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

Discuss the purpose of a detailed income statement.Briefly describe the major kinds of business activities covered on a detailed income statement.

Net Purchases + Purchases Returns and Allowances + Purchase Discount equals:

The general ledger balances are used to prepare the post-closing trial balance.

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). - Column 1 Column 2 Column 3 Column 4 Cash

Which of the following adjustments may be reversed?

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). - Column 1 Column 2 Column 3 Column 4 Equipment

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). - Column 1 Column 2 Column 3 Column 4 Depreciation Expense

Net Sales - Cost of Goods Sold is equal to:

Determine the beginning inventory of a business having: Beginning Capital balance of $11,000 No additional investments or withdrawals Net sales of $43,500 Net purchases $26,000 Ending inventory of $4,250 Ending Capital balance of $10,000 Operating expenses of $16,500 $ ________

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). - Column 1 Column 2 Column 3 Column 4 Sales

Land is listed first under Plant,Property and Equipment.

The ending merchandise inventory was overstated.This error would cause:

The entry to adjust salaries was done twice.This error would cause:

Which of the following is an operating expense?

The entry to record the adjustment for depreciation on equipment would be a debit to Depreciation Expense-Equipment and a credit to Equipment.

Gross profit equals Net Sales minus Cost of Goods Sold.

After the closing process,the permanent accounts are set back to zero.

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). - Column 1 Column 2 Column 3 Column 4 Prepaid Insurance Expense

The average time it takes to buy and sell merchandise and collect Accounts Receivable is the sales cycle for a business.

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). - Column 1 Column 2 Column 3 Column 4 Accumulated Depr. Equip.