Question 1

If the Balance Sheet and Statement of Owner's Equity columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Owner's Equity Credit column, the cause could be:
A)An expense entered in the Balance Sheet and Statement of Owner's Equity Credit column.
B)A liability amount entered in the Income Statement and Statement of Owner's Equity Credit column.
C)An expense entered in the Balance Sheet and Statement of Owner's Equity Debit column.
D)A revenue entered in the Balance Sheet and Statement of Owner's Equity Credit column.
E)An asset amount entered in the Income Statement and Statement of Owner's Equity Debit column.

Accepted Answer

The answer of If the Balance Sheet and Statement of...

Question 2

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750. The Adjustments columns shows a credit of $425 for supplies used during the period. The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:
A)$425 debit.
B)$750 debit.
C)$425 credit.
D)$325 credit.
E)$325 debit.

Accepted Answer

The answer of The Unadjusted Trial Balance columns of a...

Question 3

K. Canopy, the proprietor of Canopy Services, withdrew $5,700 from the business during the current year. The entry to close the withdrawals account at the end of the year is:
A)Debit K. Canopy, Capital $5,700, credit Salary Expense $5,700
B)Debit K Canopy, Withdrawals $5,700; credit Cash, $5,700
C)Debit Income Summary $5,700; credit K. Canopy, Capital $5,700
D)Debit K. Canopy, Capital $5,700; credit K. Canopy, Withdrawals $5,700
E)Debit K. Canopy, Withdrawals $5,700; credit K. Canopy, Capital $5,700

Accepted Answer

The answer of K. Canopy, the proprietor of Canopy Services,...

Question 4

An optional columnar working paper used to prepare a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements is a(n):
A)Unadjusted trial balance.
B)Adjusted trial balance.
C)Work sheet.
D)General ledger.
E)Post-closing trial balance.

Accepted Answer

A work sheet is an optional columnar working paper used to prepare a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements. It helps to organize and facilitate the adjustment process before preparing the final financial statements. The other options listed are either final trial balances or accounting records used throughout the accounting cycle.

Question 5

Which of the following is classified as a plant asset?
A)Office equipment.
B)Merchandise inventory.
C)Patent.
D)Office supplies.
E)Cash.

Accepted Answer

Plant assets are tangible assets that are used in the production or operation of a business. Office equipment, such as computers and furniture, are examples of plant assets. Merchandise inventory, patents, office supplies, and cash are not considered plant assets.

Question 6

In the process of completing a work sheet, the accountant determines that the Income Statement debit column totals $83,000, while the Income Statement credit column totals $65,000. To enter net income (or net loss)for the period into the work sheet would require an entry to
A)it is not practical to enter Net Income (or Net Loss)on the work sheet.
B)the Balance Sheet & Statement of Owner's Equity debit column and the Income Statement credit column.
C)the Adjustments debit column and the Adjustments credit column.
D)the Unadjusted Trial Balance debit column and the Adjustments credit column.
E)the Income Statement debit column and the Balance Sheet & Statement of Owner's Equity credit column.

Accepted Answer

The answer of In the process of completing a work...

Question 7

In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. The Balance Sheet columns will balance on completing the work sheet but with the wrong net income, if the amount sorted in error is:
A)A liability amount placed in the Income Statement Credit column.
B)A liability amount placed in the Balance Sheet Debit column.
C)An asset amount placed in the Balance Sheet Credit column.
D)An expense amount placed in the Balance Sheet Credit column.
E)A revenue amount placed in the Balance Sheet Debit column.

Accepted Answer

The answer of In preparing a work sheet an adjusted...

Question 8

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:
A)Debit T. Westmont, Capital $297,000; credit Income Summary $297,000
B)Debit Income Summary $63,300; credit T. Westmont, Capital $63,300
C)Debit T. Westmont, Capital $81,300; credit Income Summary $81,300
D)Debit T. Westmont, Capital $63,300; credit Income Summary $63,300
E)Debit Income Summary $81,300, credit T. Westmont, Capital $81,300

Accepted Answer

The answer of Tara Westmont, the proprietor of Tiptoe Shoes,...

Question 9

The current ratio:
A)Is used to help assess a company's ability to pay its debts in the near future.
B)Is used to measure a company's profitability.
C)Measures the effect of operating income on profit.
D)Is used to measure the relation between assets and long-term debt.
E)Is calculated by dividing current assets by equity.

Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay off its short-term debts with its current assets. It is calculated by dividing current assets by current liabilities. This ratio is used to assess a company's ability to pay its debts in the near future.

Question 10

Which of the following statements is incorrect?
A)After the work sheet is completed, it can be used to help prepare the financial statements.
B)On the work sheet, the effects of the accounting adjustments are shown on the account balances.
C)Working papers are useful aids in the accounting process.
D)On the work sheet, the adjusted amounts are sorted into columns according to whether the accounts are used in preparing the unadjusted trial balance or the adjusted trial balance.
E)A worksheet is not a substitute for financial statements.

Accepted Answer

The answer of Which of the following statements is incorrect?
A)After...

Question 11

Accumulated Depreciation and Service Fees Earned would be sorted to which respective columns in completing a work sheet?
A)Balance Sheet and Statement of Owner's Equity-Debit and Balance Sheet and Statement of Owner's Equity-Credit.
B)Balance Sheet and Statement of Owner's Equity-Debit and Income Statement-Debit.
C)Income Statement-Debit and Income Statement-Credit.
D)Balance Sheet and Statement of Owner's Equity-Debit; and Income Statement-Credit.
E)Balance Sheet and Statement of Owner's Equity-Credit and Income Statement-Credit.

Accepted Answer

The answer of Accumulated Depreciation and Service Fees Earned would...

Question 12

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from)the owner's capital account is the:
A)Contra account.
B)Income Summary account.
C)Nominal account.
D)Closing account.
E)Balance column account.

Accepted Answer

The account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account is the Income Summary account. This account is a temporary account used to summarize revenues and expenses and determine the net income (or loss) for the period. The net income (or loss) is then transferred to the owner's capital account.

Question 13

All of the following regarding the current ratio are true except:
A)Current ratio is calculated by dividing current assets by current liabilities.
B)Current ratio can reveal challenges in covering short-term obligations if it is less than 1.
C)Current ratio can affect a creditor's decision about whether to lend money to a company.
D)Current ratio does not affect a creditor's decision on whether to allow a company to buy on credit.
E)Current ratio helps to assess a company's ability to pay its debts in the near future.

Accepted Answer

Current ratio is an important metric used by creditors to determine a company's ability to pay its debts in the near future. A current ratio below 1 may indicate challenges in covering short-term obligations. However, it does not affect a creditor's decision on whether to allow a company to buy on credit.

Question 14

The balances in the unadjusted columns of a work sheet will agree with:
A)whatever balances management has decided to report.
B)the balances reflected in the company's unadjusted trial balance.
C)the balances in the company's post-closing trial balance.
D)the balances reflected in the company's financial statements.
E)the balances management budgeted for the accounting period.

Accepted Answer

The unadjusted columns of a work sheet contain the balances reflected in the company's unadjusted trial balance. Therefore, the balances in the unadjusted columns should agree with the balances in the company's unadjusted trial balance.

Question 15

Which of the following errors would cause the Balance Sheet and Statement of Owner's Equity columns of a work sheet to be out of balance?
A)Entering a liability amount in the Income Statement Credit column.
B)Entering an expense amount in the Balance Sheet and Statement of Owner's Equity Debit column.
C)Entering a liability amount in the Balance Sheet and Statement of Owner's Equity Credit column.
D)Entering a revenue amount in the Balance Sheet and Statement of Owner's Equity Debit column.
E)Entering an asset amount in the Income Statement Debit column.

Accepted Answer

The answer of Which of the following errors would cause...

Question 16

Statements that show the financial statements as if proposed transactions had already occurred are called:
A)Temporary statements.
B)Interim statements.
C)Pro forma statements.
D)Professional statements.
E)Simplified statements.

Accepted Answer

Pro forma statements show the financial statements as if proposed transactions had already occurred. They are often used for forecasting and planning purposes. Temporary statements, interim statements, professional statements, and simplified statements are not used to show the impact of proposed transactions.

Question 17

A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired rent of $200. This adjusting entry results in:
A)$200 of prepaid insurance.
B)$200 difference between the debit and credit columns of the Unadjusted Trial Balance.
C)An error in the financial statements.
D)$200 decrease in net income.
E)$200 increase in net income.

Accepted Answer

The adjusting entry for $200 of expired rent means that $200 of the Prepaid Rent balance is no longer prepaid and should be recognized as Rent Expense. This results in a decrease in net income, as expenses have increased by $200. Therefore, the correct answer is D.

Question 18

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The ending owner's capital balance after closing is:
A)$63,300
B)$378,300
C)$81,300
D)$185,000
E)$360,300

Accepted Answer

The answer of Tara Westmont, the proprietor of Tiptoe Shoes,...

Question 19

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The Net Income for the year is:
A)$185,000
B)$63,300
C)$360,300
D)$378,300
E)$81,300

Accepted Answer

The answer of Tara Westmont, the proprietor of Tiptoe Shoes,...

Question 20

The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments columns contain entries for the following: Office supplies used during the period, $1,200. Expiration of prepaid rent, $700.
Accrued salaries expense, $500. Depreciation expense, $800.
Accrued service fees receivable, $400.
The Adjusted Trial Balance columns total is:
A)$87,600
B)$84,000
C)$80,400.
D)$85,700
E)$85,900

Accepted Answer

To calculate the Adjusted Trial Balance, we need to add the adjustments to the unadjusted trial balance. 
$84,000 + $1,200 - $700 + $500 - $800 + $400 = $85,600 
Therefore, the answer is option D: $85700.

Quiz 4: Completing the Accounting Cycle

If the Balance Sheet and Statement of Owner's Equity columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Owner's Equity Credit column, the cause could be:

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750. The Adjustments columns shows a credit of $425 for supplies used during the period. The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:

K. Canopy, the proprietor of Canopy Services, withdrew $5,700 from the business during the current year. The entry to close the withdrawals account at the end of the year is:

An optional columnar working paper used to prepare a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements is a(n) :

Which of the following is classified as a plant asset?

In the process of completing a work sheet, the accountant determines that the Income Statement debit column totals $83,000, while the Income Statement credit column totals $65,000. To enter net income (or net loss) for the period into the work sheet would require an entry to

In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. The Balance Sheet columns will balance on completing the work sheet but with the wrong net income, if the amount sorted in error is:

The current ratio:

Which of the following statements is incorrect?

Accumulated Depreciation and Service Fees Earned would be sorted to which respective columns in completing a work sheet?

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account is the:

All of the following regarding the current ratio are true except:

The balances in the unadjusted columns of a work sheet will agree with:

Which of the following errors would cause the Balance Sheet and Statement of Owner's Equity columns of a work sheet to be out of balance?

Statements that show the financial statements as if proposed transactions had already occurred are called:

A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired rent of $200. This adjusting entry results in:

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The ending owner's capital balance after closing is:

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The Net Income for the year is: