Question 1

How is Income Summary closed if the company had a net income?

Accepted Answer

A) Debit Capital;credit Income Summary 
B) Debit Income Summary;credit Capital 
C) Debit Capital;credit Withdrawals 
D) Debit Withdrawals;credit Capital 
A) Debit Capital;credit Income Summary 
B) Debit Income Summary;credit Capital 
C) Debit Capital;credit Withdrawals 
D) Debit Withdrawals;credit Capital

Question 2

The statement of owner's equity ending capital is equal to the capital on the worksheet.

Accepted Answer

A) True 
 B)False

Question 3

The adjusting entry to record rental income that is earned would involve a debit to Rental Income and a credit to Unearned Rent Revenue.

Accepted Answer

A) True 
 B)False

Question 4

Reversing entries are done when assets or liabilities are increasing and have no previous balance.

Accepted Answer

A) True 
 B)False

Question 5

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement on which the account balance is reported, and in Column 4 the account's nature (permanent/temporary).
-$$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column 1 } & \text { Column 2 } & \text { Column 3 } & \text { Column } 4 \
\hline \text { Wages Expense } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following, identify in...

Question 6

Merchandise purchased for resale under the perpetual inventory method is added to:

Accepted Answer

A) Merchandise Inventory. 
B) Sales. 
C) Purchases. 
D) Supplies Expense. 
A) Merchandise Inventory. 
B) Sales. 
C) Purchases. 
D) Supplies Expense.

Question 7

Liquidity is:

Accepted Answer

A) how quickly loans can be paid. 
B) how easily an asset can be converted to cash. 
C) how much cash a company has on its balance sheet. 
D) how quickly customers pay. 
A) how quickly loans can be paid. 
B) how easily an asset can be converted to cash. 
C) how much cash a company has on its balance sheet. 
D) how quickly customers pay.

Question 8

The post-closing trial balance contains:

Accepted Answer

A) assets and liabilities. 
B) all accounts with balances. 
C) only permanent accounts. 
D) All of these answers are correct. 
A) assets and liabilities. 
B) all accounts with balances. 
C) only permanent accounts. 
D) All of these answers are correct.

Question 9

Which of the following transactions could cause the Income Summary to be debited and Capital to be credited?

Accepted Answer

A) The business earned a net loss for the period. 
B) The business earned a net income for the period. 
C) Closed the Owner's Capital account 
D) A credit balance in the Owner's Withdrawals account. 
A) The business earned a net loss for the period. 
B) The business earned a net income for the period. 
C) Closed the Owner's Capital account 
D) A credit balance in the Owner's Withdrawals account.

Question 10

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement on which the account balance is reported, and in Column 4 the account's nature (permanent/temporary).
-$$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column 1 } & \text { Column } 2 & \text { Column } 3 & \text { Column } 4 \
\hline \begin{array} { l } 
\text { Merchandise } \
\text { Inventory }
\end{array} & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following, identify in...

Question 11

In what category in a classified balance sheet is Mortgage Payable found?

Accepted Answer

A) Plant and Equipment 
B) Current Liabilities 
C) Long-term Liabilities 
D) Both B and C are correct. 
A) Plant and Equipment 
B) Current Liabilities 
C) Long-term Liabilities 
D) Both B and C are correct.

Question 12

Net Sales + Sales Discounts + Sales Returns and Allowances equals:

Accepted Answer

A) Net Loss. 
B) Gross Sales. 
C) Net Income from Operations. 
D) None of the above 
A) Net Loss. 
B) Gross Sales. 
C) Net Income from Operations. 
D) None of the above

Question 13

Other Income is used to:

Accepted Answer

A) record payments from sales customers. 
B) record any revenue from activities other than sales. 
C) record all revenue. 
D) record owner investments. 
A) record payments from sales customers. 
B) record any revenue from activities other than sales. 
C) record all revenue. 
D) record owner investments.

Question 14

When calculating Cost of Goods Sold on the Income Statement,the beginning inventory and not the ending inventory value is required.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following could be recorded as a reversing entry?

Accepted Answer

A) Depreciation of building 
B) Accrual of interest expense 
C) Allocation of prepaid rent in the current period 
D) Cash 
A) Depreciation of building 
B) Accrual of interest expense 
C) Allocation of prepaid rent in the current period 
D) Cash

Question 16

To determine how much merchandise a company has returned to its vendors,it should review the:

Accepted Answer

A) Purchases Returns & Allowances account. 
B) Change in the Inventory balance. 
C) Sales Returns & Allowances account. 
D) Sales Discounts account. 
A) Purchases Returns & Allowances account. 
B) Change in the Inventory balance. 
C) Sales Returns & Allowances account. 
D) Sales Discounts account.

Question 17

Ending inventory is adjusted by debiting Merchandise Inventory and crediting Capital.

Accepted Answer

A) True 
 B)False

Question 18

The entry to close the expense account(s)was entered in reverse-Income Summary was credited and the expense account(s)was/were debited.This error would cause:

Accepted Answer

A) assets to be overstated. 
B) liabilities to be overstated. 
C) Capital account to be understated. 
D) Capital account to be overstated. 
A) assets to be overstated. 
B) liabilities to be overstated. 
C) Capital account to be understated. 
D) Capital account to be overstated.

Question 19

Cost of Goods Sold is calculated on the:

Accepted Answer

A) Post-Closing Trial Balance. 
B) Trial Balance. 
C) Income Statement. 
D) Statement of Owner's Equity. 
A) Post-Closing Trial Balance. 
B) Trial Balance. 
C) Income Statement. 
D) Statement of Owner's Equity.

Question 20

Operating expenses are found in the Cost of Goods Sold section of the income statement.

Accepted Answer

A) True 
 B)False

Exam 12: Completion of the Accounting Cycle for a Merchandise Company

How is Income Summary closed if the company had a net income?

The statement of owner's equity ending capital is equal to the capital on the worksheet.

The adjusting entry to record rental income that is earned would involve a debit to Rental Income and a credit to Unearned Rent Revenue.

Reversing entries are done when assets or liabilities are increasing and have no previous balance.

Merchandise purchased for resale under the perpetual inventory method is added to:

Liquidity is:

The post-closing trial balance contains:

Which of the following transactions could cause the Income Summary to be debited and Capital to be credited?

In what category in a classified balance sheet is Mortgage Payable found?

Net Sales + Sales Discounts + Sales Returns and Allowances equals:

Other Income is used to:

When calculating Cost of Goods Sold on the Income Statement,the beginning inventory and not the ending inventory value is required.

Which of the following could be recorded as a reversing entry?

To determine how much merchandise a company has returned to its vendors,it should review the:

Ending inventory is adjusted by debiting Merchandise Inventory and crediting Capital.

The entry to close the expense account(s)was entered in reverse-Income Summary was credited and the expense account(s)was/were debited.This error would cause:

Cost of Goods Sold is calculated on the:

Operating expenses are found in the Cost of Goods Sold section of the income statement.

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property,plant,equipment,and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values,dividends,treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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