When Preparing the Financial Statements of a Company

question 94

Multiple Choice

When preparing the financial statements of a company:

• A)liabilities are not classified on the balance sheet.
• B)current assets are the most liquid assets.
• C)the balance sheet must be prepared using the account format.
• D)the income statement can be prepared using the multistep or report format.

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Definitions:

NSF Check

A check that cannot be honored because the account on which it is drawn lacks sufficient funds, standing for "non-sufficient funds."

Outstanding Checks

Checks that have been issued and recorded in accounting records but have not yet been cashed or cleared by the bank.

Bank Reconciliation

Aligning the cash account figures in a business's financial records with the relevant details found in a bank statement.

Bank Statement Balance

The ending account balance in a bank statement, representing the amount of money available in an account at the end of a statement period.