Exam 4: Completing the Accounting Cycle

The following revenue and expense account balances were taken from the Income Statement columns of the work sheet for Fraser Services Co. for December 31, 2010: Prepare an income statement.

Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted, will overstate or understate assets, liabilities, owner's equity, revenues, expenses, or net income. Indicate the amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-) for understate, and (NE) for no effect. 1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand. 2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years of insurance. 3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months rent.

The worksheet

You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or Statement of Accounts) for his first year of operations ended December 31, 2010. What three accounts do you think should be relabeled for greater clarity? ·

Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the adjusted trial balance at December 31, 2010. Prepare the closing entry required to transfer the income or loss at the end of the period.

A fiscal year that ends when business activities have reached their lowest point is called the natural business year.

Prepaid insurance is reported on the balance sheet as a

Hakik Enterprises offers rug cleaning services to business clients. Below is the trial balance for Hakik Enterprises, which was prepared on the end of period spreadsheet (work sheet) for the year ended July 31, 2010. REQUIRED: Enter the adjustment data in the work sheet for the transactions shown below and place the balances in the Adjusted Trial Balance columns.

The work sheet is considered a part of the formal accounting records.

Use the following worksheet to answer the following questions. Based on the preceding trial balance, the entry to close

A work sheet includes columns for

The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet columns with a debit total of $614,210 and a credit total of $630,430. This is before the amount for net income or net loss has been included. In preparing the income statement from work sheet, what is the amount of net income or net loss?

Use the following information in the adjusted trial balance for Stockton Company to answer the following questions. Determine the net income (loss) for the period.

There are four closing entries. The first one is to close ____, the second one is to close ____, the third one is to close ____, and the last one is to close ____.

An indication that the work sheet columns are in balance and the work sheet is completed is

Notes Receivable due in 350 days appear on the

The worksheet and the financial statements both require dollar signs.

The post-closing trial balance will generally have fewer accounts than the trial balance.

The drawing account is closed to the income summary account.

Which of the following is not true about closing entries?