Deck 4: Completing the Accounting Cycle

Question 1

Once the adjusted trial balance is in balance,the flow of accounts will now go into the financial statements.

Answer 1

True

Question 2

The usual presentation of the retained earnings statement is (1)Beginning balance,(2)Net income or loss,(3)Dividends,(4)Stockholders' contributions,(5)Ending balance.

Answer 2

False

Question 3

Accrued expenses are ordinarily listed on the balance sheet as current assets.

Answer 3

False

Question 4

Office Equipment is an example of a current asset account.

Question 5

Prepaid Insurance is an example of a current asset.

Question 6

Land is an example of a plant asset.

Question 7

The amount of the net income for a period appears on both the income statement and the balance sheet for that period.

Question 8

Accrued taxes payable are generally reported on the balance sheet as a current liability.

Question 9

After analyzing transactions,the next step would be to post the transactions in the ledger.

Question 10

Cash and other assets that may reasonably be expected to be realized in cash,sold,or consumed through the normal operations of a business,usually longer than one year,are called current assets.

Question 11

Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities.

Question 12

The income statement is prepared from the adjusted trial balance or the Income Statement columns of the end-of-period spreadsheet.

Question 13

When accounts do not appear on the unadjusted trial balance but are needed to post adjustments,they are simply added to the account title column.

Question 14

There is really no benefit in preparing financial statements in any particular order.

Question 15

Cross-referencing is useful in assuring that the debits and credits are in balance.

Question 16

Common stock and dividends are reported in the stockholders' equity section of the balance sheet.

Question 17

Prepaid expenses that benefit a relatively short period of time are listed on the balance sheet as current assets.

Question 18

Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as current assets.

Question 19

On the income statement,miscellaneous expenses are usually presented as the last item without regard to the dollar amount.

Question 20

The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings.

Question 21

Assets,liabilities,and stockholders' equity accounts are real accounts and do not get closed at the end of the period.

Question 22

The dividends account is a temporary account.

Question 23

A post-closing trial balance should be prepared before the financial statements are prepared.

Question 24

Examples of temporary accounts are Supplies and Prepaid Expenses,which are in the ledger for just a short time before they expire.

Question 25

The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance.

Question 26

The dividends account is closed to the income summary account.

Question 27

The post-closing trial balance will generally have fewer accounts than the trial balance.

Question 28

Journalizing and posting closing entries must be completed before financial statements can be prepared.

Question 29

Accrued revenues are ordinarily listed on the balance sheet as current liabilities.

Question 30

Accumulated Depreciation is a permanent account.

Question 31

Entries required to close the balances of the temporary accounts at the end of the period are called final entries.

Question 32

The income summary account is also known as the clearing account.

Question 33

A post-closing trial balance contains only asset and liability accounts.

Question 34

During the closing process,some balance sheet accounts are closed and end the period with a zero balance.

Question 35

The accumulated depreciation account is closed to the income summary account.

Question 36

All income statement accounts will be closed at the end of the period.

Question 37

The income summary account is closed to the retained earnings account.

Question 38

The balance sheet accounts are referred to as real or permanent accounts.

Question 39

Closing entries are entered directly on the end-of-period spreadsheet.

Question 40

Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting period.

Question 41

The balances of the equity accounts from the Adjusted Trial Balance of the end-of-period spreadsheet are extended to the Retained Earnings Statement columns.

Question 42

Any twelve-month accounting period adopted by a company is known as its fiscal year.

Question 43

A fiscal year that ends when business activities have reached their lowest point is called the natural business year.

Question 44

The end-of-period spreadsheet is not considered a part of the formal accounting records.

Question 45

Real accounts are not permanent accounts.

Question 46

The end-of-period spreadsheet is a tool that accountants can use to summarize adjusting entries and the account balances for the financial statements.

Question 47

The accounting cycle begins with preparing an unadjusted trial balance.

Question 48

The most important output of the accounting cycle is the financial statements.

Question 49

Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts.

Question 50

The trial balance may be listed on the end-of-period spreadsheet instead of being prepared separately.

Question 51

All companies must use a calendar year as their fiscal year.

Question 52

The last step of the accounting cycle is to prepare a post-closing trial balance.

Question 53

The majority of businesses end their fiscal year on December 31.

Question 54

The closing process is sometimes referred to as closing the books.

Question 55

It is not necessary to post the closing entries to the general ledger.

Question 56

The unadjusted,adjusted,and final trial balances are prepared during the accounting cycle of a period.

Question 57

The totals of the Adjusted Trial Balance columns on an end-of-period spreadsheet will always be the sum of the Trial Balance column totals and the Adjustments column totals.

Question 58

Balance sheet accounts are not considered real accounts.

Question 59

Financial statements should be prepared before the closing entries are journalized and posted.

Question 60

Once an account has been closed for the period,inserting a line in the balance columns zeros out the account,making it ready for the following period.

Question 61

A end-of-period spreadsheet heading is dated for a period of time.

Question 62

Since the adjustments are entered on the end-of-period spreadsheet,it is not necessary to record them in the journal or post them to the ledger.

Question 63

​The income statement is prepared from

A) ​the adjusted trial balance
B) ​the Income Statement columns of the end-of-period spreadsheet
C) ​either the adjusted trial balance or the Income Statement columns of the end-of-period spreadsheet
D) ​both the adjusted trial balance and the Income Statement columns of the end-of-period spreadsheet

Question 64

Notes receivable due in 390 days appear on the

A) balance sheet in the current assets section
B) balance sheet in the noncurrent assets section
C) balance sheet in the current liabilities section
D) income statement as an expense

Question 65

After the account balances have been extended from the Adjusted Trial Balance columns on the end-of-period spreadsheet,the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net Loss.

Question 66

The chart of accounts,the journal,and the ledger are essential parts of the accounting system.

Question 67

If the totals of the Income Statement Debit and Credit columns of an end-of-period spreadsheet are $27,000 and $29,000,respectively,after all account balances have been extended,the amount of the net loss is $2,000.

Question 68

A net loss is shown on the end-of-period spreadsheet in the credit columns of both the Income Statement columns and the Balance Sheet columns.

Question 69

Which one of the fixed asset accounts listed below will not have a related contra asset account?

A) Office Equipment
B) Land
C) Delivery Equipment
D) Building

Question 70

What is the major difference between the unadjusted trial balance and the adjusted trial balance?

A) The adjusted trial balance will show the net income (loss)as an additional account.
B) Unlike the adjusted trial balance,the unadjusted trial balance will continue with the end-of-period processing even if it is not in balance.
C) The adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts.
D) The adjusted trial balance will be used to record the adjustments for the period.

Question 71

Net income is shown on the end-of-period spreadsheet in the Income Statement debit column and the Balance Sheet credit column.

Question 72

Prepaid insurance is reported on the balance sheet as a

A) current asset
B) fixed asset
C) current liability
D) long-term liability

Question 73

After Net Income or Loss is entered on the end-of-period spreadsheet,the debit column total must equal the credit column total for the Balance Sheet pair of columns.

Question 74

Once the adjusting entries are posted,the adjusted trial balance is prepared to

A) verify that the debits and credits are in balance
B) verify that the net income correctly flows into the statement of stockholders' equity from the income statement
C) verify that the net income (loss)is correct for the period
D) verify the correct flow of accounts into the financial statements

Question 75

Unearned Fees appear on the

A) balance sheet in the current assets section
B) balance sheet as a current liability
C) balance sheet in the stockholders' equity section
D) income statement as revenue

Question 76

On the end-of-period spreadsheet,the common stock and dividends account balances are extended to the Balance Sheet columns.

Question 77

The income statement should be prepared

A) before the retained earnings statement and balance sheet
B) after the retained earnings statement and before the balance sheet
C) after the retained earnings statement and balance sheet
D) after the balance sheet and before the retained earnings statement

Question 78

The first item appearing on the statement of retained earnings is

A) net income
B) the ending balance of retained earnings
C) dividends
D) the beginning balance of retained earnings

Question 79

The statement of retained earnings should be prepared

A) before the income statement and after the balance sheet
B) before the income statement and balance sheet
C) after the income statement and balance sheet
D) after the income statement and before the balance sheet

Question 80

Accumulated Depreciation appears on the

A) balance sheet in the current assets section
B) balance sheet in the property,plant,and equipment section
C) balance sheet in the long-term liabilities section
D) income statement as an operating expense