Question 1

All of the following regarding reversing entries are true except:

Accepted Answer

A) Reversing entries are used to simplify a company's recordkeeping. 
B) Reversing entries are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of the previous accounting period. 
C) Reversing entries are dated the first day of the new accounting period. 
D) Reversing entries are optional. 
E) Reversing entries should not be the exact opposite of previous period adjusting entries. 
A) Reversing entries are used to simplify a company's recordkeeping. 
B) Reversing entries are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of the previous accounting period. 
C) Reversing entries are dated the first day of the new accounting period. 
D) Reversing entries are optional. 
E) Reversing entries should not be the exact opposite of previous period adjusting entries.

Question 2

A company had revenues of $75,000 and expenses of $62,000 for the accounting period. The owner withdrew $8,000 in cash during the same period. Which of the following entries could not be a closing entry?

Accepted Answer

A) Debit Income Summary $75,000; credit Revenues $75,000. 
B) Debit Revenues $75,000; credit Income Summary $75,000. 
C) Debit Owner's, Capital $8,000, credit Owner's, Withdrawals $8,000. 
D) Debit Income Summary $62,000, credit Expenses $62,000. 
E) Debit Income Summary $13,000; credit Owner's, Capital $13,000. 
A) Debit Income Summary $75,000; credit Revenues $75,000. 
B) Debit Revenues $75,000; credit Income Summary $75,000. 
C) Debit Owner's, Capital $8,000, credit Owner's, Withdrawals $8,000. 
D) Debit Income Summary $62,000, credit Expenses $62,000. 
E) Debit Income Summary $13,000; credit Owner's, Capital $13,000.

Question 3

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 ending owner's capital balance after closing is:

Accepted Answer

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

Question 4

Kline Company accrued wages of $7,350 that were earned by employees unpaid at the year-end. Assuming Kline uses reversing entries, which of the following entries correctly reverses the accrued wages at the beginning of the following year?

Accepted Answer

A) Debit Wages Expense $7,350; credit Cash $7,350. 
B) Debit Wages Payable $7,350; credit Wages Expense $7,350. 
C) Debit Wages Expense $7,350; credit Wages Payable $7,350. 
D) Debit Wages Payable $7,350; credit Cash $7,350. 
E) Debit Cash $7,350; credit Wages Expense $7,350. 
A) Debit Wages Expense $7,350; credit Cash $7,350. 
B) Debit Wages Payable $7,350; credit Wages Expense $7,350. 
C) Debit Wages Expense $7,350; credit Wages Payable $7,350. 
D) Debit Wages Payable $7,350; credit Cash $7,350. 
E) Debit Cash $7,350; credit Wages Expense $7,350.

Question 5

Reversing entries:

Accepted Answer

A) Will often result temporarily in abnormal account balances in some accounts. 
B) Must be made before preparing the post-closing trial balance. 
C) Are a required step in the accounting cycle. 
D) Are required only if the company uses accounting software to record journal entries. 
E) Are necessary when journal entries have been incorrectly recorded. 
A) Will often result temporarily in abnormal account balances in some accounts. 
B) Must be made before preparing the post-closing trial balance. 
C) Are a required step in the accounting cycle. 
D) Are required only if the company uses accounting software to record journal entries. 
E) Are necessary when journal entries have been incorrectly recorded.

Question 6

Reversing entries are recorded in response to external transactions that were created in error during the prior accounting period.

Accepted Answer

A) True 
 B)False

Question 7

The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency. After closing entries are posted, what will be the balance in the Sue Harris, Capital account? $ 125,00
$\begin{array}{lr}
\text { Total revenues } & 0 \
\text { Total expenses } & 60,000 \
\text { Sue Harris, Capital } & 80,000 \
\text { Sue Harris, Withdrawals } & 15,000
\end{array}$ $\begin{array}{lr}
\text { Total revenues } & 0 \
\text { Total expenses } & 60,000 \
\text { Sue Harris, Capital } & 80,000 \
\text { Sue Harris, Withdrawals } & 15,000
\end{array}$

Accepted Answer

A) $130,000. 
B) $65,000. 
C) $80,000. 
D) $280,000. 
E) $145,000. 
A) $130,000. 
B) $65,000. 
C) $80,000. 
D) $280,000. 
E) $145,000.

Question 8

On the work sheet, net income is entered in the Income Statement Credit column as well as the Balance Sheet or Statement of Owner's Equity Credit column.

Accepted Answer

A) True 
 B)False

Question 9

In the process of completing a work sheet, the accountant determines that the Income Statement debit column totals $83,000, while the Income Statement credit column totals $65,000. To enter net income (or net loss)for the period into the work sheet would require an entry to

Accepted Answer

A) it is not practical to enter Net Income (or Net Loss)on the work sheet. 
B) the Balance Sheet & Statement of Owner's Equity debit column and the Income Statement credit column. 
C) the Adjustments debit column and the Adjustments credit column. 
D) the Unadjusted Trial Balance debit column and the Adjustments credit column. 
E) the Income Statement debit column and the Balance Sheet & Statement of Owner's Equity credit column. 
A) it is not practical to enter Net Income (or Net Loss)on the work sheet. 
B) the Balance Sheet & Statement of Owner's Equity debit column and the Income Statement credit column. 
C) the Adjustments debit column and the Adjustments credit column. 
D) the Unadjusted Trial Balance debit column and the Adjustments credit column. 
E) the Income Statement debit column and the Balance Sheet & Statement of Owner's Equity credit column.

Question 10

Explain the difference between temporary and permanent accounts.

Accepted Answer

Temporary, or nominal, accounts accumula

Question 11

Revenue accounts are temporary accounts that should begin each accounting period with zero balances.

Accepted Answer

A) True 
 B)False

Question 12

All necessary amounts needed to prepare the income statement can be taken from the income statement columns of the work sheet, including the net income or net loss.

Accepted Answer

A) True 
 B)False

Question 13

The accounting cycle refers to the sequence of steps used in preparing the work sheet.

Accepted Answer

A) True 
 B)False

Question 14

For the year ended December 31, a company has revenues of $317,000 and expenses of $196,000. The owner withdrew $50,000 during the year. The balance in the owner's capital account before closing is $81,000. Which of the following entries would be used to close the withdrawal account?

Accepted Answer

A) Debit Owner's Capital $81,000; credit Income Summary $81,000. 
B) Debit Income Summary $50,000; credit Owner's, Capital $50,000. 
C) Debit Income Summary $81,000, credit Owner's Withdrawals $81,000. 
D) Debit Owner's Capital $50,000; credit Owner Withdrawals $50,000. 
E) Debit Owner's Withdrawals $50,000; credit Owner's Capital $50,000. 
A) Debit Owner's Capital $81,000; credit Income Summary $81,000. 
B) Debit Income Summary $50,000; credit Owner's, Capital $50,000. 
C) Debit Income Summary $81,000, credit Owner's Withdrawals $81,000. 
D) Debit Owner's Capital $50,000; credit Owner Withdrawals $50,000. 
E) Debit Owner's Withdrawals $50,000; credit Owner's Capital $50,000.

Question 15

Another name for a temporary account is a(n):

Accepted Answer

A) Real account. 
B) Nominal account. 
C) Contra account. 
D) Balance column account. 
E) Accrued account. 
A) Real account. 
B) Nominal account. 
C) Contra account. 
D) Balance column account. 
E) Accrued account.

Question 16

Which of the following accounts would be included in a post-closing trial balance?

Accepted Answer

A) Depreciation Expense-Equipment. 
B) Salaries Expense. 
C) S. Stills, Withdrawal. 
D) Accounts Receivable. 
E) Consulting Fees Earned. 
A) Depreciation Expense-Equipment. 
B) Salaries Expense. 
C) S. Stills, Withdrawal. 
D) Accounts Receivable. 
E) Consulting Fees Earned.

Question 17

The last four steps in the accounting cycle include preparing the adjusted trial balance, preparing financial statements, and recording closing and adjusting entries.

Accepted Answer

A) True 
 B)False

Question 18

All of the following statements regarding a work sheet are true except:

Accepted Answer

A) A worksheet helps in preparing interim financial statements. 
B) A worksheet is not useful in planning and organizing an audit of financial statements. 
C) A worksheet shows the effects of proposed or "what-if" transactions. 
D) A worksheet reduces possible errors when working with many accounts and adjustments. 
E) A worksheet aids in the preparation of financial statements. 
A) A worksheet helps in preparing interim financial statements. 
B) A worksheet is not useful in planning and organizing an audit of financial statements. 
C) A worksheet shows the effects of proposed or "what-if" transactions. 
D) A worksheet reduces possible errors when working with many accounts and adjustments. 
E) A worksheet aids in the preparation of financial statements.

Question 19

Which of the following statements is incorrect?

Accepted Answer

A) After the work sheet is completed, it can be used to help prepare the financial statements. 
B) On the work sheet, the effects of the accounting adjustments are shown on the account balances. 
C) Working papers are useful aids in the accounting process. 
D) On the work sheet, the adjusted amounts are sorted into columns according to whether the accounts are used in preparing the unadjusted trial balance or the adjusted trial balance. 
E) A worksheet is not a substitute for financial statements. 
A) After the work sheet is completed, it can be used to help prepare the financial statements. 
B) On the work sheet, the effects of the accounting adjustments are shown on the account balances. 
C) Working papers are useful aids in the accounting process. 
D) On the work sheet, the adjusted amounts are sorted into columns according to whether the accounts are used in preparing the unadjusted trial balance or the adjusted trial balance. 
E) A worksheet is not a substitute for financial statements.

Question 20

Cash and office supplies are both classified as current assets.

Accepted Answer

A) True 
 B)False

All of the following regarding reversing entries are true except:

A company had revenues of $75,000 and expenses of $62,000 for the accounting period. The owner withdrew $8,000 in cash during the same period. Which of the following entries could not be a closing entry?

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 ending owner's capital balance after closing is:

Kline Company accrued wages of $7,350 that were earned by employees unpaid at the year-end. Assuming Kline uses reversing entries, which of the following entries correctly reverses the accrued wages at the beginning of the following year?

Reversing entries:

Reversing entries are recorded in response to external transactions that were created in error during the prior accounting period.

On the work sheet, net income is entered in the Income Statement Credit column as well as the Balance Sheet or Statement of Owner's Equity Credit column.

In the process of completing a work sheet, the accountant determines that the Income Statement debit column totals $83,000, while the Income Statement credit column totals $65,000. To enter net income (or net loss)for the period into the work sheet would require an entry to

Explain the difference between temporary and permanent accounts.

Revenue accounts are temporary accounts that should begin each accounting period with zero balances.

All necessary amounts needed to prepare the income statement can be taken from the income statement columns of the work sheet, including the net income or net loss.

The accounting cycle refers to the sequence of steps used in preparing the work sheet.

For the year ended December 31, a company has revenues of $317,000 and expenses of $196,000. The owner withdrew $50,000 during the year. The balance in the owner's capital account before closing is $81,000. Which of the following entries would be used to close the withdrawal account?

Another name for a temporary account is a(n):

Which of the following accounts would be included in a post-closing trial balance?

The last four steps in the accounting cycle include preparing the adjusted trial balance, preparing financial statements, and recording closing and adjusting entries.

All of the following statements regarding a work sheet are true except:

Which of the following statements is incorrect?

Cash and office supplies are both classified as current assets.

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

All of the following regarding reversing entries are true except:

A company had revenues of $75,000 and expenses of $62,000 for the accounting period. The owner withdrew $8,000 in cash during the same period. Which of the following entries could not be a closing entry?

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 ending owner's capital balance after closing is:

Kline Company accrued wages of $7,350 that were earned by employees unpaid at the year-end. Assuming Kline uses reversing entries, which of the following entries correctly reverses the accrued wages at the beginning of the following year?

Reversing entries:

Reversing entries are recorded in response to external transactions that were created in error during the prior accounting period.

On the work sheet, net income is entered in the Income Statement Credit column as well as the Balance Sheet or Statement of Owner's Equity Credit column.

In the process of completing a work sheet, the accountant determines that the Income Statement debit column totals $83,000, while the Income Statement credit column totals $65,000. To enter net income (or net loss)for the period into the work sheet would require an entry to

Explain the difference between temporary and permanent accounts.

Revenue accounts are temporary accounts that should begin each accounting period with zero balances.

All necessary amounts needed to prepare the income statement can be taken from the income statement columns of the work sheet, including the net income or net loss.

The accounting cycle refers to the sequence of steps used in preparing the work sheet.

For the year ended December 31, a company has revenues of $317,000 and expenses of $196,000. The owner withdrew $50,000 during the year. The balance in the owner's capital account before closing is $81,000. Which of the following entries would be used to close the withdrawal account?

Another name for a temporary account is a(n):

Which of the following accounts would be included in a post-closing trial balance?

The last four steps in the accounting cycle include preparing the adjusted trial balance, preparing financial statements, and recording closing and adjusting entries.

All of the following statements regarding a work sheet are true except:

Which of the following statements is incorrect?

Cash and office supplies are both classified as current assets.

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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