Deck 4: Completing the Accounting Cycle
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Deck 4: Completing the Accounting Cycle
1
Land is an example of a plant asset.
True
2
Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets.
False
3
Capital and Drawing are reported in the owner's equity section of the balance sheet.
False
4
The usual presentation of the statement of owner's equity is (1) Beginning capital, (2) Net income or loss, (3) Drawing, (4) Owner's contributions, (5) Ending capital.
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5
When accounts do appear on the unadjusted trial balance but are needed to post adjustments, they are simply added to the account title column.
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6
The work sheet is considered a part of the formal accounting records.
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7
On the income statement, miscellaneous expenses are usually presented as the last item without regard to the dollar amount.
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8
Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities.
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9
After analyzing transactions, the next step would be to post the transactions in the ledger.
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10
Prepaid Insurance is an example of a current asset.
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11
Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements.
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12
The most important output of the accounting cycle is the financial statements.
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13
Office Equipment is an example of a current asset account.
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14
Round tripping is a fraudulent scheme where business A artificially inflates revenue by lending money to customer B who uses that money to buy products from
A.
A.
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15
The difference between a classified balance sheet and one that is classified is that the classified one has subheadings.
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16
Accrued taxes payable are generally reported on the balance sheet as a current liability.
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17
There is really benefit in preparing financial statements in any particular order.
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18
At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses.
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19
Cross-referencing is useful in assuring that the debits and credits are in balance.
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20
The amount of the net income for a period appears on both the income statement and the balance sheet for that period.
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21
A post-closing trial balance contains only asset and liability accounts.
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22
The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance.
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23
The accumulated depreciation account is closed to the income summary account.
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24
Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting period.
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25
Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current assets.
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26
During the closing process, some balance sheet accounts are closed and end the period with a zero balance.
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27
The post-closing trial balance will generally have fewer accounts than the trial balance.
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28
Accrued revenues are ordinarily listed on the balance sheet as current liabilities.
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29
Entries required to close the balances of the temporary accounts at the end of the period are called final entries.
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30
The balance sheet accounts are referred to as real or permanent accounts.
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31
Journalizing and posting closing entries must be completed before financial statements can be prepared.
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32
The income summary account is closed to the owner's capital account.
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33
Accrued expenses are ordinarily listed on the balance sheet as current assets.
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34
Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as current assets.
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35
The drawing account is closed to the income summary account.
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36
The income statement is prepared from the adjusted trial balance or the income statement columns on the work sheet.
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37
Closing entries are entered directly on to the work sheet.
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38
The drawing account is a temporary account.
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39
Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short time before they expire.
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40
Accumulated Depreciation is a permanent account.
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41
All income statement accounts will be closed at the end of the period.
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42
The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements.
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43
Financial statements should be prepared before the closing entries are journalized and posted.
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44
Assets, liabilities, and owner's capital are real accounts and do get closed at the end of the period.
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45
Once an account has been closed for the period, inserting a line in the balance columns zeros out the account, making it ready for the following period.
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46
The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial Balance column totals and the Adjustments column totals.
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47
Any twelve-month accounting period adopted by a company is known as its fiscal year.
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48
The income summary account is also known as the clearing account.
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49
The majority of businesses end their fiscal year on December 31.
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50
It is necessary to post the closing entries to the general ledger.
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51
A post-closing trial balance should be prepared before the financial statements are prepared.
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52
The trial balance may be listed on the work sheet instead of being prepared separately.
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53
The balances of the capital accounts from the Adjusted Trial Balance of the work sheet are extended to the Statement of Owner's Equity columns.
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54
The accounting cycle begins with preparing an unadjusted trial balance.
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55
All companies must use a calendar year as their fiscal year.
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56
A fiscal year that ends when business activities have reached their lowest point is called the natural business year.
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57
In a computerized accounting system, a work sheet may be necessary because the software program automatically posts entries to the accounts and prepares financial statements.
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58
Balance Sheet accounts are considered real accounts.
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59
The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period.
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60
The last step of the accounting cycle is to prepare a post-closing trial balance.
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61
The worksheet and the financial statements both require dollar signs.
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62
In the accounting cycle, the last step is
A) preparing the financial statements
B) journalizing and posting the adjusting entries
C) preparing a post-closing trial balance
D) journalizing and posting the closing entries
A) preparing the financial statements
B) journalizing and posting the adjusting entries
C) preparing a post-closing trial balance
D) journalizing and posting the closing entries
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63
After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet, the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net Loss.
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64
What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance?
A) The Adjusted Trial Balance will show the net income (loss) as an additional account.
B) Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period processing even if it is not in balance.
C) The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the accounts.
D) The Adjusted Trial Balance will be used to record the adjustments for the period.
A) The Adjusted Trial Balance will show the net income (loss) as an additional account.
B) Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period processing even if it is not in balance.
C) The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the accounts.
D) The Adjusted Trial Balance will be used to record the adjustments for the period.
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65
The closing process is sometimes referred to as closing the books.
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66
Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts.
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67
After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column total for the Balance Sheet pair of columns.
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68
The chart of accounts, the journal, and the ledger are essential parts of the accounting system.
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69
When preparing the statement of owner's equity, the beginning capital balance can always be found
A) in the Income Statement columns of the work sheet
B) in the statement of cash flows
C) in the general ledger
D) in the Balance Sheet columns of the work sheet
A) in the Income Statement columns of the work sheet
B) in the statement of cash flows
C) in the general ledger
D) in the Balance Sheet columns of the work sheet
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70
If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000, respectively, after all account balances have been extended, the amount of the net loss is $2,000.
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71
During the end-of-period processing which of the following best describes the logical order of this process
A) Preparation of adjustments, adjusted trial balance, financial statements
B) Preparation of Income Statement, adjusted trial balance, Balance Sheet
C) Preparation of adjusted trial balance, cross-referencing, journalizing
D) Preparation of adjustments, adjusted trial balance, posting
A) Preparation of adjustments, adjusted trial balance, financial statements
B) Preparation of Income Statement, adjusted trial balance, Balance Sheet
C) Preparation of adjusted trial balance, cross-referencing, journalizing
D) Preparation of adjustments, adjusted trial balance, posting
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72
The balance in the capital account on the worksheet will equal the amount presented in the balance sheet.
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73
A work sheet heading is dated for a period of time.
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74
Real accounts are permanent accounts.
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75
Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to
A) verify that the debits and credits are in balance.
B) verify that the net income correctly flows into the statement of owner's equity from the income statement
C) verify that the net income (loss) is correct for the period.
D) verify the correct flow of accounts into the financial statements.
A) verify that the debits and credits are in balance.
B) verify that the net income correctly flows into the statement of owner's equity from the income statement
C) verify that the net income (loss) is correct for the period.
D) verify the correct flow of accounts into the financial statements.
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76
On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns.
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77
Since the adjustments are entered on the work sheet, it is necessary to record them in the journal or post them to the ledger.
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78
Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit column.
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79
Accumulated Depreciation appears on the
A) balance sheet in the current assets section
B) balance sheet in the property, plant and equipment section
C) balance sheet in the long-term liabilities section
D) income statement as an operating expense
A) balance sheet in the current assets section
B) balance sheet in the property, plant and equipment section
C) balance sheet in the long-term liabilities section
D) income statement as an operating expense
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80
A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the Balance Sheet columns.
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