Exam 6: Financial Statements and the Closing Process

The steps involved in handling all of the transactions and events completed during an accounting period, beginning with placing data in a book of original entry and ending with a post-closing trial balance, are referred to collectively as the accounting cycle.

What is the correct sequence for closing the temporary accounts?

The order in which financial statements should be prepared is

Match the terms with the definitions. -Cash and assets that will be converted into cash or consumed within either one year or the normal operating cycle of the business, whichever is longer.

The Account Title and Balance Sheet columns of the work sheet provide all of the information necessary to prepare the statement of owner's equity.

Match the terms with the definitions. -Prepared after posting the closing entries to prove the equality of the debit and credit balances in the general ledger accounts.

On December 31, 20--, after adjustments, Tuscany Company's general ledger contains the account balances as shown on the partially completed work sheet below. Journalize the (four) closing entries necessary at the end of December. ​ ​ ​

Match the terms with the definitions. -Obligations that are due within either one year or the normal operating cycle of the business, whichever is longer, and that are to be paid out of current assets.

Match the terms with the definitions. -A balance sheet with separate categories for current assets; property, plant, and equipment; current liabilities; and long-term liabilities.

A balance sheet that groups similar items is called a(n)

Long-term liabilities may also be called long-term debt.

Match the terms with the definitions. -Accounts that accumulate information across accounting periods; all accounts reported on the balance sheet.

The owner's equity in a business amounted to $52,000 at the beginning of the year and $100,000 at the end of the year. The owner had made no additional investments and had withdrawn $19,000 during the year. The net income for the year amounted to

Assets, liabilities, and the owner's capital account are closed at the end of the accounting period.

The purpose and use of the income summary account is to summarize the difference between revenues and expenses.

The income statement includes all changes in owner's equity except those resulting from investments or withdrawals of assets by the owner.

The body of the income statement consists of an itemized list of

An income statement is an itemized statement for the purpose of providing information regarding the results of operations during a specified period of time.

(Appendix) The three types of business activities are operating activities, investing activities, and capital activities.

After posting the adjusting entries, the balance of the depreciation expense account should agree with the amount shown on the income statement.