Question 1

On a work sheet, if the Debit total exceeds the Credit total of the Income Statement columns, a net loss is indicated.

Accepted Answer

A) True 
 B)False

Question 2

______________ revenues are liabilities requiring delivery of products and for services.

Accepted Answer

The answer of ______________ revenues are liabilities requiring delivery of...

Question 3

The closing process is necessary in order to:

Accepted Answer

A)  Calculate net income or net loss for an accounting period.
B)  Ensure that all permanent accounts are closed to zero at the end of each accounting period.
C)  Ensure that the company complies with state laws.
D)  Ensure that net income or net loss and dividends for the period are closed into the retained earnings account.
E)  Ensure that management is aware of how well the company is operating.F) D) and E)
G) A) and D)

Question 4

Explain the purpose of reversing entries.

Accepted Answer

Reversing entries are an optional step i...

Question 5

The recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Accepted Answer

A)  Accounting period.
B)  Operating cycle.
C)  Accounting cycle.
D)  Closing cycle.
E)  Natural business year.F) A) and E)
G) C) and E)

Question 6

The Income Summary account is used to:

Accepted Answer

A)  Adjust and update asset and liability accounts.
B)  Close the revenue and expense accounts.
C)  Determine the appropriate dividend amount.
D)  Replace the income statement under certain circumstances.
E)  Replace the retained earnings account in some businesses.F) A) and E)
G) C) and D)

Question 7

Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $185,000, expenses of $103,700, The company paid $18,000 cash in dividends to the owner (sole stockholder) . The retained earnings account before closing had a balance of $297,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

Accepted Answer

A)  Debit Retained Earnings $297,000; credit Income Summary $297,000
B)  Debit Retained Earnings $63,300; credit Income Summary $63,300
C)  Debit Income Summary $63,300; credit Retained Earnings $63,300
D)  Debit Income Summary $81,300; credit Retained Earnings $81,300
E)  Debit Retained Earnings $81,300; credit Income Summary $81,300F) C) and D)
G) B) and E)

Question 8

Profit margin can also be called return on sales.

Accepted Answer

A) True 
 B)False

Question 9

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements regarding reporting under GAAP and IFRS is not true:

Accepted Answer

A)  Both GAAP and IFRS define the initial asset value as historical cost for nearly all assets.
B)  The definition of an asset under GAAP and IFRS involves three basic criteria.
C)  Both GAAP and IFRS define the initial asset value as replacement value.
D)  The definition of a liability under GAAP and IFRS involves three basic criteria.
E)  After acquisition, one of two asset measurement systems is applied.F) C) and E)
G) B) and D)

Question 11

The aim of a post-closing trial balance is to verify that (1) total debits equal total credits for temporary accounts, and (2) all temporary accounts have zero balances.

Accepted Answer

A) True 
 B)False

Question 12

Revenues, expenses, dividends, and Income Summary are called _________________ accounts because they are closed at the end of each accounting period.

Accepted Answer

temporary ...

Question 13

The work sheet is a required report made available to external decision makers.

Accepted Answer

A) True 
 B)False

Question 14

Before an adjusting entry is made to recognize the cost of expired insurance for the period, Prepaid Insurance and Insurance Expense are both overstated.

Accepted Answer

A) True 
 B)False

Question 15

The _______________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

Accepted Answer

The answer of The _______________ depreciation method allocates equal amounts...

Question 16

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of its related asset.

Accepted Answer

A) True 
 B)False

Question 17

Identify the types of adjusting entries and explain the purpose of each type.

Accepted Answer

Adjusting entries can be grouped into tw...

Question 18

List the three-steps of the adjusting process.

Accepted Answer

(1) Determine what the current...

Question 19

Adjusting entries are designed primarily to correct accounting errors.

Accepted Answer

A) True 
 B)False

Question 20

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts for Financial Statements

Revenues, expenses, dividends, and Income Summary are called _________________ accounts because they are closed at the end of each accounting period.

Correct Answer
verified
temporary ...
View Answer

The recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Correct Answer
verified

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of its related asset.

Correct Answer
verified

Explain the purpose of reversing entries.

Correct Answer
verified
Reversing entries are an optional step i...
View Answer

Before an adjusting entry is made to recognize the cost of expired insurance for the period, Prepaid Insurance and Insurance Expense are both overstated.

Correct Answer
verified

Identify the types of adjusting entries and explain the purpose of each type.

Correct Answer
verified
Adjusting entries can be grouped into tw...
View Answer

The _______________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

Correct Answer
verified

Profit margin can also be called return on sales.

Correct Answer
verified

The aim of a post-closing trial balance is to verify that (1) total debits equal total credits for temporary accounts, and (2) all temporary accounts have zero balances.

Correct Answer
verified

On a work sheet, if the Debit total exceeds the Credit total of the Income Statement columns, a net loss is indicated.

Correct Answer
verified

Adjusting entries are designed primarily to correct accounting errors.

Correct Answer
verified

List the three-steps of the adjusting process.

Correct Answer
verified
(1) Determine what the current...
View Answer

The work sheet is a required report made available to external decision makers.

Correct Answer
verified

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Correct Answer
verified

Which of the following statements regarding reporting under GAAP and IFRS is not true:

Correct Answer
verified

______________ revenues are liabilities requiring delivery of products and for services.

Correct Answer
verified

Correct Answer
verified

The Income Summary account is used to:

Correct Answer
verified

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Correct Answer
verified

The closing process is necessary in order to:

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

Revenues, expenses, dividends, and Income Summary are called _________________ accounts because they are closed at the end of each accounting period.

Correct Answerverifiedtemporary ...View AnswerShow Answer

The recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Correct AnswerverifiedShow Answer

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of its related asset.

Correct AnswerverifiedShow Answer

Explain the purpose of reversing entries.

Correct AnswerverifiedReversing entries are an optional step i...View AnswerShow Answer

Before an adjusting entry is made to recognize the cost of expired insurance for the period, Prepaid Insurance and Insurance Expense are both overstated.

Correct AnswerverifiedShow Answer

Identify the types of adjusting entries and explain the purpose of each type.

Correct AnswerverifiedAdjusting entries can be grouped into tw...View AnswerShow Answer

The _______________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

Correct AnswerverifiedShow Answer

Profit margin can also be called return on sales.

Correct AnswerverifiedShow Answer

The aim of a post-closing trial balance is to verify that (1) total debits equal total credits for temporary accounts, and (2) all temporary accounts have zero balances.

Correct AnswerverifiedShow Answer

On a work sheet, if the Debit total exceeds the Credit total of the Income Statement columns, a net loss is indicated.

Correct AnswerverifiedShow Answer

Adjusting entries are designed primarily to correct accounting errors.

Correct AnswerverifiedShow Answer

List the three-steps of the adjusting process.

Correct Answerverified(1) Determine what the current...View AnswerShow Answer

The work sheet is a required report made available to external decision makers.

Correct AnswerverifiedShow Answer

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Correct AnswerverifiedShow Answer

Which of the following statements regarding reporting under GAAP and IFRS is not true:

Correct AnswerverifiedShow Answer

______________ revenues are liabilities requiring delivery of products and for services.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Income Summary account is used to:

Correct AnswerverifiedShow Answer

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Correct AnswerverifiedShow Answer

The closing process is necessary in order to:

Correct AnswerverifiedShow Answer

Correct Answer
verified
temporary ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Reversing entries are an optional step i...
View Answer

Correct Answer
verified

Correct Answer
verified
Adjusting entries can be grouped into tw...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified
(1) Determine what the current...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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