Question 1

The first step in the accounting cycle is to analyze transactions and events to prepare for journalizing.

Accepted Answer

A) True 
 B)False

Question 2

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 3

If the Balance Sheet and Statement of Owner's Equity columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Owner's Equity Credit column, the cause could be:

Accepted Answer

A) An expense entered in the Balance Sheet and Statement of Owner's Equity Credit column. 
B) A liability amount entered in the Income Statement and Statement of Owner's Equity Credit column. 
C) An expense entered in the Balance Sheet and Statement of Owner's Equity Debit column. 
D) A revenue entered in the Balance Sheet and Statement of Owner's Equity Credit column. 
E) An asset amount entered in the Income Statement and Statement of Owner's Equity Debit column. 
A) An expense entered in the Balance Sheet and Statement of Owner's Equity Credit column. 
B) A liability amount entered in the Income Statement and Statement of Owner's Equity Credit column. 
C) An expense entered in the Balance Sheet and Statement of Owner's Equity Debit column. 
D) A revenue entered in the Balance Sheet and Statement of Owner's Equity Credit column. 
E) An asset amount entered in the Income Statement and Statement of Owner's Equity Debit column.

Question 4

All of the following regarding the current ratio are true except:

Accepted Answer

A) Current ratio is calculated by dividing current assets by current liabilities. 
B) Current ratio can reveal challenges in covering short-term obligations if it is less than 1. 
C) Current ratio can affect a creditor's decision about whether to lend money to a company. 
D) Current ratio does not affect a creditor's decision on whether to allow a company to buy on credit. 
E) Current ratio helps to assess a company's ability to pay its debts in the near future. 
A) Current ratio is calculated by dividing current assets by current liabilities. 
B) Current ratio can reveal challenges in covering short-term obligations if it is less than 1. 
C) Current ratio can affect a creditor's decision about whether to lend money to a company. 
D) Current ratio does not affect a creditor's decision on whether to allow a company to buy on credit. 
E) Current ratio helps to assess a company's ability to pay its debts in the near future.

Question 5

If all columns of a completed work sheet balance, you can be sure that no errors were made in its preparation.

Accepted Answer

A) True 
 B)False

Question 6

Closing entries are necessary so that owner's capital will begin each period with a zero balance.

Accepted Answer

A) True 
 B)False

Question 7

On a work sheet, the adjusted balances of revenues and expenses are sorted to the Income Statement columns of the work sheet.

Accepted Answer

A) True 
 B)False

Question 8

Reversing entries:

Accepted Answer

A) Are prepared on the worksheet. 
B) Are mandatory. 
C) Are optional. 
D) Correct errors in journal entries. 
E) Are required by GAAP. 
A) Are prepared on the worksheet. 
B) Are mandatory. 
C) Are optional. 
D) Correct errors in journal entries. 
E) Are required by GAAP.

Question 9

Closing entries are required at the end of each accounting period to close all ledger accounts.

Accepted Answer

A) True 
 B)False

Question 10

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 11

The F. Mercury, Capital account has a credit balance of $37,000 before closing entries are made. Total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $9,000. What is the correct closing entry for the expense accounts?

Accepted Answer

A) Debit Expense accounts $39,800; credit Income Summary $39,800. 
B) Debit Expense accounts $37,000; credit F. Mercury, Capital $37,000. 
C) Credit Expense accounts $39,800; debit F. Mercury, Capital $39,800. 
D) Debit Income Summary $39,800; credit F. Mercury Capital $39,800. 
E) Debit Income Summary $39,800; credit Expense accounts $39,800. 
A) Debit Expense accounts $39,800; credit Income Summary $39,800. 
B) Debit Expense accounts $37,000; credit F. Mercury, Capital $37,000. 
C) Credit Expense accounts $39,800; debit F. Mercury, Capital $39,800. 
D) Debit Income Summary $39,800; credit F. Mercury Capital $39,800. 
E) Debit Income Summary $39,800; credit Expense accounts $39,800.

Question 12

The purpose of reversing entries is to:

Accepted Answer

A) Make certain that only permanent accounts are carried forward into the next accounting period. 
B) Complete a required step in the accounting cycle. 
C) Correct errors made in previous journal entries. 
D) Ensure that closing entries have been properly posted to the ledger accounts. 
E) Simplify a company's recording of certain journal entries in the future. 
A) Make certain that only permanent accounts are carried forward into the next accounting period. 
B) Complete a required step in the accounting cycle. 
C) Correct errors made in previous journal entries. 
D) Ensure that closing entries have been properly posted to the ledger accounts. 
E) Simplify a company's recording of certain journal entries in the future.

Question 13

The trial balance prepared after all closing entries have been journalized and posted is called the:

Accepted Answer

A) Work sheet. 
B) Adjusted trial balance. 
C) General ledger. 
D) Unadjusted trial balance. 
E) Post-closing trial balance. 
A) Work sheet. 
B) Adjusted trial balance. 
C) General ledger. 
D) Unadjusted trial balance. 
E) Post-closing trial balance.

Question 14

Trekker Bikes' current assets are $300 million and its current liabilities are $125 million. Its current ratio is 0.417.

Accepted Answer

A) True 
 B)False

Question 15

The steps in the closing process are (1)close credit balances in revenue accounts to Income Summary; (2)close debit balances in expense accounts to Income Summary; (3)close Income Summary to Owner's Capital; (4)close Withdrawals to Owner's Capital.

Accepted Answer

A) True 
 B)False

Question 16

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below. What amount will be posted to Wilson Peters, Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances.)
$\begin{array}{lr}\text { Revenue }&29,000\
\text { Rent expense } & 3,600 \
\text { Salaries expense } & 7,200 \
\text { Insurance expense } & 920 \
\text { Depr.Expense-equipment } & 500 \
\text { Accum depr-equipment } & 1,500
\end{array}$

Accepted Answer

A) $7,180 credit. 
B) $16,780 credit. 
C) $16,780 debit. 
D) $23,780 credit. 
E) $18,280 credit. 
A) $7,180 credit. 
B) $16,780 credit. 
C) $16,780 debit. 
D) $23,780 credit. 
E) $18,280 credit.

Question 17

How is the current ratio calculated? How is it used to evaluate a company?

Accepted Answer

The current ratio is current assets divi

Question 18

K. Canopy, the proprietor of Canopy Services, withdrew $5,700 from the business during the current year. The entry to close the withdrawals account at the end of the year is:

Accepted Answer

A) Debit K. Canopy, Capital $5,700, credit Salary Expense $5,700 
B) Debit K Canopy, Withdrawals $5,700; credit Cash, $5,700 
C) Debit Income Summary $5,700; credit K. Canopy, Capital $5,700 
D) Debit K. Canopy, Capital $5,700; credit K. Canopy, Withdrawals $5,700 
E) Debit K. Canopy, Withdrawals $5,700; credit K. Canopy, Capital $5,700 
A) Debit K. Canopy, Capital $5,700, credit Salary Expense $5,700 
B) Debit K Canopy, Withdrawals $5,700; credit Cash, $5,700 
C) Debit Income Summary $5,700; credit K. Canopy, Capital $5,700 
D) Debit K. Canopy, Capital $5,700; credit K. Canopy, Withdrawals $5,700 
E) Debit K. Canopy, Withdrawals $5,700; credit K. Canopy, Capital $5,700

Question 19

In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. The Balance Sheet columns will balance on completing the work sheet but with the wrong net income, if the amount sorted in error is:

Accepted Answer

A) A liability amount placed in the Income Statement Credit column. 
B) A liability amount placed in the Balance Sheet Debit column. 
C) An asset amount placed in the Balance Sheet Credit column. 
D) An expense amount placed in the Balance Sheet Credit column. 
E) A revenue amount placed in the Balance Sheet Debit column. 
A) A liability amount placed in the Income Statement Credit column. 
B) A liability amount placed in the Balance Sheet Debit column. 
C) An asset amount placed in the Balance Sheet Credit column. 
D) An expense amount placed in the Balance Sheet Credit column. 
E) A revenue amount placed in the Balance Sheet Debit column.

Question 20

Explain the purpose of reversing entries.

Accepted Answer

Reversing entries are an optional step i

The first step in the accounting cycle is to analyze transactions and events to prepare for journalizing.

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

If the Balance Sheet and Statement of Owner's Equity columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Owner's Equity Credit column, the cause could be:

All of the following regarding the current ratio are true except:

If all columns of a completed work sheet balance, you can be sure that no errors were made in its preparation.

Closing entries are necessary so that owner's capital will begin each period with a zero balance.

On a work sheet, the adjusted balances of revenues and expenses are sorted to the Income Statement columns of the work sheet.

Reversing entries:

Closing entries are required at the end of each accounting period to close all ledger accounts.

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

The F. Mercury, Capital account has a credit balance of $37,000 before closing entries are made. Total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $9,000. What is the correct closing entry for the expense accounts?

The purpose of reversing entries is to:

The trial balance prepared after all closing entries have been journalized and posted is called the:

Trekker Bikes' current assets are $300 million and its current liabilities are $125 million. Its current ratio is 0.417.

The steps in the closing process are (1)close credit balances in revenue accounts to Income Summary; (2)close debit balances in expense accounts to Income Summary; (3)close Income Summary to Owner's Capital; (4)close Withdrawals to Owner's Capital.

How is the current ratio calculated? How is it used to evaluate a company?

K. Canopy, the proprietor of Canopy Services, withdrew $5,700 from the business during the current year. The entry to close the withdrawals account at the end of the year is:

In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. The Balance Sheet columns will balance on completing the work sheet but with the wrong net income, if the amount sorted in error is:

Explain the purpose of reversing entries.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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Exam 4: Completing the Accounting Cycle

The first step in the accounting cycle is to analyze transactions and events to prepare for journalizing.

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

If the Balance Sheet and Statement of Owner's Equity columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Owner's Equity Credit column, the cause could be:

All of the following regarding the current ratio are true except:

If all columns of a completed work sheet balance, you can be sure that no errors were made in its preparation.

Closing entries are necessary so that owner's capital will begin each period with a zero balance.

On a work sheet, the adjusted balances of revenues and expenses are sorted to the Income Statement columns of the work sheet.

Reversing entries:

Closing entries are required at the end of each accounting period to close all ledger accounts.

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

The F. Mercury, Capital account has a credit balance of $37,000 before closing entries are made. Total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $9,000. What is the correct closing entry for the expense accounts?

The purpose of reversing entries is to:

The trial balance prepared after all closing entries have been journalized and posted is called the:

Trekker Bikes' current assets are $300 million and its current liabilities are $125 million. Its current ratio is 0.417.

The steps in the closing process are (1)close credit balances in revenue accounts to Income Summary; (2)close debit balances in expense accounts to Income Summary; (3)close Income Summary to Owner's Capital; (4)close Withdrawals to Owner's Capital.

How is the current ratio calculated? How is it used to evaluate a company?

K. Canopy, the proprietor of Canopy Services, withdrew $5,700 from the business during the current year. The entry to close the withdrawals account at the end of the year is:

In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. The Balance Sheet columns will balance on completing the work sheet but with the wrong net income, if the amount sorted in error is:

Explain the purpose of reversing entries.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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