Question 1

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.

Question 2

The steps in the accounting cycle are shown below. List them in the correct order in which they are completed:
Prepare adjusted trial balance 
Post transactions
Prepare an unadjusted trial balance 
Journalize transactions
Prepare the financial statements
 Close the temporary accounts 
Adjust the ledger accounts
Prepare a post-closing trial balance 
Analyze transactions

Accepted Answer

1) Analyze transactions
2)	Journalize  t

Question 3

Revenues, expenses, withdrawals, and Income Summary are called ________ accounts because they are closed at the end of each accounting period.

Accepted Answer

temporary

Question 4

Closing entries result in the owner's capital account being transferred into net income or net loss for the period ending.

Accepted Answer

A) True 
 B)False

Question 5

The following information has been gathered for Major Properties Co. to assist in preparing its year-end adjusting entries at December 31:
(a) The company has earned $2,500 of rental revenue that has not yet been received or recorded.
(b) Major had previously recorded $3,200 of unearned rental revenue. At year-end, $1,500 of this amount has been earned.
(c) Depreciation on equipment for the year is $7,800.
(d) Employees have earned but have not yet been paid $2,750 in salaries.
Identify which of the above accounting adjustment would be reversed assuming Major Properties Co. uses reversing entries.

Accepted Answer

(a) Reversed.
(b) No

Question 6

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 7

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 8

Current assets and current liabilities are expected to be used up or come due within one year or the company's operating cycle whichever is longer.

Accepted Answer

A) True 
 B)False

Question 9

Paradise Travel's adjusted trial balance as of the end of its annual accounting period is shown below:

(a) Prepare the necessary closing entries.
(b) Prepare a post-closing trial balance.

Accepted Answer

None

Question 10

Statements that show the financial statements as if proposed transactions had already occurred are called:

Accepted Answer

A)  Temporary statements. 
B)  Interim statements. 
C)  Pro forma statements. 
D)  Professional statements. 
E)  Simplified statements. 
A)  Temporary statements. 
B)  Interim statements. 
C)  Pro forma statements. 
D)  Professional statements. 
E)  Simplified statements.

Question 11

Normally closing entries are first entered in the general journal and then posted to the work sheet.

Accepted Answer

A) True 
 B)False

Question 12

Explain the purpose of reversing entries.

Accepted Answer

Reversing entries are an optional step i

Question 13

Explain the difference between temporary and permanent accounts.

Accepted Answer

Temporary, or nominal, accounts accumula

Question 14

Flagg records adjusting entries at its December 31 year end. At December 31, employees had earned $12,000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $30,000 will be paid. Prepare the journal on January 3 to record payment assuming the adjusting and reversing entries were made on December 31 and January 1.

Accepted Answer

A)  Debit Salaries expense $12,000; debit Salaries payable $18,000; credit Cash $30,000. 
B)  Debit Salaries expense $18,000, debit Salaries payable $12,000; credit Cash $30,000. 
C)  Debit Salaries expense $18,000; credit Cash $18,000. 
D)  Debit Salaries payable $30,000; credit Cash $30,000. 
E)  Debit Salaries expense $30,000; credit Cash $30,000. 
A)  Debit Salaries expense $12,000; debit Salaries payable $18,000; credit Cash $30,000. 
B)  Debit Salaries expense $18,000, debit Salaries payable $12,000; credit Cash $30,000. 
C)  Debit Salaries expense $18,000; credit Cash $18,000. 
D)  Debit Salaries payable $30,000; credit Cash $30,000. 
E)  Debit Salaries expense $30,000; credit Cash $30,000.

Question 15

The usual order for the asset subgroups of a classified balance sheet is:

Accepted Answer

A)  Current assets, long-term investments, plant assets, intangible assets. 
B)  Plant assets, intangible assets, long-term investments, current assets. 
C)  Intangible assets, current assets, long-term investments, plant assets. 
D)  Current assets, prepaid expenses, long-term investments, intangible assets. 
E)  Long-term investments, current assets, plant assets, intangible assets. 
A)  Current assets, long-term investments, plant assets, intangible assets. 
B)  Plant assets, intangible assets, long-term investments, current assets. 
C)  Intangible assets, current assets, long-term investments, plant assets. 
D)  Current assets, prepaid expenses, long-term investments, intangible assets. 
E)  Long-term investments, current assets, plant assets, intangible assets.

Question 16

Which of the following is classified as a current asset?

Accepted Answer

A)  Office supplies. 
B)  Patent. 
C)  Office equipment. 
D)  Land. 
E)  Unearned revenue. 
A)  Office supplies. 
B)  Patent. 
C)  Office equipment. 
D)  Land. 
E)  Unearned revenue.

Question 17

The current ratio:

Accepted Answer

A)  Is used to help assess a company's ability to pay its debts in the near future. 
B)  Is used to measure a company's profitability. 
C)  Measures the effect of operating income on profit. 
D)  Is used to measure the relation between assets and long-term debt. 
E)  Is calculated by dividing current assets by equity. 
A)  Is used to help assess a company's ability to pay its debts in the near future. 
B)  Is used to measure a company's profitability. 
C)  Measures the effect of operating income on profit. 
D)  Is used to measure the relation between assets and long-term debt. 
E)  Is calculated by dividing current assets by equity.

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

The following information is available for Brendon Company before closing the accounts. What will be the amount in the Income Summary account that should be closed to Brendon, Capital? $$\begin{array} { | l | r | } 
\hline \text { J. Brendon, Capital } & \$ 112,000 \
\hline \text { J. Brendon, Withdrawals } &  3 2 , 0 0 0  \
\hline \text { Fest earned } & 187,000 \
\hline \text { Depreciation Expense-Equipment } & 12,000 \
\hline \text { Wages expense } & 71,400 \
\hline \text { Interest expense } &  3 , 3 0 0 \
\hline \text { Insurance expense } & 11,700 \
\hline \text { Rent expense } & 24,200 \
\hline
\end{array}$$

Accepted Answer

A)  $80,000. 
B)  $32,400. 
C)  $42,400. 
D)  $43,000. 
E)  $64,400. 
A)  $80,000. 
B)  $32,400. 
C)  $42,400. 
D)  $43,000. 
E)  $64,400.

Question 20

The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments columns contain entries for the following:

Office supplies used during the period, $1,200. Expiration of prepaid rent, $700.
Accrued salaries expense, $500. Depreciation expense, $800.
Accrued service fees receivable, $400.
The Adjusted Trial Balance columns total is:

Accepted Answer

A)  $87,600 
B)  $84,000 
C)  $80,400. 
D)  $85,700 
E)  $85,900 
A)  $87,600 
B)  $84,000 
C)  $80,400. 
D)  $85,700 
E)  $85,900

Exam 4: Completing the Accounting Cycle

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?

Revenues, expenses, withdrawals, and Income Summary are called ________ accounts because they are closed at the end of each accounting period.

Closing entries result in the owner's capital account being transferred into net income or net loss for the period ending.

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

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

Current assets and current liabilities are expected to be used up or come due within one year or the company's operating cycle whichever is longer.

Paradise Travel's adjusted trial balance as of the end of its annual accounting period is shown below: (a) Prepare the necessary closing entries. (b) Prepare a post-closing trial balance.

Statements that show the financial statements as if proposed transactions had already occurred are called:

Normally closing entries are first entered in the general journal and then posted to the work sheet.

Explain the purpose of reversing entries.

Explain the difference between temporary and permanent accounts.

The usual order for the asset subgroups of a classified balance sheet is:

Which of the following is classified as a current asset?

The current ratio:

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:

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

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