Exam 4: Completing the Accounting Cycle

Which statement about long-term investments is not true?

A company's operating cycle and fiscal year are usually the same length of time.

You have recently started to work for Payne Holmes, manufacturers of cemetery markers and monuments. During your first month at work, you inadvertently recorded as revenue, about $3,000 of prepayments from Tang Company. The financial statements had been released within the company when you discovered your error. The month-end closing had not been completed, however, and you were able to correct the accounts without incident. Required: Prepare a short note to accompany the re-released financial statements explaining the mistake.

The relationship between current assets and current liabilities is important in evaluating a company's

Journalizing and posting closing entries is a required step in the accounting cycle. Discuss why it is necessary to close the books at the end of an accounting period. If closing entries were not made, how would the preparation of financial statements be affected?

After the adjusting entries are journalized and posted to the accounts in the general ledger, the balance of each account should agree with the balance shown on the

Which one of the following is usually prepared only at the end of a company's annual accounting period?

The information for preparing a trial balance on a worksheet is obtained from

On March 8, Fernetti Company bought office supplies on account from the Flint Company for $550. Fernetti Company incorrectly debited Equipment for $500 and credited Accounts Payable for $500. The entries have been posted to the ledger. the correcting entry should be:

The preparation of a ______________ and ______________ entries are two optional steps in the accounting cycle.

Computing net income on the worksheet occurs in step

These are selected account balances on December 31, 2014. What is the total amount of property, plant, and equipment that will appear on the statement of financial position?

The use of reversing entries will change the amounts reported in the statement of financial position.

In order to close the Dividends account, the

A company's liquidity is concerned with the relationship between long-term investments and long-term debt.

In one closing entry, the Dividends account is credited and Income Summary is debited.

Compute the dollar amount of current assets based on the following account balances.

Indicate the proper sequence of the steps in the accounting cycle by placing numbers 1-8 in the blank spaces.

The steps in the preparation of a worksheet do not include

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.