Question 1

Which of the following statements regarding reporting under GAAP and IFRS is not true:

Accepted Answer

A) The definition of a liability under GAAP and IFRS involves three basic criteria. 
B) After acquisition, one of two asset measurement systems is applied. 
C) The definition of an asset under GAAP and IFRS involves three basic criteria. 
D) Both GAAP and IFRS define the initial asset value as historical cost for nearly all assets. 
E) Both GAAP and IFRS define the initial asset value as replacement value. 
A) The definition of a liability under GAAP and IFRS involves three basic criteria. 
B) After acquisition, one of two asset measurement systems is applied. 
C) The definition of an asset under GAAP and IFRS involves three basic criteria. 
D) Both GAAP and IFRS define the initial asset value as historical cost for nearly all assets. 
E) Both GAAP and IFRS define the initial asset value as replacement value.

Question 2

The Income Summary account is a permanent account that will be carried forward period after period.

Accepted Answer

A) True 
 B)False

Question 3

In the table below, indicate with an "X" in the proper column whether the account is a temporary (nominal)account or a permanent (real)account.
 $$\begin{array} { | l | l | l | l | } 
\hline & \text { Account } & \begin{array} { l } 
\text { Temporary } \
( \text { Nominal) }
\end{array} & \begin{array} { l } 
\text { Permanent } \
\text { (Real) }
\end{array} \
\hline \text { a. } & \text { Cash } & & \
\hline \text { b. } & \text { Prepaid rent } & & \
\hline \text { c. } & \text { Unearned revenue } & & \
\hline \text { d. } & \text { Accounts receivable } & & \
\hline \text { e. } & \text { Insurance expense } & & \
\hline \text { f. } & \text { S. Holder, Capital } & & \
\hline \text { g. } & \text { S. Holder, Withdrawals } & & \
\hline \text { h. } & \text { Rent expense } & & \
\hline \text { i. } & \text { Fees earned } & & \
\hline \text { j. } & \text { Supplies } & & \
\hline \text { k. } & \text { Supplies expense } & & \
\hline \text { 1. } & \text { Depreciation expense-Equipment } & & \
\hline \text { m. } & \text { Accumulated depreciation-Equipment.... } & & \
\hline
\end{array}$$

Accepted Answer

The answer of In the table below, indicate with an...

Question 4

A classified balance sheet organizes assets and liabilities into important subgroups that provide more information to decision makers.

Accepted Answer

A) True 
 B)False

Question 5

Two common subgroups for liabilities on a classified balance sheet are:

Accepted Answer

A) Current liabilities and intangible liabilities. 
B) Current liabilities and long-term liabilities. 
C) Present liabilities and operating liabilities. 
D) General liabilities and specific liabilities. 
E) Intangible liabilities and long-term liabilities. 
A) Current liabilities and intangible liabilities. 
B) Current liabilities and long-term liabilities. 
C) Present liabilities and operating liabilities. 
D) General liabilities and specific liabilities. 
E) Intangible liabilities and long-term liabilities.

Question 6

Adjustments must be entered in the journal and posted to the ledger after the work sheet is prepared.

Accepted Answer

A) True 
 B)False

Question 7

Permanent accounts carry their balances into the next accounting period.

Accepted Answer

A) True 
 B)False

Question 8

Reversing entries are optional.

Accepted Answer

A) True 
 B)False

Question 9

At the beginning of the year, Sigma Company's balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000. During the year, the company reported total revenues of $226,000 and expenses of $175,000. Also, owner withdrawals during the year totaled $48,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of the year would be:

Accepted Answer

A) $123,000. 
B) $120,000. 
C) $78,000. 
D) $174,000. 
E) $171,000. 
A) $123,000. 
B) $120,000. 
C) $78,000. 
D) $174,000. 
E) $171,000.

Question 10

The aim of a post-closing trial balance is to verify that (1)total debits equal total credits for temporary accounts, and (2)all temporary accounts have zero balances.

Accepted Answer

A) True 
 B)False

Question 11

Because it is a necessary financial statement, the work sheet must be prepared according to specified accounting procedures.

Accepted Answer

A) True 
 B)False

Question 12

Current liabilities include accounts receivable, unearned revenues, and salaries payable.

Accepted Answer

A) True 
 B)False

Question 13

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

Accepted Answer

A) True 
 B)False

Question 14

A post-closing trial balance reports:

Accepted Answer

A) Only asset accounts. 
B) All temporary and permanent ledger accounts with balances. 
C) Only revenue and expense accounts. 
D) All permanent ledger accounts with balances. 
E) All nominal ledger accounts with balances. 
A) Only asset accounts. 
B) All temporary and permanent ledger accounts with balances. 
C) Only revenue and expense accounts. 
D) All permanent ledger accounts with balances. 
E) All nominal ledger accounts with balances.

Question 15

Explain why temporary accounts are closed each period.

Accepted Answer

Temporary accounts accumulate data relat

Question 16

The closing process is necessary in order to:

Accepted Answer

A) Ensure that the company complies with state laws. 
B) Calculate net income or net loss for an accounting period. 
C) Ensure that management is aware of how well the company is operating. 
D) Ensure that all permanent accounts are closed to zero at the end of each accounting period. 
E) Ensure that net income or net loss and owner withdrawals for the period are closed into the owner's capital account. 
A) Ensure that the company complies with state laws. 
B) Calculate net income or net loss for an accounting period. 
C) Ensure that management is aware of how well the company is operating. 
D) Ensure that all permanent accounts are closed to zero at the end of each accounting period. 
E) Ensure that net income or net loss and owner withdrawals for the period are closed into the owner's capital account.

Question 17

A worksheet can be helpful in showing the effects of proposed or "what if" transactions but not in helping to prepare interim financial statements.

Accepted Answer

A) True 
 B)False

Question 18

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The Net Income for the year is:

Accepted Answer

A) $185,000 
B) $63,300 
C) $360,300 
D) $378,300 
E) $81,300 
A) $185,000 
B) $63,300 
C) $360,300 
D) $378,300 
E) $81,300

Question 19

The following information is available for Zephyr Company before closing the accounts. After all of the closing entries are made, what will be the balance in the Zephyr, Capital account? $$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 115,000 \
\hline \text { Zephyr, Capital } & 110,000 \
\hline \text { Zephyr, Withdrawals } & 39,000 \
\hline
\end{array}$$

Accepted Answer

A) $225,000. 
B) $264,000. 
C) $956,000. 
D) $115,000. 
E) $186,000. 
A) $225,000. 
B) $264,000. 
C) $956,000. 
D) $115,000. 
E) $186,000.

Question 20

Which of the following errors would cause the Balance Sheet and Statement of Owner's Equity columns of a work sheet to be out of balance?

Accepted Answer

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

Which of the following statements regarding reporting under GAAP and IFRS is not true:

The Income Summary account is a permanent account that will be carried forward period after period.

A classified balance sheet organizes assets and liabilities into important subgroups that provide more information to decision makers.

Two common subgroups for liabilities on a classified balance sheet are:

Adjustments must be entered in the journal and posted to the ledger after the work sheet is prepared.

Permanent accounts carry their balances into the next accounting period.

Reversing entries are optional.

The aim of a post-closing trial balance is to verify that (1)total debits equal total credits for temporary accounts, and (2)all temporary accounts have zero balances.

Because it is a necessary financial statement, the work sheet must be prepared according to specified accounting procedures.

Current liabilities include accounts receivable, unearned revenues, and salaries payable.

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

A post-closing trial balance reports:

Explain why temporary accounts are closed each period.

The closing process is necessary in order to:

A worksheet can be helpful in showing the effects of proposed or "what if" transactions but not in helping to prepare interim financial statements.

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The Net Income for the year is:

The following information is available for Zephyr Company before closing the accounts. After all of the closing entries are made, what will be the balance in the Zephyr, Capital account? Net income \ 115,000 Zephyr, Capital 110,000 Zephyr, Withdrawals 39,000

Which of the following errors would cause the Balance Sheet and Statement of Owner's Equity columns of a work sheet to be out of balance?

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

Filters

Exam 4: Completing the Accounting Cycle

Which of the following statements regarding reporting under GAAP and IFRS is not true:

The Income Summary account is a permanent account that will be carried forward period after period.

A classified balance sheet organizes assets and liabilities into important subgroups that provide more information to decision makers.

Two common subgroups for liabilities on a classified balance sheet are:

Adjustments must be entered in the journal and posted to the ledger after the work sheet is prepared.

Permanent accounts carry their balances into the next accounting period.

Reversing entries are optional.

The aim of a post-closing trial balance is to verify that (1)total debits equal total credits for temporary accounts, and (2)all temporary accounts have zero balances.

Because it is a necessary financial statement, the work sheet must be prepared according to specified accounting procedures.

Current liabilities include accounts receivable, unearned revenues, and salaries payable.

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

A post-closing trial balance reports:

Explain why temporary accounts are closed each period.

The closing process is necessary in order to:

A worksheet can be helpful in showing the effects of proposed or "what if" transactions but not in helping to prepare interim financial statements.

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The Net Income for the year is:

The following information is available for Zephyr Company before closing the accounts. After all of the closing entries are made, what will be the balance in the Zephyr, Capital account? Net income \ 115,000 Zephyr, Capital 110,000 Zephyr, Withdrawals 39,000

Which of the following errors would cause the Balance Sheet and Statement of Owner's Equity columns of a work sheet to be out of balance?

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

Filters