Exam 4: Completing the Accounting Cycle

The operating cycle of a company is determined by the number of years the company has been operating.

The following information is for Sunny Day Real Estate: Sunny Day Real Estate Balance Sheet December 31, 2015 Cash \ 25,000 Accounts Payable \ 60,000 Prepaid Insurance 30,000 Salaries and Wages Payable 15,000 Accounts Receivable 50,000 Mortqage Payable 85,000 Inventory 70,000 Total Liabilities 160,000 Land Held for Investment 85,000 Land 120,000 Buildings \ 100,000 Common Stock \ 120,000 Less Accumulated Retained Earnings 250,000 370,000 Trademark 70,000 Total Liabilities and Total Assets \ 530,000 Stockholders' Equity \ 530,000 The total dollar amount of assets to be classified as current assets is

After a worksheet has been completed, the statement columns contain all data that are required for the preparation of financial statements.

If the total debits exceed total credits in the balance sheet columns of the worksheet, stockholders' equity

The dividends account is closed to the Income Summary account in order to properly determine net income (or loss) for the period.

The net income (or loss) for the period

The adjustments on a worksheet can be posted directly to the accounts in the ledger from the worksheet.

Both correcting entries and adjusting entries always affect at least one balance sheet account and one income statement account.

The following information is for Bright Eyes Auto Supplies: Bright Eyes Auto Supplies Balance Sheet December 31, 2015 Cash \ 40,000 Accounts Payable \ 130,000 Prepaid Insurance 80,000 Salaries and Wages Payable 50,000 Accounts Receivable 100,000 Mortgage Payable 150,000 Inventory 140,000 Total Liabilities 330,000 Land Held for Investment 180,000 Land 250,000 Buildings \ 200,000 Common Stock \ 400,000 Less Accumulated Retained Earnings 340,000 740,000 Depreciation (60,000) 140,000 Trademark 140,000 Total Liabilities and Total Assets \1 ,070,000 Stockholders' Equity \1 ,070,000 The total dollar amount of liabilities to be classified as current liabilities is

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

The balance of the depreciation expense account will appear in the income statement debit column of a worksheet.

Which statement about long-term investments is not true?

After closing entries are posted, the balance in the retained earnings account in the ledger will be equal to

The income statement for the month of June, 2015 of Camera Obscura Enterprises contains the following information: Revenues \7 ,000 Expenses: Salaries and Wages Expense \ 3,000 Rent Expense 1,500 Advertising Expense 800 Supplies Expense 300 Insurance Expense 100 Total expenses 5,700 Net income \1 ,300 At June 1, 2015, Camera Obscura reported retained earnings of $35,000. The company had no dividends during June. At June 30, 2015, the company will report retained earnings of

The following information is for Bright Eyes Auto Supplies: Bright Eyes Auto Supplies Balance Sheet December 31, 2015 Cash \ 40,000 Accounts Payable \ 130,000 Prepaid Insurance 80,000 Salaries and Wages Payable 50,000 Accounts Receivable 100,000 Mortgage Payable 150,000 Inventory 140,000 Total Liabilities 330,000 Land Held for Investment 180,000 Land 250,000 Buildings \ 200,000 Common Stock \ 400,000 Less Accumulated Retained Earnings 340,000 740,000 Depreciation (60,000) 140,000 Trademark 140,000 Total Liabilities and Total Assets \1 ,070,000 Stockholders' Equity \1 ,070,000 The total dollar amount of assets to be classified as current assets is

Jawbreaker Company paid $940 on account to a creditor. The transaction was erroneously recorded as a debit to Cash of $490 and a credit to Accounts Receivable, $490. The correcting entry is a. Accounts Payable $\quad$$\quad$ 940 $\quad$ Cash $\quad$$\quad$ 940 b. Accounts Receivable $\quad$$\quad$ 490 $\quad$ Cash $\quad$$\quad$ 490 c. Accounts Receivable $\quad$$\quad$ 490 $\quad$ Accounts Payable. $\quad$$\quad$ 490 d. Accounts Receivable $\quad$$\quad$ 490 $\quad$ Accounts Payable $\quad$$\quad$ 940 $\quad$ Cash $\quad$$\quad$ 1,430

The income statement for the year 2015 of Fugazi Co. contains the following information: $\begin{array}{lr}\text { Revenues }&&\$70,000\\\text { Expenses: }\\\text { Salaries and Wages Expense } & \$ 45,000 \\\text { Rent Expense } & 12,000 \\\text { Advertising Expense } & 10,000 \\\text { Supplies Expense } & 6,000 \\\text { Utilities Expense } & 2,500 \\\text { Insurance Expense } & 2,000 \\\text { Total expenses }&&77,500\\\text { Net income (loss) }&&\$(7,500)\end{array}$ After the revenue and expense accounts have been closed, the balance in Income Summary will be

Which one of the following statements concerning the accounting cycle is incorrect?

On September 23, Sebadoh Company received a $350 check from Surfer Rosa Inc. for services to be performed in the future. The bookkeeper for Sebadoh Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should

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