Question 1

The normal order in which the financial statements are prepared is:

Accepted Answer

A)  Balance sheet, income statement, statement of changes in equity. 
B)  Income statement, statement of changes in equity, balance sheet. 
C)  Income tax return, income statement, balance sheet. 
D)  Income statement, statement of cash flows, balance sheet. 
A)  Balance sheet, income statement, statement of changes in equity. 
B)  Income statement, statement of changes in equity, balance sheet. 
C)  Income tax return, income statement, balance sheet. 
D)  Income statement, statement of cash flows, balance sheet.

Question 2

Closing entries would be prepared before:

Accepted Answer

A)  Financial statements are prepared 
B)  A post-closing trial balance 
C)  An adjusted trial balance 
D)  Adjusting entries 
A)  Financial statements are prepared 
B)  A post-closing trial balance 
C)  An adjusted trial balance 
D)  Adjusting entries

Question 3

The section of the annual report titled "Management Discussion and Analysis"

Accepted Answer

A)  Is required by the SEC 
B)  Is not required but may be included by management 
C)  Is required by GAAP 
D)  All of the above 
A)  Is required by the SEC 
B)  Is not required but may be included by management 
C)  Is required by GAAP 
D)  All of the above

Question 4

The Retained Earnings statement is based upon which of the following relationships?

Accepted Answer

A)  Retained Earnings - Profit - Dividends 
B)  Retained Earnings - Profit + Dividends 
C)  Retained Earnings + Profit + Dividends 
D)  Retained Earnings + Profit - Dividends 
A)  Retained Earnings - Profit - Dividends 
B)  Retained Earnings - Profit + Dividends 
C)  Retained Earnings + Profit + Dividends 
D)  Retained Earnings + Profit - Dividends

Question 5

Refer to the above data. Profit for the period equals:

Accepted Answer

A)  $20,960. 
B)  $16,640. 
C)  $21,920. 
D)  $23,360. 
A)  $20,960. 
B)  $16,640. 
C)  $21,920. 
D)  $23,360.

Question 6

Profit from the Income Statement appears on:

Accepted Answer

A)  The Balance Sheet. 
B)  The Statement of Changes in Equity. 
C)  Neither the Balance Sheet nor the Statement of Changes in Equity. 
D)  Both the Balance Sheet and the Statement of Changes in Equity. 
A)  The Balance Sheet. 
B)  The Statement of Changes in Equity. 
C)  Neither the Balance Sheet nor the Statement of Changes in Equity. 
D)  Both the Balance Sheet and the Statement of Changes in Equity.

Question 7

After preparing the financial statements for the current year, the accountant for Exquisite Gems closed the Dividends account at year-end by debiting Income Summary and crediting the Dividends account. What is the effect of this entry on current-year profit and the balance in the Retained Earnings account at year-end?

Accepted Answer

A)  Profit is overstated and the balance in the Retained Earnings account is correct. 
B)  Profit is correct and the balance in the Retained Earnings account is correct. 
C)  Profit is understated and the balance in the Retained Earnings account is understated. 
D)  Profit is understated and the balance in the Retained Earnings account is overstated. 
A)  Profit is overstated and the balance in the Retained Earnings account is correct. 
B)  Profit is correct and the balance in the Retained Earnings account is correct. 
C)  Profit is understated and the balance in the Retained Earnings account is understated. 
D)  Profit is understated and the balance in the Retained Earnings account is overstated.

Question 8

Shown below is a trial balance for Novelty Toys, Limited, on December 31, after adjusting entries: $$\begin{array}{c} { \text { Novelty Toys Limited } } \
{ \text { Trial Balance } } \
 { \text { December } 31,20\_ } \\begin{array} { | l | r | r | }

\hline \text { Cash } & \$ 7,750 & \
\hline \text { Accounts receivable } & 6,375 & \
\hline \text { Office equipment } & 11,250 & \
\hline \text { Accumulated Depreciation } & & \$ 3,000 \
\hline \text { Accounts payable } & & 3,875 \
\hline \text { Share Capital } & & 11,250 \
\hline \text { Retained eamings } & & - 0 \
\hline \text { Dividends } & 3,750 & \
\hline \text { Fees Earned } & & 22,750 \
\hline \text { Salaries expense } & 8,000 & \
\hline \text { Advertising expense } & 1,625 & \
\hline \text { Depreciation expense } & 2,125 & \
\hline & \$ 40,875 & \underline { \$ 40,875 } \
\hline
\end{array}\end{array}$$
-Refer to the above data. After closing the accounts, Retained earnings at December 31 equals:

Accepted Answer

A)  $11,000. 
B)  $7,250. 
C)  Zero. 
D)  Some other amount. 
A)  $11,000. 
B)  $7,250. 
C)  Zero. 
D)  Some other amount.

Question 9

Inserting missing data into a worksheet.
Certain data are given on the worksheet below, and certain missing data are indicated by the blank lines. Sufficient information is included to fill in the missing data. Each account has a debit or credit balance characteristically normal for that kind of account. Note that the dollar amounts have been reduced to figures of not more than three digits to simplify the arithmetic.
Insert the figures necessary to complete the worksheet in the blanks indicated by an underline. The lines cover both debit and credit columns; be sure to insert the missing figures in the correct column of the blank line. If no figure should appear in a column within a line, indicate this by placing a "0" in one or more columns with a blank line (see sample box opposite Cash).

Accepted Answer

The answer of Inserting missing data into a worksheet.
Certain data...

Question 10

Shown below is a trial balance for Novelty Toys, Limited, on December 31, after adjusting entries: $$\begin{array}{c} { \text { Novelty Toys Limited } } \
{ \text { Trial Balance } } \
 { \text { December } 31,20\_ } \\begin{array} { | l | r | r | }

\hline \text { Cash } & \$ 7,750 & \
\hline \text { Accounts receivable } & 6,375 & \
\hline \text { Office equipment } & 11,250 & \
\hline \text { Accumulated Depreciation } & & \$ 3,000 \
\hline \text { Accounts payable } & & 3,875 \
\hline \text { Share Capital } & & 11,250 \
\hline \text { Retained eamings } & & - 0 \
\hline \text { Dividends } & 3,750 & \
\hline \text { Fees Earned } & & 22,750 \
\hline \text { Salaries expense } & 8,000 & \
\hline \text { Advertising expense } & 1,625 & \
\hline \text { Depreciation expense } & 2,125 & \
\hline & \$ 40,875 & \underline { \$ 40,875 } \
\hline
\end{array}\end{array}$$
-Refer to the above data. Income Summary will have what balance before it is closed?

Accepted Answer

A)  Zero. 
B)  $11,750. 
C)  $7,250. 
D)  Some other amount. 
A)  Zero. 
B)  $11,750. 
C)  $7,250. 
D)  Some other amount.

Question 11

Dividends will have what effect upon retained earnings?

Accepted Answer

A)  Increase. 
B)  Decrease. 
C)  No effect. 
D)  Depends upon if there is income or loss. 
A)  Increase. 
B)  Decrease. 
C)  No effect. 
D)  Depends upon if there is income or loss.

Question 12

Publicly traded companies must file audited financial statements with the:

Accepted Answer

A)  AICPA. 
B)  IRS. 
C)  SEC. 
D)  AAA. 
A)  AICPA. 
B)  IRS. 
C)  SEC. 
D)  AAA.

Question 13

Declaring a dividend will:

Accepted Answer

A)  Increase profit. 
B)  Decrease profit. 
C)  Not change profit. 
D)  Increase the net worth of a company. 
A)  Increase profit. 
B)  Decrease profit. 
C)  Not change profit. 
D)  Increase the net worth of a company.

Question 14

A debit balance in the income summary account indicates:

Accepted Answer

A)  An error was made. 
B)  A Net Profit. 
C)  A Loss. 
D)  That revenues were greater than expenses. 
A)  An error was made. 
B)  A Net Profit. 
C)  A Loss. 
D)  That revenues were greater than expenses.

Question 15

Real accounts can only be closed at the end of the year with a single compound entry.

Accepted Answer

A) True 
 B)False

Question 16

Which account will appear on an after-closing trial balance?

Accepted Answer

A)  Dividends. 
B)  Prepaid Expenses. 
C)  Retained Earnings, at the beginning of the period. 
D)  Sales. 
A)  Dividends. 
B)  Prepaid Expenses. 
C)  Retained Earnings, at the beginning of the period. 
D)  Sales.

Question 17

Shown below is a trial balance for Novelty Toys, Limited, on December 31, after adjusting entries: $$\begin{array}{c} { \text { Novelty Toys Limited } } \
{ \text { Trial Balance } } \
 { \text { December } 31,20\_ } \\begin{array} { | l | r | r | }

\hline \text { Cash } & \$ 7,750 & \
\hline \text { Accounts receivable } & 6,375 & \
\hline \text { Office equipment } & 11,250 & \
\hline \text { Accumulated Depreciation } & & \$ 3,000 \
\hline \text { Accounts payable } & & 3,875 \
\hline \text { Share Capital } & & 11,250 \
\hline \text { Retained eamings } & & - 0 \
\hline \text { Dividends } & 3,750 & \
\hline \text { Fees Earned } & & 22,750 \
\hline \text { Salaries expense } & 8,000 & \
\hline \text { Advertising expense } & 1,625 & \
\hline \text { Depreciation expense } & 2,125 & \
\hline & \$ 40,875 & \underline { \$ 40,875 } \
\hline
\end{array}\end{array}$$
-Refer to the above data. The entry to close the Fees Earned account will:

Accepted Answer

A)  Produce a zero balance in that account when posted. 
B)  Include a debit to Income Summary. 
C)  Include a credit to Fees Earned. 
D)  Include a debit to Share Capital. 
A)  Produce a zero balance in that account when posted. 
B)  Include a debit to Income Summary. 
C)  Include a credit to Fees Earned. 
D)  Include a debit to Share Capital.

Question 18

IFRS 1 requires that management and auditors should depart from compliance with GAAP if it is necessary to achieve a fair presentation when reporting financial results.

Accepted Answer

A) True 
 B)False

Question 19

A worksheet should be viewed as:

Accepted Answer

A)  A financial statement to be distributed to investors. 
B)  A financial statement to assist managers in making managerial decisions. 
C)  A tool to assist accountants in making end-of-period adjustments and in preparing financial statements. 
D)  A tool to assist auditors in determining that all transactions have been properly recorded throughout the period. 
A)  A financial statement to be distributed to investors. 
B)  A financial statement to assist managers in making managerial decisions. 
C)  A tool to assist accountants in making end-of-period adjustments and in preparing financial statements. 
D)  A tool to assist auditors in determining that all transactions have been properly recorded throughout the period.

Question 20

Which of the following account titles could not be debited in the process of preparing closing entries for Andrew's Auto Shop?

Accepted Answer

A)  Income Summary. 
B)  Fees Earned. 
C)  Dividends. 
D)  Retained Earnings. 
A)  Income Summary. 
B)  Fees Earned. 
C)  Dividends. 
D)  Retained Earnings.

The normal order in which the financial statements are prepared is:

Closing entries would be prepared before:

The section of the annual report titled "Management Discussion and Analysis"

The Retained Earnings statement is based upon which of the following relationships?

Refer to the above data. Profit for the period equals:

Profit from the Income Statement appears on:

Dividends will have what effect upon retained earnings?

Publicly traded companies must file audited financial statements with the:

Declaring a dividend will:

A debit balance in the income summary account indicates:

Real accounts can only be closed at the end of the year with a single compound entry.

Which account will appear on an after-closing trial balance?

IFRS 1 requires that management and auditors should depart from compliance with GAAP if it is necessary to achieve a fair presentation when reporting financial results.

A worksheet should be viewed as:

Which of the following account titles could not be debited in the process of preparing closing entries for Andrew's Auto Shop?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Property, Plant, and Equipment, Intangible Assets and Natural Resources

Liabilities

Shareholders Equity: Capital

Profit and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Filters

Exam 5: The Accounting Cycle: Reporting Financial Results

The normal order in which the financial statements are prepared is:

Closing entries would be prepared before:

The section of the annual report titled "Management Discussion and Analysis"

The Retained Earnings statement is based upon which of the following relationships?

Refer to the above data. Profit for the period equals:

Profit from the Income Statement appears on:

Dividends will have what effect upon retained earnings?

Publicly traded companies must file audited financial statements with the:

Declaring a dividend will:

A debit balance in the income summary account indicates:

Real accounts can only be closed at the end of the year with a single compound entry.

Which account will appear on an after-closing trial balance?

IFRS 1 requires that management and auditors should depart from compliance with GAAP if it is necessary to achieve a fair presentation when reporting financial results.

A worksheet should be viewed as:

Which of the following account titles could not be debited in the process of preparing closing entries for Andrew's Auto Shop?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Property, Plant, and Equipment, Intangible Assets and Natural Resources

Liabilities

Shareholders Equity: Capital

Profit and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Filters