Question 1

Retained Earnings at the end of a period:

Accepted Answer

A)  Is equal to the balance in the Retained Earnings account in the adjusted trial balance at the end of a period. 
B)  Is determined in the statement of Changes in Equity 
C)  Is equal to Retained Earnings at the beginning of the period, minus profit (or plus loss) for the period. 
D)  Appears in the income statement for the period. 
A)  Is equal to the balance in the Retained Earnings account in the adjusted trial balance at the end of a period. 
B)  Is determined in the statement of Changes in Equity 
C)  Is equal to Retained Earnings at the beginning of the period, minus profit (or plus loss) for the period. 
D)  Appears in the income statement for the period.

Question 2

Refer to the above data. After closing the accounts, Retained Earnings at December 31 equals:

Accepted Answer

A)  Zero. 
B)  $18,400. 
C)  $19,360. 
D)  Some other amount. 
A)  Zero. 
B)  $18,400. 
C)  $19,360. 
D)  Some other amount.

Question 3

Materiality
(a) Identify several factors considered by an accountant in deciding whether an item is "material."
(b) Does the concept of materiality complicate or simplify the process of making adjusting entries? Give an illustration to support your answer.

Accepted Answer

(a) Factors to be considered include the

Question 4

Return on equity is a commonly used measure of a company's solvency.

Accepted Answer

A) True 
 B)False

Question 5

The following information is available: $\begin{array}{ll}
\text { Sales } & \$ 400,000 \
\text { Profit } & \$ 20,000 \
\text { Retained Earnings } & \$ 40,000 \
\text { Avg. Shareholders' Equity } & \$ 130,000 \
\text { Dividends } & \$ 6,000
\end{array}$ What is the return on equity? (round to the nearest number)

Accepted Answer

A)  5%. 
B)  20%. 
C)  25%. 
D)  15%. 
A)  5%. 
B)  20%. 
C)  25%. 
D)  15%.

Question 6

At year-end all equity accounts must be closed.

Accepted Answer

A) True 
 B)False

Question 7

Return on equity measures:

Accepted Answer

A)  Solvency. 
B)  Profitability. 
C)  Leverage. 
D)  All three of the above. 
A)  Solvency. 
B)  Profitability. 
C)  Leverage. 
D)  All three of the above.

Question 8

The closing entry for an expense account would consist of a

Accepted Answer

A)  Debit to Income Summary and a credit to the expense account. 
B)  Debit to the expense account and a credit to Income Summary. 
C)  Credit to Retained Earnings and a debit to the expense account. 
D)  Credit to Revenue and a debit to the expense account. 
A)  Debit to Income Summary and a credit to the expense account. 
B)  Debit to the expense account and a credit to Income Summary. 
C)  Credit to Retained Earnings and a debit to the expense account. 
D)  Credit to Revenue and a debit to the expense account.

Question 9

The current ratio is a measure of short-term debt paying ability.

Accepted Answer

A) True 
 B)False

Question 10

Publicly owned companies are:

Accepted Answer

A)  Managed and owned by the government. 
B)  Must be not-for-profit companies. 
C)  Listed on a stock exchange. 
D)  Not permitted to be owned by individuals. 
A)  Managed and owned by the government. 
B)  Must be not-for-profit companies. 
C)  Listed on a stock exchange. 
D)  Not permitted to be owned by individuals.

Question 11

During the closing process:

Accepted Answer

A)  All income statement accounts are credited to income summary. 
B)  All income statement accounts are debited to income summary. 
C)  All revenue accounts are credited and expense accounts are debited. 
D)  All revenue accounts are debited and expense accounts are credited. 
A)  All income statement accounts are credited to income summary. 
B)  All income statement accounts are debited to income summary. 
C)  All revenue accounts are credited and expense accounts are debited. 
D)  All revenue accounts are debited and expense accounts are credited.

Question 12

Only two adjustments appear in the adjustments column of a worksheet for Wycliff Publications: one to record $800 depreciation of office equipment, and the other to record the use of $560 of office supplies. If the Trial Balance column totals are $15,380, what are the totals of the Adjusted Trial Balance columns?

Accepted Answer

A)  $16,740 
B)  $15,140. 
C)  $16,180. 
D)  $15,860. 
A)  $16,740 
B)  $15,140. 
C)  $16,180. 
D)  $15,860.

Question 13

Preparation of financial statements
Using the Adjusted Trial Balance shown below, prepare (a) an Income Statement and (b) a Statement of Changes in Equity for All Star Repairs.

Accepted Answer

None

Question 14

The report form of the balance sheet lists liabilities and equity below assets.

Accepted Answer

A) True 
 B)False

Question 15

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 total debits in the After-Closing Trial Balance will equal:

Accepted Answer

A)  $25,375. 
B)  $29,125. 
C)  $40,875. 
D)  Some other amount. 
A)  $25,375. 
B)  $29,125. 
C)  $40,875. 
D)  Some other amount.

Question 16

Which of the following amounts appears in both the Income Statement debit column and the Balance Sheet credit column of a worksheet?

Accepted Answer

A)  Profit. 
B)  Loss. 
C)  Dividends. 
D)  Retained earnings. 
A)  Profit. 
B)  Loss. 
C)  Dividends. 
D)  Retained earnings.

Question 17

Publicly owned companies are typically managed by their shareholders.

Accepted Answer

A) True 
 B)False

Question 18

Interim financial statements:

Accepted Answer

A)  Cover a period less than one year. 
B)  Cover only periods of a quarter of a year. 
C)  Cover periods greater than a year. 
D)  Cannot cover a period of one month or less. 
A)  Cover a period less than one year. 
B)  Cover only periods of a quarter of a year. 
C)  Cover periods greater than a year. 
D)  Cannot cover a period of one month or less.

Question 19

If current assets are $90,000 and current liabilities are $70,000, the current ratio will be:

Accepted Answer

A)  77%. 
B)  $20,000. 
C)  1.3 
D)  $160,000 
A)  77%. 
B)  $20,000. 
C)  1.3 
D)  $160,000

Question 20

Closing entries never involve posting a credit to the:

Accepted Answer

A)  Income Summary account. 
B)  Accumulated Depreciation account. 
C)  Dividends. 
D)  Depreciation Expense account. 
A)  Income Summary account. 
B)  Accumulated Depreciation account. 
C)  Dividends. 
D)  Depreciation Expense account.

Retained Earnings at the end of a period:

Refer to the above data. After closing the accounts, Retained Earnings at December 31 equals:

Materiality (a) Identify several factors considered by an accountant in deciding whether an item is "material." (b) Does the concept of materiality complicate or simplify the process of making adjusting entries? Give an illustration to support your answer.

Return on equity is a commonly used measure of a company's solvency.

The following information is available: Sales \ 400,000 Profit \ 20,000 Retained Earnings \ 40,000 Avg. Shareholders' Equity \ 130,000 Dividends \ 6,000 What is the return on equity? (round to the nearest number)

At year-end all equity accounts must be closed.

Return on equity measures:

The closing entry for an expense account would consist of a

The current ratio is a measure of short-term debt paying ability.

Publicly owned companies are:

During the closing process:

Preparation of financial statements Using the Adjusted Trial Balance shown below, prepare (a) an Income Statement and (b) a Statement of Changes in Equity for All Star Repairs.

The report form of the balance sheet lists liabilities and equity below assets.

Which of the following amounts appears in both the Income Statement debit column and the Balance Sheet credit column of a worksheet?

Publicly owned companies are typically managed by their shareholders.

Interim financial statements:

If current assets are $90,000 and current liabilities are $70,000, the current ratio will be:

Closing entries never involve posting a credit to the:

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

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Exam 5: The Accounting Cycle: Reporting Financial Results

Retained Earnings at the end of a period:

Refer to the above data. After closing the accounts, Retained Earnings at December 31 equals:

Materiality (a) Identify several factors considered by an accountant in deciding whether an item is "material." (b) Does the concept of materiality complicate or simplify the process of making adjusting entries? Give an illustration to support your answer.

Return on equity is a commonly used measure of a company's solvency.

The following information is available: Sales \ 400,000 Profit \ 20,000 Retained Earnings \ 40,000 Avg. Shareholders' Equity \ 130,000 Dividends \ 6,000 What is the return on equity? (round to the nearest number)

At year-end all equity accounts must be closed.

Return on equity measures:

The closing entry for an expense account would consist of a

The current ratio is a measure of short-term debt paying ability.

Publicly owned companies are:

During the closing process:

Preparation of financial statements Using the Adjusted Trial Balance shown below, prepare (a) an Income Statement and (b) a Statement of Changes in Equity for All Star Repairs.

The report form of the balance sheet lists liabilities and equity below assets.

Which of the following amounts appears in both the Income Statement debit column and the Balance Sheet credit column of a worksheet?

Publicly owned companies are typically managed by their shareholders.

Interim financial statements:

If current assets are $90,000 and current liabilities are $70,000, the current ratio will be:

Closing entries never involve posting a credit to the:

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