Question 1

The report that proves that Assets = Liabilities + Equity is the report.&#10;A) Profit and Loss&#10;B) Statement of Cash Flows&#10;C) Balance Sheet&#10;D) Trial Balance

Accepted Answer

The Balance Sheet is the financial statement that reports a company's assets, liabilities, and equity at a specific point in time. It is used to prove that Assets equals Liabilities plus Equity, also known as the accounting equation. The Profit and Loss statement reports a company's revenues and expenses over a period of time, while the Statement of Cash Flows reports the inflows and outflows of cash during a period. The Trial Balance is a list of all the general ledger account balances, used to ensure that debits and credits match and there are no errors in the accounting records.

Question 2

QuickBooks Online uses the cash-basis of accounting by default.

Accepted Answer

QuickBooks Online offers both cash-basis and accrual-basis accounting methods, and businesses can choose which one they prefer to use. However, accrual-basis accounting is recommended for businesses with more complex financial transactions or inventory tracking needs.

Question 3

An entry to must be recorded at the end of the year.&#10;A) Transfer Net Income into the Owner's Capital account&#10;B) Transfer Net Income into the Checking account&#10;C) Close the adjusting entries for prepaid expenses&#10;D) Write a check to the owner for the amount of Net Income

Accepted Answer

At the end of the year, the Net Income needs to be transferred into the Owner's Capital account. This is done to update the owner's equity in the business and reflects the increased value of the owner's interest in the business due to profitability. The other options are not relevant in this context.

Question 4

QuickBooks Online follows the same closing process as manual accounting.

Accepted Answer

The answer of QuickBooks Online follows the same closing process...

Question 5

QuickBooks Online automatically transfers Net Income into Retained Earnings at the end of the year.

Accepted Answer

This statement is true. QuickBooks Online automatically transfers Net Income into Retained Earnings at the end of the year.

Question 6

When the Checking account and the bank account are reconciled, are recorded into the Checking account.&#10;A) Service Charges&#10;B) Automatic Payments&#10;C) Interest Earned on the account&#10;D) All of the above

Accepted Answer

When reconciling a Checking account, any service charges, automatic payments, and interest earned on the account must be recorded to ensure that the account balance matches the bank statement. Therefore, option D, "All of the above," is the correct choice.

Question 7

Additional investments in the business may be cash or non-cash investments.

Accepted Answer

Additional investments in the business can be made in the form of cash (money) or non-cash (such as equipment or property).

Question 8

When an owner works in a business, payment for services is made by .&#10;A) Creating a Paycheck&#10;B) An Owner Withdrawal&#10;C) A contribution to a Special Fund&#10;D) Adding the time as an investment in the business

Accepted Answer

When the owner works in the business, payment for services is usually made by an owner withdrawal. This means that the owner takes money out of the business as a form of compensation for their work. It is not usually done through creating a paycheck or contributing to a special fund, and adding the time as an investment in the business is not a formal payment method.

Question 9

Adjusting entries are prepared for .&#10;A) Prepaid Expenses&#10;B) Depreciation&#10;C) Drawing&#10;D) Both A and B

Accepted Answer

Adjusting entries are prepared for both prepaid expenses and depreciation. Prepaid expenses are expenses that have been paid in advance but have not been used up or consumed yet, such as insurance or rent. Depreciation is the allocation of the cost of a long-term asset over its useful life, reflecting the gradual loss in value of the asset. Adjusting entries are made to ensure that the expenses and assets are properly recorded in the accounting records.

Question 10

To close income and expense accounts, you enter a closing date in QuickBooks Online.

Accepted Answer

To close income and expense accounts in QuickBooks Online, you need to enter a closing date. This is done to prevent any changes or edits to transactions that belong to a closed period.

Deck 5: General Accounting and End-Of-Period Procedures