 Hello, in this presentation we will take a look at multiple choice questions related to the closing process and financial statements. First question. Which of the following are property, plant and equipment? A. Forklift. B. Goodwill. C. Cash. D. Supplies. E. Inventory. Once again, we're going to read the question and then see if we can eliminate and narrow down our choices. Question of. Which of the following are property, plant and equipment? One. A. Forklift. A. Forklift typically, depending on whether we're going to resell it, which would be inventory or not, would be in property, plant and equipment a longer term asset. I'm going to keep that there. I won't select it yet. We'll read through the rest of them. B. Goodwill. You might look at Goodwill and say, I'm not sure exactly what that is. I'm going to keep that there and we'll come back to that one. C. Cash. Cash is a current asset, so I'm pretty sure we're not talking about a current asset. D. Supplies. Supplies also is a current asset, so we're not talking about supplies. E. Inventory. Inventory is also part of the current assets and not a property, plant and equipment. I'm going to cross that out. We're left with A and B. Once again, the question is, which of the following are property, plant and equipment? One are A. Forklift. B. Goodwill. Now over the two, I'm thinking A is going to be in property, plant and equipment, so I'm going to keep that one. It's going to be grouped probably as equipment within property, plant and equipment. B is Goodwill and that has to do with an intangible asset. It may be amortized in a similar way as property, plant and equipment, but it's intangible, representing the idea that we purchased something for greater more money than purchased a company for more money than the assets minus the liability, and therefore it's assumed that we have this intangible asset that's on the books. So it's not that. That's going to be an intangible asset, kind of similar, not the same. Next question. Asset subgroups are, asset subgroups are, A, current assets, property prepaid expenses, long-term investments, fixed assets, B, property, plant and equipment, current assets, intangible assets, C, current assets, long-term investments, property, plant and equipment, intangible assets, D, intangible assets, current assets, long-term investment, property, plant and equipment, and E, current liabilities, long-term investments, property, plant and equipment, intangible assets. Okay, we'll go through this again see if we can eliminate some of these. We're going to say that the assets subgroups. So we're thinking of the balance sheet, we're thinking of the subgroups, and we may want to try to list them ourselves before going through these, and then see if we can see the list that matches up most to what we believe should be there. When we think of the first thing, we're probably thinking that it should be current assets. So that should kind of pop into your mind, current assets is probably going to be the first thing on our list. And then we're going to have maybe long-term assets, and we know property, plants, and equipment is going to be in there somewhere. And then they're mentioning intangible assets, and we'll try to see where that lines up. So the first thing I would do is say, well, current assets, I think is going to be the first thing. And that's just, we probably remember the first thing of the list, that's current assets. So it should start with current assets. B does not. It starts with property, plant, and equipment. So I'm going to eliminate it, eliminate it. And then D starts with intangible assets. So I'm going to eliminate that. And then we're left with three choices that start with current assets. A, current assets, prepaid expenses, long-term investment, and fixed assets. C, current assets, long-term investments, property, plant, and equipment, and then intangible assets. E starts with current liabilities. That kind of tricked me here. They started with current liabilities. That's a liability, not an asset at all. So it's not going to be E. And so we're left with just A and C. So once again, we're looking for the asset subgroups, the subgroups on the balance sheet for assets. First one says, A says, current assets, prepaid expenses, long-term investment, and fixed assets. Whereas C says, current assets, long-term investments, rather than prepaid, and then property, plant, and equipment, and then intangible assets. So I think that sounds more the proper way. The first one says, current asset, prepaid expenses are actually a form of current assets, long-term investments, and then the fixed assets. And we don't have intangible assets at all listed here. Whereas C says, current assets, and then long-term investments is included. That seems reasonable. Property, plant, and equipment. After the long-term investments, we know that those should be towards the bottom because they're depreciable long-term assets. And then intangible assets, we may not fully know what those are, but those are things that we're going to amortize or things that aren't tangible, but we know have value to the company like patents and Goodwill and whatnot. And so C looks like the best answer. So once again, asset subgroups are C, current assets, long-term investments, property, plant, and equipment, intangible assets. Next question, which is not true? A, all temporary accounts are closed. That's actually true. We're going to, within the closing process, we're going to close all temporary accounts. I'm actually going to cross that one out. B, because we're looking for what is not true here, what is not true. B, temporary accounts will have zero balances at period beginning. Now that's kind of tricky because I was expecting it to say period end, but it is true that, of course, if we close something out at the end of the period to zero, it will also have at the beginning of the next period, zero. We need to start at zero to count up. We need to close back down to zero at the end of the period, at the end of the month or year to prepare for the next time. So I believe that is true. So we're going to say cross that one out. That one looks good. C, the income summary account is a clearing account. Now you may not know what a clearing account is, but we'll go back to that one. D says the real accounts remain open. So real accounts, we're not sure about that term, but so I'll keep that one there. And then E says permanent accounts are closed. Now the one that looks best to me is this one here, the permanent accounts are closed because that's not true for sure. The permanent accounts are not closed. Those are going to be the balance sheet accounts and we are in the closing process type of topics here. So the permanent accounts are going to remain open. So I think this would be the one. D, I'm not fully sure if this is true or not. Real accounts remain open because this term real accounts doesn't doesn't seem correct. You know, something within our section here, but I'm saying E is the more correct answer. So I'm going to cross that one out. I'm a little skeptical about this one. And then C says the income summary account is a clearing account. So the income summary account is a clearing account. And that's going to be that one account that we're used in the four step closing process. We have to add it there. And the reason it's a clearing account, you can also call it a temporary account because it will be closed out at the end of the process. But it's kind of more than a temporary account because it really has a zero balance, like in the same day, almost in the same time period. We only use it during the closing process. So it's not like it has anything in it for the entire month. It only has something in it for one specific purpose, that one specific job, and will be zero within, you know, that one day of doing the closing process. And that's why it would be more defined as a clearing account, although it could be called a temporary account, because it will be closed out at the end of the time period as well. So once again, E answer and question and answer is, which is not true. E permanent accounts are closed. Next question. Which of the following are current assets? A. Buildings. B. Goodwill. C. Revenue. D. Land. E. Supplies. Once again, the question then we'll cross off some of these items. Which of the following are current assets? A. A building. Not a current asset. That's going to be a long term asset. It'll be property, plant, and equipment. B. Goodwill. Again, we might not know what that is, so I'm going to keep that one there for now. C. Revenue. Revenue is on the income statement, so that's not a current asset. D. Land. That's going to be property, plant, and equipment, not current long term. We're going to have that for a long period of time. And E is supplies. Supplies looks pretty good. We're going to use that fairly quickly. So we're left with B and E. Question once again, which of the following are current assets? B. Goodwill. E. Supplies. Of the two, supplies sounds like a current asset to me. If we don't know what Goodwill is, then I would choose supply because it sounds better. Goodwill is an intangible asset, however, and it happens when a purchase of a company, if we purchase the company and we pay more than the asset minus the liability price, it's assumed that there's some intangible asset within that company, possibly the name of the company or the brand that has Goodwill with it, and that's what we're buying when we pay more than just the asset minus the liability price of the company.