Exam 5: The Accounting Cycle: Reporting Financial Results

Shown below is a trial balance for Novelty Toys, Limited, on December 31, after adjusting entries: Novelty Toys Limited Trial Balance December 31,20\_ Cash \ 7,750 Accounts receivable 6,375 Office equipment 11,250 Accumulated Depreciation \ 3,000 Accounts payable 3,875 Share Capital 11,250 Retained eamings -0 Dividends 3,750 Fees Earned 22,750 Salaries expense 8,000 Advertising expense 1,625 Depreciation expense 2,125 \ 40,875 -Refer to the above data. Profit for the period equals:

The income summary account appears, as stated, on the statement of changes in equity.

Of the following, which is not an alternative title for the income statement?

Dividends declared are an expense and reduce profit.

If sales are $270,000, expenses are $220,000 and dividends are $30,000, Income Summary:

An after-closing trial balance consists only of asset, liability, and equity accounts.

Which accounts should be closed?

Interim financial statements usually report on a period of time greater than one year.

Dividends are closed out directly to retained earnings at year end.

The amount of profit (or loss) will appear on the debit side of the Income Statement columns in a worksheet if:

The purpose of the after-closing trial balance is to give assurance that the accounts are in balance and ready for the new accounting period.

Indicate which of the following accounts will be closed to Income Summary at year-end. (a) Cash (b) Office Supplies Expense (c) Unexpired Insurance (d) Unearned Revenue (e) Dividends (f) Depreciation Expense (g) Income Taxes Payable (h) Accumulated Depreciation

If monthly financial statements are desired by management:

Return on equity is calculated by:

If a business closes its accounts only at year-end:

Financial statements are usually prepared before the closing entries are made.

Refer to the above data. The entry to close Depreciation Expense account will:

The adjusted trial balance contains income statement accounts and balance sheet accounts while the after-closing trial balance will only have balance sheet accounts.

A worksheet consists of all of the following except:

The profit percentage can be measured by dividing profit by total revenue.