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

a. an expense
b. revenue
c. a liability
d. an asset

2. Current assets of most companies are normally made up of:

a. assets which are currently used in operations of company
b. cash and assets expected to be converted to cash within a year
c. a 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 given reconciling items would adjusting entry be necessary to books of company?

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

4. Allowance for collectable accounts is a(n):

a. asset
b. contra current asset
c. expense
d. contra revenue

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

a. True
b. False