Question 1

The net income (or loss) for the period

Accepted Answer

A) is found by computing the difference between the income statement credit column and the balance sheet credit column on the worksheet. 
B) cannot be found on the worksheet. 
C) is found by computing the difference between the income statement columns of the worksheet. 
D) is found by computing the difference between the trial balance totals and the adjusted trial balance totals.

Question 2

If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has

Accepted Answer

A) earned net income for the period. 
B) an error because debits do not equal credits. 
C) suffered a net loss for the period. 
D) to make an adjusting entry.

Question 3

A double rule (double underline) applied to accounts in the ledger during the closing process implies that

Accepted Answer

A) the account is a temporary account. 
B) the account is a balance sheet account. 
C) the account balance is not zero. 
D) a mistake has been made, since double ruling is prescribed.

Question 4

Closing entries are made

Accepted Answer

A) in order to terminate the business as an operating entity. 
B) so that all assets, liabilities, and stockholders' equity accounts will have zero balances when the next accounting period starts. 
C) in order to transfer net income (or loss) and dividends to the retained earnings account. 
D) so that financial statements can be prepared.

Question 5

A business entity has only one accounting cycle over its economic existence.

Accepted Answer

A) True 
 B)False

Question 6

The following information is for Bright Eyes Auto Supplies:  The total dollar amount of assets to be classified as investments is

Accepted Answer

A) $0. 
B) $140,000. 
C) $180,000. 
D) $250,000.

Question 7

Equipment used in the company's operations is classified in the balance sheet as

Accepted Answer

A) a current asset. 
B) property, plant, and equipment. 
C) an intangible asset. 
D) a long-term investment.

Question 8

An incorrect debit to Accounts Receivable instead of the correct account Notes Receivable does not require a correcting entry because total assets will not be misstated.

Accepted Answer

A) True 
 B)False

Question 9

IFRS

Accepted Answer

A) requires a specific format for the balance sheet (statement of financial position) that is identical to U.S.GAAP. 
B) requires a specific format for the balance sheet (statement of financial position) that is different from U.S.GAAP. 
C) requires no specific format for the balance sheet (statement of financial position) but most companies that follow IFRS prepare the statement identical to U.S.GAAP. 
D) requires no specific format for the balance sheet (statement of financial position) but most companies that follow IFRS prepare the statement in a different format from U.S.GAAP.
IFRS.

Question 10

A company's liquidity is concerned with the relationship between long-term investments and long-term debt.

Accepted Answer

A) True 
 B)False

Question 11

The steps in the preparation of a worksheet do not include

Accepted Answer

A) analyzing documentary evidence. 
B) preparing a trial balance on the worksheet. 
C) entering the adjustments in the adjustment columns. 
D) entering adjusted balances in the adjusted trial balance columns.

Question 12

Long-term investments would appear in the property, plant, and equipment section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

Closing entries are journalized after adjusting entries have been journalized.

Accepted Answer

A) True 
 B)False

Question 14

After closing entries are posted, the balance in the retained earnings account in the ledger will be equal to

Accepted Answer

A) the beginning retained earnings reported on the retained earnings statement. 
B) the amount of the retained earnings reported on the balance sheet. 
C) zero. 
D) the net income for the period.

Question 15

Both IFRS and GAAP require disclosures about

Accepted Answer

A) accounting policies followed. 
B) judgments that management has made in the process of applying the entity's accounting policies. 
C) the key assumptions and estimation uncertainty. 
D) All of these answer choices are correct.
IFRS.

Question 16

Which one of the following is an optional step in the accounting cycle of a business?

Accepted Answer

A) Analyze business transactions 
B) Prepare a worksheet 
C) Prepare a trial balance 
D) Post to the ledger accounts

Question 17

Which one of the following statements concerning the accounting cycle is incorrect?

Accepted Answer

A) The accounting cycle includes journalizing transactions and posting to ledger accounts. 
B) The accounting cycle includes only one optional step. 
C) The steps in the accounting cycle are performed in sequence. 
D) The steps in the accounting cycle are repeated in each accounting period.

Question 18

The use of reversing entries

Accepted Answer

A) is a required step in the accounting cycle. 
B) changes the amounts reported in the financial statements. 
C) simplifies the recording of subsequent transactions. 
D) is required for all adjusting entries.

Question 19

The adjustments entered in the adjustments columns of a worksheet are

Accepted Answer

A) not journalized. 
B) posted to the ledger but not journalized. 
C) not journalized until after the financial statements are prepared. 
D) journalized before the worksheet is completed.

Question 20

In preparing closing entries

Accepted Answer

A) each revenue account will be credited. 
B) each expense account will be credited. 
C) the retained earnings account will be debited if there is net income for the period. 
D) the dividends account will be debited.

Exam 4: Completing the Accounting Cycle

The net income (or loss) for the period

If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has

A double rule (double underline) applied to accounts in the ledger during the closing process implies that

Closing entries are made

A business entity has only one accounting cycle over its economic existence.

The following information is for Bright Eyes Auto Supplies: The total dollar amount of assets to be classified as investments is

Equipment used in the company's operations is classified in the balance sheet as

An incorrect debit to Accounts Receivable instead of the correct account Notes Receivable does not require a correcting entry because total assets will not be misstated.

IFRS

A company's liquidity is concerned with the relationship between long-term investments and long-term debt.

The steps in the preparation of a worksheet do not include

Long-term investments would appear in the property, plant, and equipment section of the balance sheet.

Closing entries are journalized after adjusting entries have been journalized.

After closing entries are posted, the balance in the retained earnings account in the ledger will be equal to

Both IFRS and GAAP require disclosures about

Which one of the following is an optional step in the accounting cycle of a business?

Which one of the following statements concerning the accounting cycle is incorrect?

The use of reversing entries

The adjustments entered in the adjustments columns of a worksheet are

In preparing closing entries