Question 1

The work sheet is used to record transactions as they occur.

Accepted Answer

The worksheet is a tool used for planning and adjusting entries before those adjustments are posted to the ledger, not for recording transactions as they occur. Transactions are initially recorded in journals, not worksheets.

Question 2

Revenue accounts should begin each accounting period with zero balances.

Accepted Answer

Revenue accounts are temporary accounts that are closed out and start with a zero balance at the beginning of each new accounting period to accurately record the revenues for that specific period.

Question 3

If all columns balance upon completion of a work sheet, you can be sure that no errors were made in preparing the work sheet.

Accepted Answer

Although balancing columns is a good indication that certain calculations are correct, it doesn't necessarily guarantee the absence of errors in the entire work sheet. Other types of errors, such as transposition errors and incorrect account classifications, may still exist despite balanced columns.

Question 4

On a work sheet, adjusted balances of revenues and expenses are sorted to the Income Statement columns.

Accepted Answer

Adjusted balances of revenues and expenses are transferred to the Income Statement columns on a worksheet in order to calculate net income or loss for a business.

Question 5

A work sheet is a substitute for the financial statements.

Accepted Answer

A worksheet is not a substitute for the financial statements. Worksheets are a tool used by accountants to summarize information and prepare financial statements, but they are not considered financial statements themselves. Financial statements are the official reports of a company's financial performance, such as the balance sheet, income statement, and cash flow statement.

Question 6

To prepare the income statement all necessary numbers can be found in the income statement columns of the work sheet, including the profit or loss.

Accepted Answer

The income statement columns of the work sheet summarize the revenue, expenses, and profit or loss, so all necessary numbers to prepare the income statement can be found in those columns.

Question 7

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Accepted Answer

The closing process is the final step of the accounting cycle in which temporary accounts (such as revenue and expenses) are closed out and transferred to permanent accounts (such as retained earnings). This prepares the accounts for the next accounting period.

Question 8

A work sheet can be prepared manually or with a computer spreadsheet program.

Accepted Answer

A worksheet can be prepared both manually and with a computer spreadsheet program like Microsoft Excel or Google Sheets.

Question 9

On the work sheet, profit is entered in the Income Statement Credit column and in the Statement of Changes in Equity or Balance Sheet Debit column.

Accepted Answer

Profit is entered as a credit in the Income Statement Credit column, but as a credit in the Statement of Changes in Equity and Balance Sheet Credit column, not a debit.

Question 10

If interim financial statements are required, adjusting entries must be journalized and posted to obtain the adjusted data needed for their preparation.

Accepted Answer

The answer of If interim financial statements are required, adjusting...

Question 11

Revenue and expense accounts are permanent accounts and should not be closed at the end of the fiscal period.

Accepted Answer

Revenue and expense accounts are temporary accounts that are closed at the end of the fiscal period to transfer their balances to permanent equity accounts, such as Retained Earnings, to prepare the accounts for the next period.

Question 12

Closing entries are normally entered in the General Journal and then recorded on the work sheet.

Accepted Answer

Closing entries are made in the General Journal and then posted to the General Ledger, not recorded on the work sheet. The work sheet is used for planning and adjusting entries, not for recording closing entries.

Question 13

Adjusting entries are normally entered in the General Journal before they are recorded on the work sheet.

Accepted Answer

Adjusting entries are typically recorded on the work sheet first to ensure the financial statements are accurate, and then they are entered into the General Journal.

Question 14

On the work sheet, a loss is indicated if the total of the Income Statement Debit column exceeds the total of the Income Statement Credit column.

Accepted Answer

The Income Statement Debit column includes expenses and losses, while the Income Statement Credit column includes revenues and gains. If the total of the Debit column (expenses and losses) is greater than the total of the Credit column (revenues and gains), then the result is a net loss.

Question 15

To prepare the balance sheet, all necessary numbers can be found in the balance sheet columns of the work sheet, including ending capital.

Accepted Answer

The ending capital is not directly found in the balance sheet columns of the worksheet; it is calculated by adjusting the beginning capital with net income or loss and withdrawals.

Question 16

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

Accepted Answer

Closing revenue and expense accounts resets the balances to zero and transfers the net income or loss to the retained earnings account, making the revenue and expense accounts available for use again in the next accounting period.

Question 17

Financial statements prepared from a work sheet offer more information than if it is not used and statements are just prepared from an adjusted trial balance.

Accepted Answer

A worksheet is a tool for preparation and does not affect the amount of information presented in the financial statements; the content and detail in the financial statements are determined by the accounting policies and standards applied, not by whether a worksheet is used.

Question 18

A work sheet is prepared before entering the adjustments in the accounts.

Accepted Answer

A work sheet is a document used to organize the information needed to prepare the financial statements. Adjustments are entered on the work sheet before being made in the accounts.

Question 19

Accounts that appear in the balance sheet are often called permanent or temporary accounts.

Accepted Answer

Accounts that appear in the balance sheet are called permanent accounts because their balances are carried over to the next accounting period. Temporary accounts, on the other hand, are reset to zero at the end of the accounting period and include items like revenues, expenses, and dividends.

Question 20

A work sheet is a tool of the accountant for bringing together information needed in preparing the statements, adjusting the accounts, and preparing closing entries.

Accepted Answer

A worksheet serves as a tool for an accountant to gather information needed in the preparation of financial statements, adjusting accounts, and making closing entries.

Quiz 4: Completing the Accounting Cycle and Classifying Accounts