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The information for preparing a trial balance on a work sheet is obtained from b. general ledger accounts.
39. After the adjusting entries are journalized and posted to the accounts in the general ledger, the balance of each account should agree with the balance shown on the a. adjusted trial balance. 40. If the total debit column exceeds the total credit column of the income statement columns on a work sheet, then the company has c. suffered a net loss for the period. 41. 42. A work sheet is a multiple column form that facilitates the c. preparation of financial statements. Which of the following companies would be least likely to use a work sheet to facilitate the adjustment process? d. Small company with few accounts A work sheet can be thought of as a(n) b. optional device used by accountants.
44.The account, Supplies, will appear in the following debit columns of the work sheet. d. All of these 45.When constructing a work sheet, accounts are often needed that are not listed in the trial balance already entered on the work sheet from the ledger. Where should these additional accounts be shown on the work sheet? c. They should be inserted on the lines immediately below the trial balance totals. 46. When using a work sheet, adjusting entries are journalized c. after the work sheet is completed and after financial statements have been prepared. Assuming that there is a net loss for the period, debits equal credits in all but which section of the work sheet? a. Income statement columns Adjusting entries are prepared from b. the adjustment columns of the work sheet. The net income (or loss) for the period c. is found by computing the difference between the income statement columns of the work sheet. The work sheet does not show c. the ending balance in the owner's capital account.
51.If the total debits exceed total credits in the balance sheet columns of the work sheet, owner's equity d. will not be affected.
Use the following information for questions 52–53. The income statement and balance sheet columns of Pine Company's work sheet reflects the following totals: Income Statement Dr. Cr. Cr. Totals 52. $58,000 $50,000 $34,000 $42,000 The net income (or loss) for the period is b. $8,000 income. To enter the net income (or loss) for the period into the above work sheet requires an entry to the d. balance sheet debit column and to the balance sheet credit column. Closing entries are made d. so that financial statements can be prepared. Closing entries are b. posted to the ledger accounts from the work sheet. The income summary account b. appears on the balance sheet. If Income Summary has a credit balance after revenues and expenses have been closed into it, the closing entry for Income Summary will include a c. credit to the owner's capital account. Closing entries are journalized and posted b. after the financial statements are prepared. Closing entries c. cause the revenue and expense accounts to have zero balances. Which of the following is a true statement about closing the books of a proprietorship? c. Revenues and expenses are closed to the Income Summary account. Closing entries may be prepared from all but which one of the following sources? c. Balance sheet In order to close the owner's drawing account, the d. owner's capital account should be debited. In preparing closing entries b. each expense account will be credited. Balance Sheet Dr.
The most efficient way to accomplish closing entries is to d. credit the income summary account for total revenues and debit the income summary account for total expenses. The closing entry process consists of closing d. all temporary accounts. The final closing entry to be journalized is typically the entry that closes the b. owner's drawing account. An error has occurred in the closing entry process if d. the balance sheet accounts have zero balances. The Income Summary account is an important account that is used b. in preparing adjusting entries. The balance in the income summary account before it is closed will be equal to a. the net income or loss on the income statement. After closing entries are posted, the balance in the owner's capital account in the ledger will be equal to b. the amount of the owner's capital reported on the balance sheet. A post-closing trial balance will show b. only temporary account balances. A post-closing trial balance should be prepared b. after closing entries are posted to the ledger accounts. A post-closing trial balance will show c. only balance sheet accounts. The purpose of the post-closing trial balance is to b. prove the equality of the balance sheet account balances that are carried forward into the next accounting period. The balances that appear on the post-closing trial balance will match the b. balance sheet account balances after closing entries. Which account listed below would be double ruled in the ledger as part of the closing process? c. Owner's Drawing A double rule applied to accounts in the ledger during the closing process implies that
a. the account is an income statement account. 78. The heading for a post-closing trial balance has a date line that is similar to the one found on a. a balance sheet. Which one of the following is an optional step in the accounting cycle of a business enterprise? b. Prepare a work sheet The final step in the accounting cycle is to prepare c. a post-closing trial balance. Which of the following steps in the accounting cycle would not generally be performed daily? c. Prepare adjusting entries Which of the following steps in the accounting cycle may be performed more frequently than annually? d. Prepare a trial balance Which of the following depicts the proper sequence of steps in the accounting cycle? c. Prepare a trial balance, prepare adjusting entries, prepare financial statements The two optional steps in the accounting cycle are preparing reversing entries and a work sheet. The first required step in the accounting cycle is c. analyzing transactions. Speedy Bike Company received a $640 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $460 and a credit to Service Revenue $460. The correcting entry is c. Debit Cash, $180 and Service Revenue, $460; Credit Accounts Receivable, $640. 87. If errors occur in the recording process, they b. should be corrected as soon as they are discovered. A correcting entry c. may involve any combination of accounts. An unacceptable way to make a correcting entry is to b. erase the incorrect entry. Cole Company paid the weekly payroll on January 2 by debiting Wages Expense for $50,000. The accountant preparing the payroll entry overlooked the fact that Wages Expense of $40,000 had been accrued at year end on December 31. The correcting entry is
84. c. 85. 86.
88. 89. 90.
c. Wages Payable .................................................................. Wages Expense ..................................................... 40,000 91.
Tyler Company paid $430 on account to a creditor. The transaction was erroneously recorded as a debit to Cash of $340 and a credit to Accounts Receivable, $340. The correcting entry is d. Accounts Receivable ........................................................ Accounts Payable ............................................................. Cash ....................................................................... 340 430 770
A lawyer collected $950 of legal fees in advance. He erroneously debited Cash for $590 and credited Accounts Receivable for $590. The correcting entry is c. Cash .................................................................................360 Accounts Receivable ........................................................ 590 Unearned Revenue ................................................ 950 Office Equipment is classified in the balance sheet as b. property, plant, and equipment. A current asset is d. expected to be realized in cash, sold or consumed within one year of the balance sheet or the company's operating cycle, whichever is longer. An intangible asset a. derives its value from the rights and privileges it provides the owner. Liabilities are generally classified on a balance sheet as d. current liabilities and long-term liabilities. Which of the following would not be classified a long-term liability? a. Current maturities of long-term debt Which of the following liabilities are not related to the operating cycle? Bonds payable The report form of the balance sheet c. shows assets above liabilities and owner's equity. It is not true that current assets are resources that are expected to be acquired within one year. The operating cycle of a company is the average time that is required to go from cash to b. cash in producing revenues. On a classified balance sheet, current assets are customarily listed
98. d. 99. 100. d. 101.
c. in the order of liquidity. 103. 104. Intangible assets are c. noncurrent resources. The relationship between current assets and current liabilities is important in evaluating a company's b. liquidity. The most important information needed to determine if companies can pay their current obligations is the c. relationship between current assets and current liabilities.
106. A reversing entry b. is the exact opposite of an adjusting entry made in a previous period. 107. If a company utilizes reversing entries, they will a. be made at the beginning of the next accounting period.
The following questions are from the Study Guide
The steps in the preparation of a work sheet do not include a. analyzing documentary evidence. Balance sheet accounts are considered to be b. permanent accounts. Income Summary has a credit balance of $12,000 in J. Spencer` Co. after closing revenues and expenses. The entry to close Income Summary is d. debit Income Summary $12,000, credit J. Spencer, Capital $12,000.
The post-closing trial balance contains only b. balance sheet accounts. Which one of the following statements concerning the accounting cycle is incorrect? b. The accounting cycle includes only one optional step. On September 23, the Polar Company received a $350 check from Mike Moluf for services to be performed in the future. The bookkeeper for Polar Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should b. debit Accounts Receivable $350 and credit Unearned Service Revenue $350.
Current liabilities a. must reasonably be expected to be paid from existing current assets or through the creation of other current liabilities.
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