Exam 4: Completing the Accounting Cycle and Classifying Accounts

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

When expenses exceed revenues, there is a loss and the Income Summary account has a credit balance.

Classified balance sheets commonly include the following categories.(a) Current assets(b) Investments(c) Property, plant and equipment(d) Intangible assets(e) Current liabilities(f) Non-current liabilities(g) Equity Indicate the typical classification of each item listed below by placing the letter of the correct balance sheet category in the blank space next to the item.(1) ______ Margarita Acosta, capital(2) ______ Cash(3) ______ Office supplies(4) ______ Accounts receivable(5) ______ Prepaid expenses(6) ______ Merchandise inventory(7) ______ Buildings used in business operations(8) ______ Wages payable(9) ______ Long-term note payable(10) ______ Accounts payable(11) ______ Patents(12) ______ Land held for future plant expansion

Asset, liability and revenue accounts are not closed as long as a company continues in business.

Which of the following statements is incorrect?

Presented below are the year-end balances at October 31 of Max Missle Paintball Co. All accounts have normal balances. Accourts receivable \ 5,000 Accourts payable 13,000 Accurnulated depreciation, equiprnent 15,000 Advertising expense 1,000 Cash 30,000 Depreciation experse, equiprnent 3,000 Insurance expense 1,000 frterest reverue 1,000 Laundry equipment 130,000 Notes payable 30,000 Max Missle, capital 47,500 Max Missle, withdrawals 5,000 Prepaid insurance 6,000 Salaries payable 2,000 Salary expense 4,000 Service revenue 80,000 Supplies 1,000 Supplies expense 100 Repair experse 500 Uneamed laurdry servicereveruse 100 Utilities experse 1,000 Prepare the necessary closing entries at October 31.

An expense account is normally closed by debiting Income Summary and crediting the expense account.

Listed below are a number of accounts for Melcier Industries. Use the schedule shown below to classify each account, and indicate if it is included in the closing process and, if so, how it is closed.

Discuss the purpose of a post-closing trial balance.

In order, the last four steps in the accounting cycle include preparing the adjusted trial balance, preparing financial statements, preparing adjusting entries and preparing closing entries.

A work sheet is prepared before entering the adjustments in the accounts.

For a partnership, the equity section is called Shareholders Equity.

The accounting cycle refers to the steps in preparing the work sheet for users.

Another name for income summary accounts is

The Income Summary account is a(n)

The Income Summary account is used to close all other temporary accounts at the end of an accounting period.

Which of the following is the final step in the accounting cycle?

After posting the entries to close all revenue accounts and all expense accounts, the Income Summary account of Waif Services has a $4,000 debit balance. This shows that Waif Services earned profit of $4,000.

Reversing entries are optional.

Reversing entries are