Distinction between current and non-current assets

Question

Question 1. What is the key distinction between current and non-current assets?

• Current assets will be used up or converted to cash within one year or one operating cycle.
• Non-current assets are which do not lose their value over time.
• Current assets always have lower balances than non-current assets.
• Non-current assets will not be used until the future.

Question 2. Which of the following statements MOST precisely describes a classified balance sheet?

• Accounts are classified by their purchase dates.
• Account balances are listed from the highest amount to the lowest amount.
• Assets are listed in their order of liquidity.
• Assets are listed in alphabetical order.

Question 3. To what account is the balance in the Income summary account closed?

• The Withdrawal account
• The net income account
• The Capital account
• The Revenue account

Question 4. Which of the following accounts will still show a balance after the closing process is completed?

• Withdrawal account
• Expense accounts
• Accumulated depreciation account
• Service revenue account

Question 5. Which of the following is TRUE?

• Accrual accounting is required by generally accepted accounting principles.
• Accrual accounting records expenses when incurred. Cash-basis accounting records expenses when cash is paid.
• Accrual accounting records revenue when services are rendered. Cash-basis accounting records revenue when cash is received.
• All of the above are true.