Exam 4: Completing the Accounting Cycle

Reversing entries are an optional bookkeeping procedure.

After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.

It is not necessary to prepare formal financial statements if a worksheet has been prepared because financial position and net income are shown on the worksheet.

The income summary account

What is the order in which assets are generally listed on a classified balance sheet?

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 investments is

A double rule applied to accounts in the ledger during the closing process implies that

The balances that appear on the post-closing trial balance will match the

All of the following statements about the post-closing trial balance are correct except it

The IASB and FASB are working on a converged statement of financial position using the headings of

Closing entries are made

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

The operating cycle of a company is the average time required to collect the receivables resulting from producing revenues.

IFRS

The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2015: Accounts payable \ 18,000 Accounts receivable 11,000 Accumulated depreciation - equipment 28,000 Advertising expense 21,000 Cash 15,000 Common stock 42,000 Dividends 14,000 Depreciation expense 12,000 Insurance expense 3,000 Note payable, due 6/30/16 70,000 Prepaid insurance (12-month policy) 6,000 Rent expense 17,000 Retained earnings (1/1/15) 60,000 Salaries and wages expense 32,000 Service revenue 133,000 Supplies 4,000 Supplies expense 6,000 Equipment 210,000 What are total current assets at December 31, 2015?

Most companies that follow IFRS present balance sheet (statement of financial position) information in this order:

A post-closing trial balance will show

Correcting entries are made any time an error is discovered even though it may not be at the end of an accounting period.

The use of reversing entries

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