ACCT 211 EXAM 2 QUESTIONS AND
ANSWERS SCORED A+.
Accounting Cycle - Answer Recurring steps performed each accounting period, starting with analyzing
transactions and continuing through the post-closing trail balance (or reverse entries)
Classified Balance Sheet - Answer Balance sheet that presents assets and liabilities in relevant
subgroups, including current and noncurrent classifications
Closing Entries - Answer Entries recorded at the end of each accounting period to transfer end-of-
period balances in revenue, gain, expense, loss, and withdrawal (dividend for a corporation) accounts to
the capital account (to retained earnings for a corporation)
Closing Process - Answer Necessary end-of-period steps to prepare the accounts for recording the
transactions of the next period
Current Assets - Answer Cash and other assets expected to be sold, collected, or used within one year
or the company's operating cycle, whichever is longer
Current Liabilities - Answer Obligations due to be paid or settled within one year or the company's
operating cycle, whichever is longer
Current Ratio - Answer Ratio used to evaluate a company's ability to pay its short-term obligations,
calculated by dividing current assets by current liabilities
Income Summary - Answer Temporary account used only in the closing process to which the balances
of revenue and expense accounts (including any gains or losses) are transferred; its balance is transferred
to the capital account (or retained earnings for a corporation)
Intangible Assets - Answer Long-term assets (resources) used to produce or sell products or services;
usually lack physical form and have uncertain benefits.
, Long-term Investments - Answer Long-term assets not used in operating activities such as notes
receivable and investments in stocks and bonds.
Long-term Liabilities - Answer Obligations not due to be paid within one year or the operating cycle,
whichever is longer.
Operating cycle - Answer Normal time between paying cash for merchandise or employee services and
receiving cash from customers.
Permanent Accounts - Answer Accounts that reflect activities related to one or more future periods;
balance sheet accounts whose balances are not closed; also called real accounts.
Post-closing Trail Balance - Answer List of permanent accounts and their balances from the ledger after
all closing entries are journalized and posted.
Pro Forma Financial Statements - Answer Statements that show the effects of proposed transactions
and events as if they had occurred.
Reversing Entries - Answer Optional entries recorded at the beginning of a period that prepare the
accounts for the usual journal entries as if adjusting entries had not occurred in the prior period.
Temporary Accounts - Answer Accounts used to record revenues, expenses, and withdrawals
(dividends for a corporation); they are closed at the end of each period; also called nominal accounts.
Unclassified Balance Sheet - Answer Balance sheet that broadly groups assets, liabilities, and equity
accounts.
Working Papers - Answer Analyses and other informal reports prepared by accountants and managers
when organizing information for formal reports and financial statements.
Work Sheet - Answer Spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted
trial balance, and financial statements.
ANSWERS SCORED A+.
Accounting Cycle - Answer Recurring steps performed each accounting period, starting with analyzing
transactions and continuing through the post-closing trail balance (or reverse entries)
Classified Balance Sheet - Answer Balance sheet that presents assets and liabilities in relevant
subgroups, including current and noncurrent classifications
Closing Entries - Answer Entries recorded at the end of each accounting period to transfer end-of-
period balances in revenue, gain, expense, loss, and withdrawal (dividend for a corporation) accounts to
the capital account (to retained earnings for a corporation)
Closing Process - Answer Necessary end-of-period steps to prepare the accounts for recording the
transactions of the next period
Current Assets - Answer Cash and other assets expected to be sold, collected, or used within one year
or the company's operating cycle, whichever is longer
Current Liabilities - Answer Obligations due to be paid or settled within one year or the company's
operating cycle, whichever is longer
Current Ratio - Answer Ratio used to evaluate a company's ability to pay its short-term obligations,
calculated by dividing current assets by current liabilities
Income Summary - Answer Temporary account used only in the closing process to which the balances
of revenue and expense accounts (including any gains or losses) are transferred; its balance is transferred
to the capital account (or retained earnings for a corporation)
Intangible Assets - Answer Long-term assets (resources) used to produce or sell products or services;
usually lack physical form and have uncertain benefits.
, Long-term Investments - Answer Long-term assets not used in operating activities such as notes
receivable and investments in stocks and bonds.
Long-term Liabilities - Answer Obligations not due to be paid within one year or the operating cycle,
whichever is longer.
Operating cycle - Answer Normal time between paying cash for merchandise or employee services and
receiving cash from customers.
Permanent Accounts - Answer Accounts that reflect activities related to one or more future periods;
balance sheet accounts whose balances are not closed; also called real accounts.
Post-closing Trail Balance - Answer List of permanent accounts and their balances from the ledger after
all closing entries are journalized and posted.
Pro Forma Financial Statements - Answer Statements that show the effects of proposed transactions
and events as if they had occurred.
Reversing Entries - Answer Optional entries recorded at the beginning of a period that prepare the
accounts for the usual journal entries as if adjusting entries had not occurred in the prior period.
Temporary Accounts - Answer Accounts used to record revenues, expenses, and withdrawals
(dividends for a corporation); they are closed at the end of each period; also called nominal accounts.
Unclassified Balance Sheet - Answer Balance sheet that broadly groups assets, liabilities, and equity
accounts.
Working Papers - Answer Analyses and other informal reports prepared by accountants and managers
when organizing information for formal reports and financial statements.
Work Sheet - Answer Spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted
trial balance, and financial statements.
