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2. In the income statement columns of the worksheet, if total debits exceed total
credits, there is profit.
3. Closing entries are prepared at the end of the accounting period to “zero out” the
balances of all nominal accounts in the ledger.
4. The amounts in the “post-closing trial balance” represent the beginning balances
of accounts in the next accounting period.
8. Worksheets are prepared only in the classroom. They are not prepared in real
life.
9. The financial statements are prepared only after adjusting entries are made.
10. The unexpired portion of an item of expense that was paid in advanced is
recognized as expense.
“Education is not just about going to school and getting a degree. It's about
widening your knowledge and absorbing the truth about life.” - Shakuntala Devi
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1
Entity A started operations on January 1, 20x1. A summary of the transactions during the year is
provided below:
Requirements:
a. Provide the journal entries for the transactions.
b. Post the entries to the ledger using T-accounts.
c. Prepare the unadjusted trial balance using a worksheet.
d. Prepare the adjusting entries (see additional information below).
“Again, I tell you that if two of you on earth agree about anything you ask for, it will be done for you by my
Father in heaven. For where two or three come together in my name, there am I with them.” (Matthew 18:19-20)
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1. Which of the following adjustments cannot be reversed in the next accounting period?
2
a. Accruals for income or expense
b. Prepayments initially recorded using the expense method
c. Advanced collections initially recorded using the income method
d. Prepayments initially recorded using the asset method
2. Which of the following adjustments can be reversed in the next accounting period?
a. Adjusting entry to take up depreciation expense
b. Adjusting entry to record bad debts expense
c. Adjusting entry to record accrued interest income
d. All of these
5. What is the reversing entry in the next accounting period (i.e., 20x2)?
“Praise be to the God and Father of our Lord Jesus Christ, the Father of compassion and the God of all
comfort, who comforts us in all our troubles, so that we can comfort those in any trouble with the comfort we
ourselves have received from God.” (2 Corinthians 1:3-4)
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