Question 1

A company's annual report includes comparative statements for several years.

Accepted Answer

A) True 
 B)False

Question 2

Closing entries do not affect the cash account.

Accepted Answer

A) True 
 B)False

Question 3

The purpose of making closing entries is to:

Accepted Answer

A) Prepare revenue and expense accounts for the recording of the next period's revenue and expenses. 
B) Enable the accountant to transfer the balances from all permanent accounts to the Income Summary account. 
C) Establish new balances in the balance sheet accounts. 
D) Reduce the number of expense accounts. 
A) Prepare revenue and expense accounts for the recording of the next period's revenue and expenses. 
B) Enable the accountant to transfer the balances from all permanent accounts to the Income Summary account. 
C) Establish new balances in the balance sheet accounts. 
D) Reduce the number of expense accounts.

Question 4

An annual report filed with the Securities and Exchange Commission must include a section called "Management Discussion and Analysis" (MD&A).

Accepted Answer

A) True 
 B)False

Question 5

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 6

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

Accepted Answer

A) True 
 B)False

Question 7

If current assets are $180,000 and current liabilities are $130,000,working capital will be:

Accepted Answer

A) 72%. 
B) $50,000. 
C) 1.4. 
D) $310,000. 
A) 72%. 
B) $50,000. 
C) 1.4. 
D) $310,000.

Question 8

Companies need not disclose information that may have a damaging effect on the business,such as product liability lawsuits.

Accepted Answer

A) True 
 B)False

Question 9

When closing the accounts at the end of the period,which of the following is closed directly into the Retained Earnings account?

Accepted Answer

A) Depreciation Expense. 
B) Accumulated Depreciation. 
C) Revenue and liability accounts. 
D) The Income Summary account. 
A) Depreciation Expense. 
B) Accumulated Depreciation. 
C) Revenue and liability accounts. 
D) The Income Summary account.

Question 10

At year-end,all equity accounts must be closed.

Accepted Answer

A) True 
 B)False

Question 11

Dividends declared are an expense and reduce net income.

Accepted Answer

A) True 
 B)False

Question 12

Working capital equals current assets divided by current liabilities.

Accepted Answer

A) True 
 B)False

Question 13

Accounting terminology
Listed below are eight technical accounting terms emphasized in this chapter:   In the space provided for each statement,indicate the accounting term described.
______ a.The generally accepted accounting principle of providing with financial statements any information that users need to interpret those statements properly.
______ b.A trial balance prepared after all closing entries have been posted.This trial balance consists only of accounts for assets,liabilities,and owners' equity.
______ c.Journal entries made at the end of the period for the purpose of closing temporary accounts (revenue,expense,and dividend accounts)and transferring balances to the Retained Earnings account.
______ d.Computer software used for recording transactions,maintaining journals and ledgers,and preparing financial statements.Also includes spreadsheet capabilities for showing the effects of proposed adjusting entries or transactions on the financial statements without actually recording these entries in the accounting records.
______ e.The summary account in the ledger to which revenue and expense accounts are closed at the end of the period.The balance (credit balance for a net income,debit balance for a net loss)is transferred to the Retained Earnings account.
______ f.Financial statements prepared for periods of less than one year (includes monthly and quarterly statements).
______ g.Supplemental disclosures that accompany financial statements.They provide users with various types of information considered necessary for the proper interpretation of the statements.
______ h.A multicolumn schedule showing the relationships among the current account balances (a trial balance),proposed or actual adjusting entries or transactions,and the financial statements that would result if these adjusting entries or transactions were recorded.Used both at the end of the accounting period as an aid to preparing financial statements and for planning purposes.

Accepted Answer

(a)Adequate disclosure (b)Afte

Question 14

Publicly owned companies are:

Accepted Answer

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

Question 15

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.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The balance sheet is prepared first because if it balances,all the accounting information is correct and can be used to prepare the other financial statements.

Accepted Answer

A) True 
 B)False

Question 18

The income summary account appears on the statement of retained earnings.

Accepted Answer

A) True 
 B)False

Question 19

The accounts and their amounts for Belgrave Co.at December 31,20__ are listed below.Prepare closing entries and an After-Closing Trial Balance.

Accepted Answer

@#IMG-DLM& After-Clo

Question 20

Closing entries never involve posting a credit to the:

Accepted Answer

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

Exam 5: The Accounting Cycle: Reporting Financial Results

A company's annual report includes comparative statements for several years.

Closing entries do not affect the cash account.

The purpose of making closing entries is to:

An annual report filed with the Securities and Exchange Commission must include a section called "Management Discussion and Analysis" (MD&A).

Publicly traded companies must file audited financial statements with the:

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

If current assets are $180,000 and current liabilities are $130,000,working capital will be:

Companies need not disclose information that may have a damaging effect on the business,such as product liability lawsuits.

When closing the accounts at the end of the period,which of the following is closed directly into the Retained Earnings account?

At year-end,all equity accounts must be closed.

Dividends declared are an expense and reduce net income.

Working capital equals current assets divided by current liabilities.

Publicly owned companies are:

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.

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

The balance sheet is prepared first because if it balances,all the accounting information is correct and can be used to prepare the other financial statements.

The income summary account appears on the statement of retained earnings.

The accounts and their amounts for Belgrave Co.at December 31,20__ are listed below.Prepare closing entries and an After-Closing Trial Balance.

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

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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