Question 1

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Accepted Answer

A) True 
 B)False

Question 2

Profit margin can also be called return on sales.

Accepted Answer

A) True 
 B)False

Question 3

Before an adjusting entry is made to recognize the cost of expired insurance for the period, Prepaid Insurance and Insurance Expense are both overstated.

Accepted Answer

A) True 
 B)False

Question 4

List the three-steps of the adjusting process.

Accepted Answer

(1) Determine what the current

Question 5

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Accepted Answer

A) True 
 B)False

Question 6

The _______________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

Accepted Answer

The answer of The _______________ depreciation method allocates equal amounts...

Question 7

Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $185,000, expenses of $103,700, The company paid $18,000 cash in dividends to the owner (sole stockholder). The retained earnings account before closing had a balance of $297,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

Accepted Answer

A) Debit Retained Earnings $297,000; credit Income Summary $297,000 
B) Debit Retained Earnings $63,300; credit Income Summary $63,300 
C) Debit Income Summary $63,300; credit Retained Earnings $63,300 
D) Debit Income Summary $81,300; credit Retained Earnings $81,300 
E) Debit Retained Earnings $81,300; credit Income Summary $81,300 
A) Debit Retained Earnings $297,000; credit Income Summary $297,000 
B) Debit Retained Earnings $63,300; credit Income Summary $63,300 
C) Debit Income Summary $63,300; credit Retained Earnings $63,300 
D) Debit Income Summary $81,300; credit Retained Earnings $81,300 
E) Debit Retained Earnings $81,300; credit Income Summary $81,300

Question 8

Revenues, expenses, dividends, and Income Summary are called _________________ accounts because they are closed at the end of each accounting period.

Accepted Answer

temporary

Question 9

The Income Summary account is used to:

Accepted Answer

A) Adjust and update asset and liability accounts. 
B) Close the revenue and expense accounts. 
C) Determine the appropriate dividend amount. 
D) Replace the income statement under certain circumstances. 
E) Replace the retained earnings account in some businesses. 
A) Adjust and update asset and liability accounts. 
B) Close the revenue and expense accounts. 
C) Determine the appropriate dividend amount. 
D) Replace the income statement under certain circumstances. 
E) Replace the retained earnings account in some businesses.

Question 10

______________ revenues are liabilities requiring delivery of products and for services.

Accepted Answer

The answer of ______________ revenues are liabilities requiring delivery of...

Question 11

On a work sheet, if the Debit total exceeds the Credit total of the Income Statement columns, a net loss is indicated.

Accepted Answer

A) True 
 B)False

Question 12

The aim of a post-closing trial balance is to verify that (1) total debits equal total credits for temporary accounts, and (2) all temporary accounts have zero balances.

Accepted Answer

A) True 
 B)False

Question 13

Explain the purpose of reversing entries.

Accepted Answer

Reversing entries are an optional step i

Question 14

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of its related asset.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements regarding reporting under GAAP and IFRS is not true:

Accepted Answer

A) Both GAAP and IFRS define the initial asset value as historical cost for nearly all assets. 
B) The definition of an asset under GAAP and IFRS involves three basic criteria. 
C) Both GAAP and IFRS define the initial asset value as replacement value. 
D) The definition of a liability under GAAP and IFRS involves three basic criteria. 
E) After acquisition, one of two asset measurement systems is applied. 
A) Both GAAP and IFRS define the initial asset value as historical cost for nearly all assets. 
B) The definition of an asset under GAAP and IFRS involves three basic criteria. 
C) Both GAAP and IFRS define the initial asset value as replacement value. 
D) The definition of a liability under GAAP and IFRS involves three basic criteria. 
E) After acquisition, one of two asset measurement systems is applied.

Question 16

The closing process is necessary in order to:

Accepted Answer

A) Calculate net income or net loss for an accounting period. 
B) Ensure that all permanent accounts are closed to zero at the end of each accounting period. 
C) Ensure that the company complies with state laws. 
D) Ensure that net income or net loss and dividends for the period are closed into the retained earnings account. 
E) Ensure that management is aware of how well the company is operating. 
A) Calculate net income or net loss for an accounting period. 
B) Ensure that all permanent accounts are closed to zero at the end of each accounting period. 
C) Ensure that the company complies with state laws. 
D) Ensure that net income or net loss and dividends for the period are closed into the retained earnings account. 
E) Ensure that management is aware of how well the company is operating.

Question 17

Identify the types of adjusting entries and explain the purpose of each type.

Accepted Answer

Adjusting entries can be grouped into tw

Question 18

The recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Accepted Answer

A) Accounting period. 
B) Operating cycle. 
C) Accounting cycle. 
D) Closing cycle. 
E) Natural business year. 
A) Accounting period. 
B) Operating cycle. 
C) Accounting cycle. 
D) Closing cycle. 
E) Natural business year.

Question 19

Adjusting entries are designed primarily to correct accounting errors.

Accepted Answer

A) True 
 B)False

Question 20

The work sheet is a required report made available to external decision makers.

Accepted Answer

A) True 
 B)False

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Profit margin can also be called return on sales.

Before an adjusting entry is made to recognize the cost of expired insurance for the period, Prepaid Insurance and Insurance Expense are both overstated.

List the three-steps of the adjusting process.

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

The _______________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

Revenues, expenses, dividends, and Income Summary are called _________________ accounts because they are closed at the end of each accounting period.

The Income Summary account is used to:

______________ revenues are liabilities requiring delivery of products and for services.

On a work sheet, if the Debit total exceeds the Credit total of the Income Statement columns, a net loss is indicated.

The aim of a post-closing trial balance is to verify that (1) total debits equal total credits for temporary accounts, and (2) all temporary accounts have zero balances.

Explain the purpose of reversing entries.

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of its related asset.

Which of the following statements regarding reporting under GAAP and IFRS is not true:

The closing process is necessary in order to:

Identify the types of adjusting entries and explain the purpose of each type.

The recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Adjusting entries are designed primarily to correct accounting errors.

The work sheet is a required report made available to external decision makers.

Accounting in Business

Accounting for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

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Exam 3: Adjusting Accounts for Financial Statements

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Profit margin can also be called return on sales.

Before an adjusting entry is made to recognize the cost of expired insurance for the period, Prepaid Insurance and Insurance Expense are both overstated.

List the three-steps of the adjusting process.

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

The _______________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

Revenues, expenses, dividends, and Income Summary are called _________________ accounts because they are closed at the end of each accounting period.

The Income Summary account is used to:

______________ revenues are liabilities requiring delivery of products and for services.

On a work sheet, if the Debit total exceeds the Credit total of the Income Statement columns, a net loss is indicated.

The aim of a post-closing trial balance is to verify that (1) total debits equal total credits for temporary accounts, and (2) all temporary accounts have zero balances.

Explain the purpose of reversing entries.

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of its related asset.

Which of the following statements regarding reporting under GAAP and IFRS is not true:

The closing process is necessary in order to:

Identify the types of adjusting entries and explain the purpose of each type.

The recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Adjusting entries are designed primarily to correct accounting errors.

The work sheet is a required report made available to external decision makers.

Accounting in Business

Accounting for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Filters