Deck 3: Supplement - Closing Entries and the Work Sheet

Question 1

When adjusting entries are entered onto a work sheet,it is not necessary to record them in the general journal.

Answer 1

False

Question 2

When the Income Statement columns of the work sheet are initially footed,they should be out of balance by the amount of net income or net loss.

Answer 2

True

Question 3

On a work sheet,the balance of Retained Earnings is its ending amount for the period.

Answer 3

False

Question 4

The heading of a work sheet might include the line "As of December 31,20xx."

Question 5

The process of crossfooting requires vertical addition and subtraction.

Question 6

An important use of the work sheet is as an aid in the preparation of financial statements.

Question 7

The balance sheet may be prepared by referring solely to the Balance Sheet columns of the work sheet.

Question 8

The total assets and the total liabilities and stockholders' equity on the balance sheet are the same as the totals of the Balance Sheet columns on the work sheet.

Question 9

The amount of dividends for the period can be found on the work sheet.

Question 10

A work sheet is more useful for a small company than for a large one.

Question 11

The Adjusted Trial Balance columns of the work sheet are prepared by combining the Trial Balance and Adjustments columns of the work sheet.

Question 12

The work sheet is a type of accountant's working paper.

Question 13

The work sheet should be prepared after the formal financial statements have been prepared.

Question 14

Despite the many uses of microcomputers,they cannot be used to prepare work sheets.

Question 15

The amount for Dividends will appear in the Income Statement columns of a work sheet.

Question 16

When the Balance Sheet columns of the work sheet are initially footed,they should be in balance.

Question 17

The balances of the Accumulated Depreciation accounts will appear on the credit side of the work sheet's Balance Sheet columns.

Question 18

The work sheet is prepared after the formal adjusting and closing entries.

Question 19

Working papers provide a written record of the work performed by the accountant.

Question 20

The amount extended to the Retained Earnings line in the Balance Sheet column of the work sheet is the amount to be reflected for Retained Earnings on the balance sheet.

Question 21

In the completed work sheet,which set of columns usually should be out of balance after the initial footing?

A) Both Income Statement and Balance Sheet columns
B) Income Statement columns only
C) Adjusted Trial Balance columns only
D) Balance Sheet columns only

Question 22

In preparing adjustments on the work sheet,which of the following accounts could not be added to the Account Name column?

A) Notes Payable
B) Interest Receivable
C) Interest Income
D) Depreciation Expense

Question 23

The work sheet is prepared

A) after the formal closing entries have been entered into the journal.
B) before the preparation of a formal trial balance.
C) after the formal adjusting entries have been entered into the journal.
D) before the preparation of formal financial statements.

Question 24

The process of crossfooting on the work sheet results in the

A) Adjusted Trial Balance columns.
B) Trial Balance columns.
C) Income Statement columns.
D) Adjustments columns.

Question 25

When a company has suffered a net loss,the net loss amount is entered on the work sheet on the

A) credit side of the Income Statement columns and the debit side of the Balance Sheet columns.
B) debit side of both the Income Statement and the Balance Sheet columns.
C) credit side of both the Income Statement and the Balance Sheet columns.
D) debit side of the Income Statement columns and the credit side of the Balance Sheet columns.

Question 26

In preparing closing entries,which of the following columns of the work sheet are the most helpful?

A) Adjustments columns
B) Income Statement columns
C) Adjusted Trial Balance columns
D) Balance Sheet columns

Question 27

When a company has earned a net income,the net income amount is entered on the work sheet on the

A) credit side of the Income Statement columns and the debit side of the Balance Sheet columns.
B) debit side of both the Income Statement and the Balance Sheet columns.
C) debit side of the Income Statement columns and the credit side of the Balance Sheet columns.
D) credit side of both the Income Statement and the Balance Sheet columns.

Question 28

Which work sheet columns should contain "key letters"?

A) Adjustments
B) Adjusted Trial Balance
C) Trial Balance
D) Balance Sheet

Question 29

Which of the following accounts will have an amount in the Adjustments columns of the work sheet but probably not in the Trial Balance columns?

A) Common Stock
B) Utilities Expense
C) Depreciation Expense-Machinery
D) Revenue from Services

Question 30

On the work sheet,under what circumstances will the last two columns be in balance after the initial footing?

A) When no adjustments have been entered on the work sheet
B) Under all circumstances, assuming no arithmetical errors have been made
C) Under no circumstances
D) When net income is zero

Question 31

On the work sheet,account balances are "extended" from the

A) Income Statement and Balance Sheet columns to the financial statements.
B) Adjusted Trial Balance columns to the Income Statement or Balance Sheet columns.
C) Trial Balance columns to the Adjusted Trial Balance columns.
D) Trial Balance and Adjustments columns to the Adjusted Trial Balance columns.

Question 32

Use this information from the Income Statement columns of the work sheet of Corner Laundry Service to answer the following question.
$\begin{array} { | l | r | r | } \hline & { \text { Income Statement } } \\\hline & \text { Debit } & \text { Credit } \\\hline \text { Laundry Revenue } & & 2,500 \\\hline \text { Wages Expense } & 750 & \\\hline \text { Rent Expense } & 500 & \\\hline \text { Supplies Expense } & 300 & \\\hline \text { Insurance Expense } & 200 & \\\hline \text { Income Taxes Expense } & 50 & \\\hline & 1,800 & 2,500 \\\text { Net Income } & 700 & \\\hline & 2,500 & 2,500 \\\hline\end{array}$
The entry to close Income Summary includes a

A) $\begin{array}{cc}\text { Income Summary } & 2,500 \\\text { Retained Earnings } & 2,500\end{array}$
B)Common Stock $\quad$$\quad$ 700
Income Summary $\quad$$\quad$ 700
C) $\begin{array} { c c } \text { Income Summary } & 700 \\\text { Retained Earnings } & 700\end{array}$
D)Income Summary $\quad$$\quad$ 700
Common Stock $\quad$$\quad$ 700

Question 33

Use this information from the Income Statement columns of the work sheet of Corner Laundry Service to answer the following question.
$\begin{array} { | l | r | r | } \hline & { \text { Income Statement } } \\\hline & \text { Debit } & \text { Credit } \\\hline \text { Laundry Revenue } & & 2,500 \\\hline \text { Wages Expense } & 750 & \\\hline \text { Rent Expense } & 500 & \\\hline \text { Supplies Expense } & 300 & \\\hline \text { Insurance Expense } & 200 & \\\hline \text { Income Taxes Expense } & 50 & \\\hline & 1,800 & 2,500 \\\text { Net Income } & 700 & \\\hline & 2,500 & 2,500 \\\hline\end{array}$
The entry to close the Laundry Revenue account includes a

A) $\begin{array} { c c c } \text { Laundry Revenue } & 2,500 \\\text { Income Summary } & & 2,500\end{array}$
B)Income Summary $\quad 2,500$
Laundry Revenue $\quad$$\quad$ 2,500
C)Retained Earnings $\quad$$\quad$ 2,500
Income Summary $\quad$$\quad$ 2,500
D)Retained Earnings $\quad$$\quad$ 2,500
Laundry Revenue $\quad$$\quad$ 2,500

Question 34

Closing entries may be prepared by referring solely to the Income Statement columns of the work sheet.

Question 35

An important reason to use a work sheet is to

A) aid the accountant in the daily preparation of journal entries.
B) replace the journal when making adjusting and closing entries.
C) check the accuracy of adjusting entries before they are entered formally into the accounting records.
D) accompany the financial statements in the company's annual report.

Question 36

In preparing adjustments on the work sheet,which of the following accounts most likely would be added to the Account Name column?

A) Telephone Expense
B) Retained Earnings
C) Income Taxes Payable
D) Accumulated Depreciation-Equipment

Question 37

Which of the following accounts probably would have a smaller balance in the Adjusted Trial Balance columns of a work sheet than in the Trial Balance columns?

A) Prepaid Advertising
B) Wages Payable
C) Accumulated Depreciation-Equipment
D) Wages Expense

Question 38

Which of the following accounts most likely would have an amount contained in the Income Statement columns of a work sheet?

A) Common Stock
B) Office Supplies
C) Dividends
D) Income Taxes Expense

Question 39

Use this information from the Income Statement columns of the work sheet of Corner Laundry Service to answer the following question.
$\begin{array} { | l | r | r | } \hline & { \text { Income Statement } } \\\hline & \text { Debit } & \text { Credit } \\\hline \text { Laundry Revenue } & & 2,500 \\\hline \text { Wages Expense } & 750 & \\\hline \text { Rent Expense } & 500 & \\\hline \text { Supplies Expense } & 300 & \\\hline \text { Insurance Expense } & 200 & \\\hline \text { Income Taxes Expense } & 50 & \\\hline\\\text { Net Income } & 1,800 & 2,500 \\& 700 & \\\hline&2,500&2,500\\\hline\end{array}$
The entry to close the expense accounts includes a

A) $\begin{array} { l l } \text { All Expenses } & 1,800 \\\text { Retained Earnings } & 1,800\end{array}$
B)All Expenses $\quad$$\quad$ 1,800
Income Summary $\quad$$\quad$ 1,800
C)Income Summary $\quad$$\quad$ 1,800
All Expenses $\quad$$\quad$ 1,800
D) $\begin{array} { l l l } \text { Retained Earnings } & 1,800 \\\text { All Expenses } & & 1,800\end{array}$

Question 40

An amount would not appear along the Dividends account line in which of the following work sheet columns?

A) Income Statement
B) Balance Sheet
C) Trial Balance
D) Adjusted Trial Balance

Question 41

Typically,formal adjusting entries

A) are prepared prior to completion of the work sheet.
B) are prepared at the same time as closing entries.
C) need not be prepared if a work sheet has been completed.
D) are entered directly into the ledger.

Question 42

An amount for Retained Earnings would not appear in which of the following work sheet columns?

A) Trial Balance
B) Income Statement
C) Balance Sheet
D) Adjusted Trial Balance

Question 43

Which account that does not appear on the balance sheet has an amount in the Balance Sheet columns of a work sheet?

A) Dividends
B) Depreciation Expense
C) Retained Earnings
D) Accumulated Depreciation-Equipment

Question 44

Which of the following accounts most likely would have an amount contained in every set of columns but the Balance Sheet columns of a work sheet?

A) Dividends
B) Depreciation Expense
C) Unearned Revenue
D) Wages Expense

Question 45

The Trial Balance and Adjusted Trial Balance columns of Roland Cleaning Corporation's work sheet are shown below.(The Adjustments columns have been omitted.)In the journal provided,prepare the seven adjusting entries and the four closing entries for the month ended June 30,2010.Omit explanations.

Question 46

The Trial Balance and Adjusted Trial Balance columns of Owen Cleaning Corporation's work sheet are shown below.(The Adjustments columns have been omitted.)Using this information,prepare the post-closing trial balance for Owen Cleaning Corporation as of June 30,2010.

Question 47

Prepare closing entries for December from the following Income Statement columns of the work sheet of Custom Cleaning Service,Inc.,assuming that a $500 dividend was paid during the period (omit explanations).

$\begin{array} { | l | r | r | } \hline & { \text { Income Statement } } \\\hline & { \text { Debit } } &{ \text { Credit } } \\\hline \text { Cleaning Revenue } & & 2,600 \\\hline \text { Wages Expense } & 1,200 & \\\hline \text { Rent Expense } & 400 & \\\hline \text { Supplies Expense } & 300 & \\\hline \text { Income Taxes Expense } & 40 & \\\hline & 1,940 & 2,600 \\\text { Net Income } & 660 & \\\hline & 2,600 & 2,600 \\\hline\end{array}$

Question 48

The amount of Retained Earnings for the balance sheet is obtained from the

A) statement of retained earnings.
B) Adjusted Trial Balance columns of the work sheet.
C) Balance Sheet columns of the work sheet.
D) Trial Balance columns of the work sheet.

Question 49

Why would a large company probably benefit more from a work sheet than would a very small company?

Question 50

From the following items in the Income Statement columns of the work sheet of Antin Corporation at December 31,2010,prepare the closing entries,assuming that a $50 dividend was paid during the period (omit explanations).
$\begin{array} { | l | r | r | } \hline & { \text { Income Statement } } \\\hline \text { Service Revenue } & \text { Debit } & \text { Credit } \\\hline \text { Wages Expense } & & 3,000 \\\hline \text { Rent Expense } & 1,800 & \\\hline \text { Supplies Expense } & 600 & \\\hline \text { Income Taxes Expense } & 300 & \\\hline \text { Depreciation Expense-Building } & 150 & \\\hline & 250 & \\\hline \text { Net Loss } & 3,100 & 3,000 \\& & 100 \\\hline&3,100&3,100\\\hline\end{array}$

Question 51

Presented below are the Retained Earnings,Dividends,and Income Summary accounts for Anika's Pet Grooming Boutique,Inc.,for the year ended December 31,2010.Closing entries have been entered and posted.Prepare a statement of retained earnings.

Question 52

Omitting key letters in the work sheet would make which of the following difficult?

A) The preparation of the financial statements
B) The preparation of the closing entries
C) The preparation of the adjusting entries
D) Crossfooting to the next set of columns

Question 53

From the following items in the Income Statement columns of the work sheet of ElKay Corporation at December 31,2010,prepare the closing entries,assuming that a $75 dividend was paid during the period (omit explanations).
$\begin{array} { | l | r | r | } \hline &{ \text { Income Statement } } \\\hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Service Revenue } & & 1,800 \\\hline \text { Wages Expense } & 1,200 & \\\hline \text { Rent Expense } & 400 & \\\hline \text { Supplies Expense } & 200 & \\\hline \text { Income Taxes Expense } & 100 & \\\hline \text { Depreciation Expense-Building } & 150 & \\\hline & 2,050 & 1,800 \\\text { Net Loss } & & 250 \\\hline & 2,050 & 2,050 \\\hline\end{array}$

Question 54

A work sheet is useful for all except which of the following?

A) Recording transactions from source documents
B) Recording closing entries
C) Recording adjusting entries
D) Preparing financial statements

Question 55

Monty Milko is the only accountant employed at Gamma Enterprises,Inc.When asked by the company president if the financial statements had been prepared yet,Milko answered that he had completed all of his work except the preparation of the statements.He added that the net income that would appear on the current income statement would be $369,075.Identify the two instances where Milko would have learned the net income before he actually prepared the income statement.

Question 56

In a manual system which uses a work sheet,the preparation of adjusting entries

A) typically precedes the preparation of the financial statements.
B) typically precedes preparation of the work sheet.
C) is easy because they are simply copied from the work sheet.
D) is difficult, and therefore they must first be entered into the general journal in pencil.

Question 57

Using the information below from the Income Statement and Balance Sheet columns of Tople Corporation's work sheet for the month ended April 30,2010,prepare the income statement,statement of retained earnings,and balance sheet.