Deck 22: End-Of-Fiscal-Period Work for a Corporation

Question 1

If Merchandise Inventory decreases from the beginning to the end of the fiscal period, the adjusting entry includes a debit to Income Summary.

Answer 1

True

Question 2

If a company has a net income, the entry to close the Income Summary account includes a debit to Income Summary.

Answer 2

True

Question 3

Paying cash for inventory is an example of an operating activity.

Answer 3

True

Question 4

Retained Earnings represents previous years' earnings that have been distributed to stockholders.

Question 5

The unadjusted trial balance and other financial data are used to plan and record adjusting entries.

Question 6

The issuance of bonds payable is an example of an investing activity.

Question 7

If a company does not use reversing entries, the last step in its accounting cycle is to prepare a post-closing trial balance.

Question 8

Cash paid for utilities would be listed as a cash outflow in the Investing Activities section on a statement of cash flows.

Question 9

The statement of cash flows is prepared using the accrual basis of accounting.

Question 10

The purchase of store equipment for cash would be listed as a cash outflow in the Investing Activities section on a statement of cash flows.

Question 11

The net income of a corporation increases retained earnings.

Question 12

Receiving cash from interest income is an example of an operating activity.

Question 13

If Merchandise Inventory increases from the beginning to the end of the fiscal period, the adjusting entry includes a credit to Merchandise Inventory.

Question 14

Dividends decrease the earnings retained by a corporation.

Question 15

Paying the principal on a line of credit would be listed as a cash inflow in the Financing Activities section on a statement of cash flows.

Question 16

If a company uses reversing entries, a reversing entry should be made for every adjusting entry that created a balance in an asset or a liability account.

Question 17

Receiving cash from the sale of equipment is an example of an investing activity.

Question 18

Paying cash dividends is an example of a financing activity.

Question 19

Paying cash for office equipment is an example of a financing activity.

Question 20

The closing entry for the Loss on Plant Assets account includes a debit to

A) Retained Earnings.
B) Income Summary.
C) Loss on Plant Assets.
D) Gain on Plant Assets.

Question 21

An amount earned by a corporation and not yet distributed to stockholders is

A) retained earnings.
B) net income.
C) capital stock.
D) stockholders' equity.

Question 22

An asset account that would not be included in current assets is

A) Merchandise Inventory.
B) Prepaid Insurance.
C) Store Equipment.
D) Supplies.

Question 23

All of the following accounts would appear in the Other Revenue section of an income statement except

A) Interest Income.
B) Rent Income.
C) Gain on Plant Assets.
D) Sales.

Question 24

A corporation's total stockholders' equity is increased by

A) net income.
B) declaring dividends.
C) paying dividends.
D) receiving payment on account.

Question 25

All of the following accounts would appear in the Other Expenses section of an income statement except

A) Interest Expense.
B) Utilities Expense.
C) Loss on Plant Assets.
D) none of these.

Question 26

Paid-in Capital in Excess of Par-Common appears on the

A) balance sheet and statement of cash flows.
B) income statement and statement of stockholders' equity.
C) statement of stockholders' equity and balance sheet.
D) income statement and statement of cash flows.

Question 27

The reversing entry for accrued interest expense would include a debit to

A) Income Summary.
B) Interest Expense.
C) Interest Income.
D) Interest Payable.

Question 28

The closing entry for the Dividends account includes a credit to

A) Retained Earnings.
B) Dividends.
C) Income Summary.
D) Capital Stock-Common.

Question 29

The reversing entry for accrued interest income would include a debit to

A) Income Summary.
B) Interest Expense.
C) Interest Income.
D) Interest Receivable.