Exam 4: Completing the Accounting Cycle

The following items (in thousands) are taken from the financial statements of Huang Company for the year ending December 31, 2014: What is the balance that would be reported for equity at December 31, 2014?

You are the controller for WNC Home Media. During the beginning of January 2014, when the company was adjusting and closing the accounting records for the calender year, you were home sick with the flu. You therefore relied on your assistant to complete much of the work. The company reported net income for 2014 of $125,000, down from $140,000 in 2013. In February, after the financial statements have been issued and distributed to the company's investors and creditors, you discover that your assistant overlooked adjustments to insurance expense, depreciation expense and utilties expense resulting in an overstatement of net income by $12,500. You immediately inform the company president of the overstatement and suggest correcting the errors and re-issuing the financial statements.The company president is concerned that investors were not happy about the lower profits reported in 2014. He feels that 2015 is going to be a better year for the company. Therefore he prefers to keep quiet about the financial statement errors in 2014 and adjust the accounting records for the errors in 2015. Required: (a) Who are the stakeholders in this situation? (b) What are the ethical issues in this situation? (c) What would you do as controller in this situation?

Closing entries are necessary for

Intangible assets are

These financial statement items (in thousands) are for Chen Company at year-end, July 31, 2014. Instructions (a) Prepare an income statement and a retained earnings statement for the year. (b) Prepare a classified statement of financial position at July 31, 2014.

A post-closing trial balance will show

The heading for a post-closing trial balance has a date line that is similar to the one found on

The following account balances appeared in the adjusted trial balance for Nguyen Inc.: Supplies ¥2,500; Inventories ¥3,000; Accounts Receivable ¥13,200; Cash ¥11,500; Prepaid Insurance ¥6,300; and Short-term Investments ¥7,600. Prepare the current assets section of the 2014 statement of financial position in proper format.

The following items (in thousands) were taken from the financial statements of Zhao Company. (All dollars are in thousands.) Instructions Prepare a classified statement of financial position in good form as of December 31, 2014.

Closing revenue and expense accounts to the Income Summary account is an optional bookkeeping procedure.

Which of the following steps in the accounting cycle would not generally be performed daily?

A worksheet is an optional working tool used by accountants to facilitate the preparation of financial statements. Consider the steps followed in preparing a worksheet. How does the use of a worksheet assist the accountant. Could financial statements be prepared without a worksheet? Evaluate how the process would differ. Consider factors such as timeliness, accuracy, and efficiency in your evaluation.

The income statement for the year 2014 of Poole Co. contains the following information: After all closing entries have been posted, the revenue account will have a balance of

The steps in the preparation of a worksheet do not include

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

After all closing entries have been journalized and posted, the final step in the accounting cycle is to prepare a ______________ trial balance.

The process of transferring net income (or loss) for the period to Retained Earnings is accomplished by making ______________ entries.

The following data (in thousands) is available for Chang Company. The subtotal of the last asset classification on the 2014 Statement of Financial Position is:

Under Protection provides underground storage facilities for companies desiring off-site storage of sensitive documents, computer records, and other items. They have developed a sophisticated surveillance and security system which they initially used in their own facilities, and have recently started to market elsewhere as well. The underground storage facilities are made from natural caves in some instances (reinforced and modified as appropriate) and from excavations of natural rock formations in others. The land was purchased over ten years ago for a total of $2.5 million. The modifications have cost approximately $15 million more. The company has never depreciated its storage facilities because the market value of the property has continued to rise. Presently, the market price is between $30 and $40 million. Joe Goll, a new accounting manager, questioned this depreciation policy. Tim North, the controller, has told him that he needn't worry about it. For one thing, he says, this is really a special form of Land account, which should not be depreciated at all. For another, this is a privately held company, and so they don't need to worry about misleading investors. All the owners know about and approve the depreciation policy. Required: What are the ethical issues in this situation?

Income Summary has a credit balance of $12,000 in J. Wenger Co. after closing revenues and expenses. The entry to close Income Summary is