Question 1

Closing the drawings account to Capital is NOT necessary if profit is greater than owner's drawings during the period.

Accepted Answer

A) True 
 B)False

Question 2

Which one of the following is an optional step in the accounting cycle of a business enterprise?

Accepted Answer

A)  Analyze business transactions. 
B)  Prepare a work sheet. 
C)  Prepare a trial balance. 
D)  Post to the ledger accounts. 
A)  Analyze business transactions. 
B)  Prepare a work sheet. 
C)  Prepare a trial balance. 
D)  Post to the ledger accounts.

Question 3

The current portion of a long-term liability is reported on the balance sheet as a

Accepted Answer

A)  deferred interest expense. 
B)  current asset. 
C)  current liability. 
D)  non-current liability. 
A)  deferred interest expense. 
B)  current asset. 
C)  current liability. 
D)  non-current liability.

Question 4

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

Accepted Answer

A)  income statement account balances after adjustments. 
B)  balance sheet account balances after closing entries. 
C)  income statement account balances after closing entries. 
D)  balance sheet account balances after adjustments. 
A)  income statement account balances after adjustments. 
B)  balance sheet account balances after closing entries. 
C)  income statement account balances after closing entries. 
D)  balance sheet account balances after adjustments.

Question 5

Office Equipment is classified in the balance sheet as

Accepted Answer

A)  a current asset. 
B)  property, plant, and equipment. 
C)  a current liability. 
D)  a long-term investment. 
A)  a current asset. 
B)  property, plant, and equipment. 
C)  a current liability. 
D)  a long-term investment.

Question 6

An error has occurred in the closing entry process if

Accepted Answer

A)  all the revenue and expense accounts have zero balances. 
B)  the Owner's Capital account is credited for the amount of profit. 
C)  the Owner's Drawings account is closed to the Owner's Capital account. 
D)  all the balance sheet accounts have zero balances. 
A)  all the revenue and expense accounts have zero balances. 
B)  the Owner's Capital account is credited for the amount of profit. 
C)  the Owner's Drawings account is closed to the Owner's Capital account. 
D)  all the balance sheet accounts have zero balances.

Question 7

If a company has a loss in the period, the amount of the loss will appear in the income statement credit column and the balance sheet debit column of the work sheet.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following will be affected by a reclassification of liabilities from current to non-current?

Accepted Answer

A)  total assets 
B)  total liabilities 
C)  working capital 
D)  inventory turnover 
A)  total assets 
B)  total liabilities 
C)  working capital 
D)  inventory turnover

Question 9

Closing entries

Accepted Answer

A)  are prepared before the financial statements. 
B)  reduce the number of permanent accounts. 
C)  cause the revenue and expense accounts to have zero balances. 
D)  close all of the permanent accounts. 
A)  are prepared before the financial statements. 
B)  reduce the number of permanent accounts. 
C)  cause the revenue and expense accounts to have zero balances. 
D)  close all of the permanent accounts.

Question 10

The two optional steps in the accounting cycle are preparing

Accepted Answer

A)  a post-closing trial balance and reversing entries. 
B)  a work sheet and post-closing trial balances. 
C)  reversing entries and a work sheet. 
D)  an adjusted trial balance and a post-closing trial balance. 
A)  a post-closing trial balance and reversing entries. 
B)  a work sheet and post-closing trial balances. 
C)  reversing entries and a work sheet. 
D)  an adjusted trial balance and a post-closing trial balance.

Question 11

The closing entry process consists of closing

Accepted Answer

A)  all asset and liability accounts. 
B)  out the Owner's Capital account. 
C)  all permanent accounts. 
D)  all temporary accounts. 
A)  all asset and liability accounts. 
B)  out the Owner's Capital account. 
C)  all permanent accounts. 
D)  all temporary accounts.

Question 12

Closing entries are made

Accepted Answer

A)  in order to terminate the business as an operating entity. 
B)  so that all assets, liabilities, and owner's capital accounts will have zero balances when the next accounting period starts. 
C)  in order to transfer profit (or loss) and owner's drawings to the Owner's Capital account. 
D)  so that financial statements can be prepared. 
A)  in order to terminate the business as an operating entity. 
B)  so that all assets, liabilities, and owner's capital accounts will have zero balances when the next accounting period starts. 
C)  in order to transfer profit (or loss) and owner's drawings to the Owner's Capital account. 
D)  so that financial statements can be prepared.

Question 13

Abbott Manufacturing Company's current ratio is 2:1. The company has $50,000 in current liabilities; current assets must be $25,000.

Accepted Answer

A) True 
 B)False

Question 14

Cash and office supplies are both classified as current assets.

Accepted Answer

A) True 
 B)False

Question 15

Drawings will appear in the balance sheet debit column of a work sheet.

Accepted Answer

A) True 
 B)False

Question 16

A reversing entry

Accepted Answer

A)  reverses entries that were made in error. 
B)  is the exact opposite of an adjusting entry made in a previous period. 
C)  is the same as the adjusting entry made in a previous period. 
D)  is made when a company sustains a loss in one period and reverses the effect with a profit in the next period. 
A)  reverses entries that were made in error. 
B)  is the exact opposite of an adjusting entry made in a previous period. 
C)  is the same as the adjusting entry made in a previous period. 
D)  is made when a company sustains a loss in one period and reverses the effect with a profit in the next period.

Question 17

When is a post-closing trial balance prepared?

Accepted Answer

A)  when reversing entries are required 
B)  after adjusting entries but before closing entries 
C)  after both adjusting and closing entries have been posted 
D)  after the balance sheet has been prepared 
A)  when reversing entries are required 
B)  after adjusting entries but before closing entries 
C)  after both adjusting and closing entries have been posted 
D)  after the balance sheet has been prepared

Question 18

A current asset is

Accepted Answer

A)  an expense incurred in the business. 
B)  an asset which is currently being used to produce a product or service. 
C)  usually found as a separate classification in the income statement. 
D)  expected to be realized in cash, sold or consumed within one year of the balance sheet. 
A)  an expense incurred in the business. 
B)  an asset which is currently being used to produce a product or service. 
C)  usually found as a separate classification in the income statement. 
D)  expected to be realized in cash, sold or consumed within one year of the balance sheet.

Question 19

The standard classification and order of the asset section of a classified balance sheet is

Accepted Answer

A)  long-term investments, current assets, property, plant and equipment, intangible assets, goodwill. 
B)  current assets, long-term investments, property, plant and equipment, intangible assets, goodwill. 
C)  intangible assets, current assets, long-term investments, property, plant and equipment, goodwill. 
D)  property, plant and equipment, intangible assets, long-term investments, current assets. 
A)  long-term investments, current assets, property, plant and equipment, intangible assets, goodwill. 
B)  current assets, long-term investments, property, plant and equipment, intangible assets, goodwill. 
C)  intangible assets, current assets, long-term investments, property, plant and equipment, goodwill. 
D)  property, plant and equipment, intangible assets, long-term investments, current assets.

Question 20

If total credits in the income statement columns of a work sheet exceed total debits, the company has profit.

Accepted Answer

A) True 
 B)False

Closing the drawings account to Capital is NOT necessary if profit is greater than owner's drawings during the period.

Which one of the following is an optional step in the accounting cycle of a business enterprise?

The current portion of a long-term liability is reported on the balance sheet as a

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

Office Equipment is classified in the balance sheet as

An error has occurred in the closing entry process if

If a company has a loss in the period, the amount of the loss will appear in the income statement credit column and the balance sheet debit column of the work sheet.

Which of the following will be affected by a reclassification of liabilities from current to non-current?

Closing entries

The two optional steps in the accounting cycle are preparing

The closing entry process consists of closing

Closing entries are made

Abbott Manufacturing Company's current ratio is 2:1. The company has $50,000 in current liabilities; current assets must be $25,000.

Cash and office supplies are both classified as current assets.

Drawings will appear in the balance sheet debit column of a work sheet.

A reversing entry

When is a post-closing trial balance prepared?

A current asset is

The standard classification and order of the asset section of a classified balance sheet is

If total credits in the income statement columns of a work sheet exceed total debits, the company has profit.

Accounting in Action

The Recording Process

Adjusting the Accounts

Inventory Costing

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities and Payroll

Filters

Exam 4: Completion of the Accounting Cycle

Closing the drawings account to Capital is NOT necessary if profit is greater than owner's drawings during the period.

Which one of the following is an optional step in the accounting cycle of a business enterprise?

The current portion of a long-term liability is reported on the balance sheet as a

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

Office Equipment is classified in the balance sheet as

An error has occurred in the closing entry process if

If a company has a loss in the period, the amount of the loss will appear in the income statement credit column and the balance sheet debit column of the work sheet.

Which of the following will be affected by a reclassification of liabilities from current to non-current?

Closing entries

The two optional steps in the accounting cycle are preparing

The closing entry process consists of closing

Closing entries are made

Abbott Manufacturing Company's current ratio is 2:1. The company has $50,000 in current liabilities; current assets must be $25,000.

Cash and office supplies are both classified as current assets.

Drawings will appear in the balance sheet debit column of a work sheet.

A reversing entry

When is a post-closing trial balance prepared?

A current asset is

The standard classification and order of the asset section of a classified balance sheet is

If total credits in the income statement columns of a work sheet exceed total debits, the company has profit.

Accounting in Action

The Recording Process

Adjusting the Accounts

Inventory Costing

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities and Payroll

Filters