Exam 4: Completion of the Accounting Cycle

Andrea Zowkewych, CGA, was asked by Jeff Scott to review the accounting records and prepare the financial statements for his antique shop for the month ended January 31. Andrea reviewed the records and found three errors. 1. Cash paid on accounts payable for $830 was recorded as a debit to Accounts Payable $380 and a credit to Cash $380. 2. The purchase of supplies on account for $500 was debited to Equipment $500 and credited to Accounts Payable $500. 3. Jeff withdrew cash for $2,500 and the bookkeeper debited Accounts Receivable for $250 and credited Cash $250. Instructions Prepare an analysis of each error showing the a. incorrect entry. b. correct entry. c. correcting entry.

In a post closing trial balance the profit of the business will be one of the temporary accounts.

Reversing entries are useful

Which of the following steps in the accounting cycle may be performed more frequently than annually?

The income statement and balance sheet columns of Rand Company's work sheet reflect the following totals: -To enter the profit (or loss) for the period into the above work sheet requires an entry to the

Closing entries are an optional part of the accounting cycle.

If a company utilizes reversing entries, they will

The following items are taken from the adjusted trial balance of Sutch Video Productions at December 31, 2015: Instructions a. Calculate the Profit. b. Calculate the balance of Owner's Equity that would appear on a balance sheet at December 31, 2015. c. Prepare a classified balance sheet for Sutch Company at December 31, 2015. d. Calculate the working capital and the current ratio. Which of the two measures is preferable for comparing Sutch's liquidity with competitors'? e. Calculate the acid-test ratio for the company. What could the company do to improve this ratio?

Which of the following depicts the proper sequence of steps in the accounting cycle?

On January 1, Robert Auto Repair Shop purchased parts on account for $800. Robert paid the entire balance on January 31 and recorded the payment by debiting Supplies for $800 and crediting Cash for $800. On the January 31 financial statements

In order to close the owner's drawings account, the

Cash is a temporary account and it should be zero after all closing entries have been posted.

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

Closing entries are journalized after adjusting entries have been journalized.

An error has occurred in the closing entry process if

Intangible assets are

The adjusted account balances of Stine Company, at December 31, 2014, are as follows: Instructions a. Prepare closing entries for December 31, 2014. b. Determine the balance in B. Stine's capital account after the entries have been posted.

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.

The following data are taken from the financial statements of Dellmont Company. Additional information: Information taken from the financial statements of Dellmont's major competitor: Information taken from industry publications: Average current ratio is 2.5:1 Average acid-test ratio is 1.9:1 Instructions Calculate Dellmont's working capital and current and acid-test ratios, and comment on the company's liquidity.

A post-closing trial balance should be prepared