Deck 4: Completing the Accounting Cycle

Question 1

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

Answer 1

False

Question 2

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

Answer 2

True

Question 3

Land is an example of a plant asset.

Answer 3

True

Question 4

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

Question 5

Office Equipment is an example of a current asset account.

Question 6

The difference between a classified balance sheet and one that is classified is that the classified one has subheadings.

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

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

Question 9

At the end of the fiscal period,prepaid expenses are reported on the income statement as expenses.

Question 10

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

Question 11

Current assets are also called as plant assets.

Question 12

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

Question 13

When accounts do appear on the unadjusted trial balance but are needed to post adjustments,they are simply added to the account title column.

Question 14

The usual presentation of the retained earnings statement is (1)beginning retained earnings, (2)net income or loss, (3)dividends (4)ending retained earnings.

Question 15

Capital Stock and Dividends are reported in the stockholders' equity section of the balance sheet.

Question 16

Prepaid Insurance is an example of a current asset.

Question 17

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 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short time before they expire.

Question 28

The income statement is prepared from the adjusted trial balance or the income statement columns on the work sheet.

Question 29

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

Question 30

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

Question 31

The dividends account is a temporary account.

Question 32

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

Question 33

Closing entries are entered directly on to the work sheet.

Question 34

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

Question 35

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

Question 36

Accumulated Depreciation is a permanent account.

Question 37

The dividends account is closed to the income summary account.

Question 38

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

Question 39

Cash,Accounts Payable,and Capital Stock are real accounts and do get closed at the end of the period.

Question 40

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

Question 41

Real accounts are permanent accounts.

Question 42

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

Question 43

Balance Sheet accounts are considered real accounts.

Question 44

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

Question 45

The unadjusted,adjusted,and post-closing trial balances are the three types of trial balances prepared in an accounting cycle.

Question 46

The balances of the equity accounts from the Adjusted Trial Balance columns of the work sheet are extended to the Retained Earnings Statement columns.

Question 47

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

Question 48

The work sheet is considered a part of the formal accounting records.

Question 49

The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements.

Question 50

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

Question 51

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

Question 52

In a computerized accounting system,a work sheet may be necessary because the software program automatically posts entries to the accounts and prepares financial statements.

Question 53

It is necessary to post the closing entries to the general ledger.

Question 54

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

Question 55

The accounting cycle begins with preparing an unadjusted trial balance.

Question 56

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

Question 57

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

Question 58

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 59

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

Question 60

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

Question 61

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

Question 62

After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet,the difference between the initial totals of the Balance Sheet debit and credit columns is net income or net loss.

Question 63

The trial balance may be listed on the work sheet instead of being prepared separately.

Question 64

The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial Balance column totals and the Adjustments column totals.

Question 65

Net income is shown on the work sheet in the Income Statement Debit column and the Balance Sheet Credit column.

Question 66

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

Question 67

The balance in the retained earnings account on the work sheet will equal the amount presented in the balance sheet.

Question 68

A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the Balance Sheet columns.

Question 69

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 all of the adjustments were posted in the correct accounts
C)verify that the net income (loss)is correct for the period
D)verify the correct flow of accounts into the financial statements

Question 70

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 71

After net income or loss is entered on the work sheet,the debit column total must equal the credit column total of the Balance Sheet columns.

Question 72

The work sheet and the financial statements both require dollar signs.

Question 73

When preparing the retained earnings statement,the beginning retained earnings balance can always be found

A)in the Income Statement columns of the work sheet
B)in the statement of cash flows
C)in the general ledger
D)in the Adjustments columns of the work sheet

Question 74

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 75

Since the adjustments are entered on the work sheet,it is necessary to record them in the journal or post them to the ledger.

Question 76

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 77

If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000,respectively,after all account balances have been extended,the amount of the net loss is $2,000.

Question 78

On the work sheet,the capital stock and dividends account balances are extended to the Balance Sheet columns.

Question 79

A work sheet heading is dated for a period of time.

Question 80

Notes receivable due in 350 days appear on the

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