1. Advance payments from customers for future services are recorded as:

a. An expense
b. Rrevenue
c. Liability
d. Asset

2. The current assets of most companies are usually made up of:

a. Assets that are currently used in the operations of the company
b. Cash and assets expected to be converted to cash within a year
c. Very small proportion (less than 10%) of the total assets of the entity
d. Cash, marketable securities, and accounts and notes payable

3. For which of the following reconciling items would an adjusting entry be necessary to the books of the company?

a. A deposit in transit
b. An error by the bank
c. Outstanding checks
d. A bank service charge

4. The allowance for collectable accounts is a(n):

a. Asset
b. Contra current asset
c. Expense
d. Contra revenue

5. When a firm uses the LIFO inventory cost flow assumption cost of goods sold will be the same as if FIFO were used

a. True
b. False