FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 4: Completing the Accounting Cycle

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following errors would cause the Balance Sheet and Statement of Owner's Equity columns of a work sheet to be out of balance?

A) Entering a liability amount in the Income Statement Credit column.
B) Entering an expense amount in the Balance Sheet and Statement of Owner's Equity Debit column.
C) Entering a liability amount in the Balance Sheet and Statement of Owner's Equity Credit column.
D) Entering a revenue amount in the Balance Sheet and Statement of Owner's Equity Debit column.
E) Entering an asset amount in the Income Statement Debit column.

F) A) and D)
G) C) and E)

Correct Answer

verified

Show Answer

Question 52

True/False

Review LaterAdd Note

Review Later

A worksheet can be helpful in showing the effects of proposed or "what if" transactions but not in helping to prepare interim financial statements.

A) True
B) False

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

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

Because it is a necessary financial statement, the work sheet must be prepared according to specified accounting procedures.

The closing process is necessary in order to:

In the table below, indicate with an "X" in the proper column whether the account is a temporary (nominal)account or a permanent (real)account. $\begin{array} { | l | l | l | l | } \hline & \text { Account } & \begin{array} { l } \text { Temporary } \\( \text { Nominal) }\end{array} & \begin{array} { l } \text { Permanent } \\\text { (Real) }\end{array} \\\hline \text { a. } & \text { Cash } & & \\\hline \text { b. } & \text { Prepaid rent } & & \\\hline \text { c. } & \text { Unearned revenue } & & \\\hline \text { d. } & \text { Accounts receivable } & & \\\hline \text { e. } & \text { Insurance expense } & & \\\hline \text { f. } & \text { S. Holder, Capital } & & \\\hline \text { g. } & \text { S. Holder, Withdrawals } & & \\\hline \text { h. } & \text { Rent expense } & & \\\hline \text { i. } & \text { Fees earned } & & \\\hline \text { j. } & \text { Supplies } & & \\\hline \text { k. } & \text { Supplies expense } & & \\\hline \text { 1. } & \text { Depreciation expense-Equipment } & & \\\hline \text { m. } & \text { Accumulated depreciation-Equipment.... } & & \\\hline\end{array}$

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.

A classified balance sheet organizes assets and liabilities into important subgroups that provide more information to decision makers.

Current liabilities include accounts receivable, unearned revenues, and salaries payable.

The Income Summary account is a permanent account that will be carried forward period after period.

Adjustments must be entered in the journal and posted to the ledger after the work sheet is prepared.

Reversing entries are optional.

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The Net Income for the year is:

A post-closing trial balance reports:

The following information is available for Zephyr Company before closing the accounts. After all of the closing entries are made, what will be the balance in the Zephyr, Capital account? $\begin{array} { | l | r | } \hline \text { Net income } & \$ 115,000 \\\hline \text { Zephyr, Capital } & 110,000 \\\hline \text { Zephyr, Withdrawals } & 39,000 \\\hline\end{array}$

Two common subgroups for liabilities on a classified balance sheet are:

Permanent accounts carry their balances into the next accounting period.

Explain why temporary accounts are closed each period.

At the beginning of the year, Sigma Company's balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000. During the year, the company reported total revenues of $226,000 and expenses of $175,000. Also, owner withdrawals during the year totaled $48,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of the year would be: