Question 1

Unearned Fees appear on the

Accepted Answer

Unearned fees are payments received by a company in advance for goods or services that have not yet been provided to the customer. As a result, unearned fees are classified as a current liability on the balance sheet, as the company has an obligation to fulfill the goods or services promised to the customer. Once the goods or services are provided, the unearned fees will be recognized as revenue on the income statement.

Question 2

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

Accepted Answer

The balance in the retained earnings account on the worksheet may not equal the amount on the balance sheet because it doesn't account for the closing entries, such as net income or dividends, which are adjusted at the end of the accounting period.

Question 3

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

Accepted Answer

It is common practice to list the trial balance on the work sheet as it is necessary for preparing financial statements. Listing it on the work sheet helps in streamlining the process and ensuring accuracy.

Question 4

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

Accepted Answer

The answer of A net loss is shown on the...

Question 5

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

Accepted Answer

A work sheet heading typically includes a date or period of time to specify the timeframe for the data or information contained within the worksheet.

Question 6

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

Accepted Answer

Net income is shown as a debit on the Income Statement column and a credit on the Balance Sheet column, as it increases the owner's equity on the Balance Sheet.

Question 7

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.

Accepted Answer

The difference between the Balance Sheet debit and credit columns after adjustments represents net income or net loss, as it reflects the company's financial performance.

Question 8

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

Accepted Answer

The beginning retained earnings balance is carried over from the previous period's balance sheet and can be found in the general ledger.

Question 9

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

Accepted Answer

The answer of The work sheet and the financial statements...

Question 10

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.

Accepted Answer

If the credit column is greater than the debit column, it means there is a net income, not a net loss. Therefore, the answer cannot be A. Instead, the amount of net income would be $2,000.

Question 11

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.

Accepted Answer

The answer of The totals of the Adjusted Trial Balance...

Question 12

Notes receivable due in 350 days appear on the

Accepted Answer

Notes receivable due in 350 days are considered a current asset as they are expected to be collected within the next year. Therefore, they appear on the balance sheet in the current assets section.

Question 13

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.

Accepted Answer

This is because the Balance Sheet columns must show a balance, meaning that the total amount of assets must be equal to the total amount of liabilities and equity. The net income or loss is taken into account in the computation of the equity section, so the total debits and credits must still be equal.

Question 14

Since the adjustments are entered on the work sheet, it is  not necessary to record them in the journal or post them to the ledger.

Accepted Answer

While adjustments are entered on the work sheet, they must also be recorded in the journal and posted to the ledger to ensure that the accounts are accurate and up-to-date.

Question 15

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

Accepted Answer

This is a common practice in preparing balance sheets. The balances of equity accounts, such as capital stock and dividends, are usually reflected in the balance sheet columns to show their current status.

Question 16

Accumulated depreciation appears on the

Accepted Answer

Accumulated depreciation is a contra-asset account that is used to offset the balance of the property, plant, and equipment account. Therefore, it appears as a deduction from the property, plant, and equipment section on the balance sheet.

Question 17

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

Accepted Answer

The major difference between the unadjusted trial balance and the adjusted trial balance is that the adjusted trial balance includes the postings of the adjustments made during the accounting period in the balance of the accounts. This means that the account balances in the adjusted trial balance have been updated to reflect the effects of the adjusting entries made at the end of the period. The unadjusted trial balance, on the other hand, only shows the balances of accounts before any adjustments have been made. Option A is incorrect because both the unadjusted and adjusted trial balances will show the net income or loss account. Option B is also incorrect because both types of trial balances are prepared to ensure that debits and credits are equal and the accounts are in balance. Option D is partially correct, but it does not fully capture the main difference between the two trial balances.

Question 18

In a computerized accounting system, a work sheet may not be necessary because the software program automatically posts entries to the accounts and prepares financial statements.

Accepted Answer

In a computerized accounting system, the software program automatically posts entries and prepares financial statements, making a work sheet unnecessary.

Question 19

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

Accepted Answer

The purpose of preparing an adjusted trial balance is to verify that the total debits and credits in the accounts are equal, thus ensuring that the fundamental accounting equation (Assets = Liabilities + Equity) remains in balance. This is achieved through the inclusion of adjusting entries that reflect any necessary changes to account balances. The adjusted trial balance provides a basis for preparing accurate financial statements, as well as ensuring the integrity of the accounting system. Therefore, A is the best choice, as it accurately describes the primary purpose of preparing an adjusted trial balance.

Question 20

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

Accepted Answer

The chart of accounts provides a list of all the accounts used in the accounting system; the journal records transactions as they occur; and the ledger contains the balances of each account in the chart of accounts. Together, these components form the foundation of the accounting system.

Quiz 4: Completing the Accounting Cycle