n)
________ balance sheet.
A) report form
B) unclassified form
C) account form
D) audited form
40) Buildings, land, and equipment are classified as ________.
A) current assets
B) long-term assets
C) current liabilities
D) long-term liabilities
41) Which of the following would be considered a long-term asset?
A) Accounts Payable
B) Land
C) Office Supplies
D) Retained Earnings
42) The balances of select accounts of Sandra, Inc. as of December 31, 2018 are given below:
Debit
Credit
Building
$130,000
Cash
5,000
Office Supplies
800
Furniture
5,000
Prepaid Insurance
450
Accumulated Depreciation—Furniture
$1,000
Land
32,000
Accumulated Depreciation—Building
4,600
Accounts Receivable
2,300
The insurance has been prepaid until June 30, 2019. Determine the amount of total current assets reported
on the balance sheet at December 31, 2018.
A) $12,300
B) $5,800
C) $8,550
D) $6,250
43) The balances of select accounts of Donovan, Inc. as of December 31, 2018 are given below.
Debit
Credit
Building
$120,000
Cash
9,000
Office Supplies
1,000
Furniture
4,000
Prepaid Insurance
600
Accumulated Depreciation—Furniture
$2,000
Land
33,000
Accumulated Depreciation—Building
4,000
Accounts Receivable
2,000
What amount of total long-term assets would be shown on the balance sheet at December 31, 2018?
A) $120,000
B) $151,000
C) $153,000
D) $157,000
44) The balances of select accounts of Elliott, Inc. as of December 31, 2018 are given below:
Notes Payable—short-term
$1,200
Salaries Payable
6,000
Notes Payable—long-term
20,000
Accounts Payable
3,000
Unearned Revenue
1,000
Interest Payable
2,500
The Unearned Revenue is the amount of cash received for services to be rendered in January, 2019. The
Interest Payable is due on February 15, 2019. What are the total current liabilities shown on the balance
sheet at December 31, 2018?
A) $5,500
B) $11,200
C) $13,700
D) $12,500
45) The balances of select accounts of McMurray, Inc. as of December 31, 2018 are given below:
Notes Payable—short-term
$1,300
Salaries Payable
3,000
Notes Payable—long-term
24,000
Accounts Payable
3,300
Unearned Revenue
1,000
Interest Payable
2,400
The Unearned Revenue is the amount of cash received for services to be rendered in January 2019.
Interest Payable will be paid on February 5, 2019. What are the total long-term liabilities shown on the
balance sheet at December 31, 2018?
A) $1,300
B) $3,000
C) $4,300
D) $24,000
46) Liquidity is a measure of how ________.
A) quickly an asset may be converted into cash
B) long an asset can be used
C) easily an asset can be exchanged for another asset
D) quickly an asset appreciates in value
47) Regarding a classified balance sheet, which of the following statements is correct?
A) Accounts are classified by their purchase dates.
B) Account balances are listed from the highest amount to the lowest amount.
C) Assets are listed in the order of their liquidity.
D) Assets are listed in alphabetical order.
48) Regarding a classified balance sheet, which of the following statements regarding liabilities is
incorrect?
A) Many Notes Payable are long-term.
B) Current liabilities include Accounts Payable and Unearned Revenue.
C) Long-term liabilities must be paid either with cash or with goods and services within one year or the
entity’s operating cycle, if the cycle is longer than one year.
D) Liabilities are listed in the order in which they must be paid.
49) Assets are listed in the order of their ________ on the balance sheet.
A) magnitude
B) dates of purchase
C) liquidity
D) durability
50) For each account listed, identify the category in which it would appear on a classified balance sheet.
Account
Location on a
Classified Balance Sheet
a
Retained Earnings
b
Accumulated Depreciation –
Equipment
c
Notes Payable (due in two years)
d
Unearned Revenue (short-term)
e
Salaries Payable
f
Accounts Receivable
g
Trademark
h
Prepaid Rent (prepaid for six months)
a
Retained Earnings
Stockholders’ Equity
b
Equipment
Property, Plant, and Equipment
c
Notes Payable (due in two years)
Long-Term Liabilities
e
Salaries Payable
Current Liabilities
f
Accounts Receivable
Current Assets
g
Trademark
Intangible Assets
h
Prepaid Rent (prepaid for six months)
Current Assets
51) The accounts from the Adjusted Trial Balance are listed in alphabetical order. Use this information for
Lawrence Service Company to prepare the classified balance sheet at September 30, 2018. Use the report
form. You must compute the ending balance of Retained Earnings.
Lawrence Service Company
Adjusted Trial Balance
September 30, 2018
Balance
Account Title
Debit
Credit
Accounts Payable
$9,000
Accounts Receivable
$2,800
Accumulated Depreciation, Equipment
1,500
Cash
14,500
Common Stock
10,000
Depreciation Expense – Equipment
600
Dividends
1,500
Equipment
40,000
Notes Payable (long-term)
20,000
Office Supplies
1,500
Prepaid Rent
4,800
Rent Expense
1,200
Retained Earnings, August 31, 2018
8,100
Salaries Expense
9,000
Service Revenue
27,500
Supplies Expense
500
Unearned Revenue (short-term)
1,000
Utilities Expense
700
Total
$77,100
$77,100
19
Copyright © 2018 Pearson Education, Inc.
Lawrence Service Company
Balance Sheet
September 30, 2018
Assets
Current Assets
Cash
$14,500
Accounts Receivable
2,800
Office Supplies
1,500
Prepaid Rent
4,800
Total Current Assets
$23,600
Property, Plant and
Equipment
Equipment
$40,000
Less: Accumulated
Deprecation,
Equipment
(1,500)
Total Property, Plant and
Equipment
38,500
Total Assets
$62,100
Liabilities
Current Liabilities
Accounts Payable
$9,000
Unearned Revenue
1,000
Total Current Liabilities
$10,000
Long-term Liabilities
Notes Payable
20,000
Total Liabilities
30,000
Stockholders‘ Equity
Common Stock
$10,000
Retained Earnings
22,100
Total Stockholders’
Equity
32,100
Total Liabilities and
Stockholders‘ Equity
$62,100
Diff: 3
LO: 4-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Application
H2: Classified Balance Sheet
1) A worksheet can be used to help prepare the financial statements.
2) A worksheet can be used to help prepare adjusting entries and the financial statements.
3) A worksheet is a substitute for the financial statements.
4) The worksheet helps accountants to ________.
A) prepare the trial balance
B) prepare the financial statements
C) prepare the unadjusted trial balance
D) maintain books of accounts without a journal