Exam 4: Completing the Accounting Cycle

Which of the following is an optional step in the accounting cycle?

Transaction and adjustment data for Doty Company for the calendar year end is as follows: 1. December 24 (initial salary entry): $12,000 of salaries earned between December 1 and December 24 are paid. 2. December 31 (adjusting entry): Salaries earned between December 25 and December 31 are $3,000. These will be paid in the January 8 payroll. 3. January 8 (subsequent salary entry): Total salary payroll amounting to $8,000 was paid. Instructions Prepare two sets of journal entries as specified below. The first set of journal entries should assume that the company does not use reversing entries, and the second set should assume that reversing entries are utilized by the company.

A double rule (double underline) applied to accounts in the ledger during the closing process implies that

If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has

Both IFRS and GAAP require disclosure about

At the end of an accounting period, all revenue and expense accounts are closed to a temporary account called ______________.

The first required step in the accounting cycle is

Which one of the following statements concerning the accounting cycle is incorrect?

Closing entries are journalized after adjusting entries have been journalized.

A worksheet can be thought of as a(n)

Intangible assets are

The net income (or loss) for the period

Adjusting entries are prepared from

The accounting cycle begins at the start of a new accounting period.

Peter Cook, CPA, was asked by Carol Kane to review the accounting records and prepare the financial statements for her upholstering shop. Peter reviewed the records and found three errors. 1. Cash paid on accounts payable for $930 was recorded as a debit to Accounts Payable $390 and a credit to Cash $390. 2. The purchase of supplies on account for $600 was debited to Equipment $600 and credited to Accounts Payable $600. 3. The company paid dividends of $1,300 and the bookkeeper debited Accounts Receivable for $130 and credited Cash $130. Instructions Prepare an analysis of each error showing the (a) incorrect entry. (b) correct entry. (c) correcting entry.

The following items were taken from the financial statements of Buttercup Company. (All dollars are in thousands.) Mortgage payable \ 2,443 Accumulated depreciation 3,655 Prepaid insurance 880 Accounts payable 1,444 Property, plant, and equipment 11,500 Notes payable after 2019 1,200 Long-term investments 1,100 Common stock 5,000 Short-term investments 3,690 Retained earnings 8,480 Notes payable in 2019 1,000 Accounts receivable 1,696 Cash 2,600 Inventories 1,756 Instructions Prepare a classified balance sheet in good form as of December 31, 2018.