Question 1

The work sheet is a required report made available to external decision makers.

Accepted Answer

A) True 
 B)False

Question 2

A work sheet contains all of the balances for each account and therefore may be used as a substitute for the set of financial statements.

Accepted Answer

A) True 
 B)False

Question 3

List and explain the steps in preparing a 10-column worksheet.

Accepted Answer

1. Enter the unadjusted trial balance. L

Question 4

Closing entries are designed to transfer the end-of-period balances in the revenue accounts, the expense accounts, and the withdrawals account to owner's capital.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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?

$\begin{array} { l r } 
\text { Total revenues } & \$ 125,000 \
\text { Total expenses } & 60,000 \
\text { Sue Harris, Capital } & 80,000 \
\text { Sue Harris, Withdrawals } &15,000
\end{array}$

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 7

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

Accepted Answer

A) True 
 B)False

Question 8

Plant assets are usually listed in order from most liquid to least liquid.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is classified as a plant asset?

Accepted Answer

A)  Office equipment. 
B)  Merchandise inventory. 
C)  Patent. 
D)  Office supplies. 
E)  Cash. 
A)  Office equipment. 
B)  Merchandise inventory. 
C)  Patent. 
D)  Office supplies. 
E)  Cash.

Question 10

Which of the following statements is incorrect?

Accepted Answer

A)  Temporary accounts carry a zero balance at the beginning of each accounting period. 
B)  The closing process applies only to temporary accounts. 
C)  Real accounts remain open as long as the asset, liability, or equity items recorded in the accounts continue in existence. 
D)  Permanent account is another name for nominal account. 
E)  The Income Summary account is a temporary account. 
A)  Temporary accounts carry a zero balance at the beginning of each accounting period. 
B)  The closing process applies only to temporary accounts. 
C)  Real accounts remain open as long as the asset, liability, or equity items recorded in the accounts continue in existence. 
D)  Permanent account is another name for nominal account. 
E)  The Income Summary account is a temporary account.

Question 11

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 12

Assets are often classified into current assets, long-term investments, plant assets, and intangible assets.

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

Which of the following types of businesses might have an operating cycle longer than one year?

Accepted Answer

A)  Clothing retailer. 
B)  Commercial airplane manufacturer. 
C)  Wheat farmer. 
D)  Florist. 
E)  Ski resort. 
A)  Clothing retailer. 
B)  Commercial airplane manufacturer. 
C)  Wheat farmer. 
D)  Florist. 
E)  Ski resort.

Question 15

When closing entries are made:

Accepted Answer

A)  All permanent accounts are closed but nominal accounts are not closed. 
B)  All balance sheet accounts are closed. 
C)  All real accounts are closed but nominal accounts are not closed. 
D)  All temporary accounts are closed but permanent accounts are not closed. 
E)  All ledger accounts are closed to start the new accounting period. 
A)  All permanent accounts are closed but nominal accounts are not closed. 
B)  All balance sheet accounts are closed. 
C)  All real accounts are closed but nominal accounts are not closed. 
D)  All temporary accounts are closed but permanent accounts are not closed. 
E)  All ledger accounts are closed to start the new accounting period.

Question 16

A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired rent of $200. This adjusting entry results in:

Accepted Answer

A)  $200 of prepaid insurance. 
B)  $200 difference between the debit and credit columns of the Unadjusted Trial Balance. 
C)  An error in the financial statements. 
D)  $200 decrease in net income. 
E)  $200 increase in net income. 
A)  $200 of prepaid insurance. 
B)  $200 difference between the debit and credit columns of the Unadjusted Trial Balance. 
C)  An error in the financial statements. 
D)  $200 decrease in net income. 
E)  $200 increase in net income.

Question 17

Which of the following is the usual final step in the accounting cycle?

Accepted Answer

A)  Preparing a post-closing trial balance. 
B)  Preparing the financial statements. 
C)  Journalizing transactions. 
D)  Preparing a work sheet. 
E)  Preparing an adjusted trial balance. 
A)  Preparing a post-closing trial balance. 
B)  Preparing the financial statements. 
C)  Journalizing transactions. 
D)  Preparing a work sheet. 
E)  Preparing an adjusted trial balance.

Question 18

The closing process resets ________, ________, and ________ account balances to zero at the end of each accounting period.

Accepted Answer

revenue; e

Question 19

Match between columns
                        Premises:  Various analyses and internal documents prepared by accountants when organizing information for internal and external decision makers.
 The time span from when cash is used to acquire goods and services until cash is received from the sale of those goods and services.
 A temporary account only used for the closing process that contains a credit for the sum of all revenues and a debit for the sum of all expenses.
 A widely used working paper that is a useful tool for preparers in working with accounting information, usually not available to external decision makers.
 A list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.
 Recurring steps in preparing financial statement performed each accounting period, beginning with analyzing transactions and ending with a post-closing trial balance or reversing entries.
 Entries used to transfer end-of-period balances in revenue, expense, and withdrawals accounts to the permanent owner's capital account.
 Statements that show the effects of proposed transactions as if the transactions had already occurred.
 Accounts that report on activities related to one or more future accounting periods; they carry their ending balances into the next period.
 Accounts that accumulate data related to one accounting period only; they include income statement accounts, withdrawals, and the Income Summary account.

Accepted Answer

The Answer of Permanent accounts and Accounting cycle and Temporary is...

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 4: Completing the Accounting Cycle

The work sheet is a required report made available to external decision makers.

A work sheet contains all of the balances for each account and therefore may be used as a substitute for the set of financial statements.

List and explain the steps in preparing a 10-column worksheet.

Closing entries are designed to transfer the end-of-period balances in the revenue accounts, the expense accounts, and the withdrawals account to owner's capital.

The closing process is necessary in order to:

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

Plant assets are usually listed in order from most liquid to least liquid.

Which of the following is classified as a plant asset?

Which of the following statements is incorrect?

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:

Assets are often classified into current assets, long-term investments, plant assets, and intangible assets.

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.

Which of the following types of businesses might have an operating cycle longer than one year?

When closing entries are made:

A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired rent of $200. This adjusting entry results in:

Which of the following is the usual final step in the accounting cycle?

The closing process resets ________, ________, and ________ account balances to zero at the end of each accounting period.

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

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

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

Filters

The closing process resets , , and account balances to zero at the end of each accounting period.