Question 1

The worksheet and the financial statements both require dollar signs.

Accepted Answer

Dollar signs are typically used in financial statements to denote currency, but they are not required in worksheets, which are often used for internal calculations and may not include currency symbols.

Question 2

In the accounting cycle, the last step is

Accepted Answer

The last step in the accounting cycle is preparing a post-closing trial balance. This step is done after all the closing entries have been made and is used to verify that debits equal credits after closing entries are posted, ensuring the ledger is balanced for the start of the new accounting period.

Question 3

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

This statement is true. The Balance Sheet columns on the work sheet should have the same total for the debit and credit sides if everything has been recorded correctly. If there is a difference, it will be either a net income or net loss, which will be recorded on the Income Statement columns.

Question 4

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 for the period in the balance of the accounts. The Unadjusted Trial Balance only includes the raw balances of the accounts before any adjustments are made. Therefore, the Adjusted Trial Balance provides a more accurate representation of the financial position of the company. Choice A is incorrect because the net income (loss) is not a separate account, but rather is included in the retained earnings account. Choice B is incorrect because both the Unadjusted and Adjusted Trial Balances must be in balance before end-of-period processing can continue. Choice D is incorrect because the adjustments are made in the adjusting entries, not in the Adjusted Trial Balance itself.

Question 5

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

Accepted Answer

This statement is true. The closing process in accounting refers to the process of preparing and finalizing financial statements for a particular period, which involves closing out temporary accounts and transferring their balances to permanent accounts. This is often referred to as "closing the books."

Question 6

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

Accepted Answer

Permanent accounts include balance sheet accounts such as assets, liabilities, and equity that are not reset to zero at the end of each accounting period.

Question 7

After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column total for the Balance Sheet pair of columns.

Accepted Answer

This is true because the Balance Sheet pair of columns represent the assets and liabilities/equity of the company, and the net income/loss affects the equity section. Therefore, the overall equation must balance out, which means the total debits must equal the total credits.

Question 8

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

Accepted Answer

The chart of accounts is a list of all accounts used by a company, the journal is a record of all financial transactions, and the ledger is a collection of all accounts and their balances. These three elements work together to make up the accounting system.

Question 9

When preparing the statement of owner's equity, the beginning capital balance can always be found

Accepted Answer

The beginning capital balance represents the ending balance from the previous accounting period, which would be recorded in the general ledger. It is not found in the Income Statement or Balance Sheet columns of the work sheet, nor is it reported in the statement of cash flows, which only shows changes in cash balances.

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

The difference between the debit column and the credit column of an Income Statement should represent the net income, not the net loss. In this case, the difference is $2,000, which means that the company had a net income of $2,000, not a net loss. Therefore, the correct answer is B.

Question 11

During the end-of-period processing which of the following best describes the logical order of this process

Accepted Answer

The logical order of end-of-period processing is to prepare adjustments, then use those adjustments to create an adjusted trial balance, and then use the adjusted trial balance to prepare financial statements. So, choice A correctly represents the logical order.

Question 12

The balance in the capital account on the worksheet will equal the amount presented in the balance sheet.

Accepted Answer

The answer of The balance in the capital account on...

Question 13

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

Accepted Answer

A worksheet heading typically includes a date or a date range to indicate the period of time that the worksheet pertains to.

Question 14

Real accounts are permanent accounts.

Accepted Answer

The answer of Real accounts are permanent accounts....

Question 15

Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to

Accepted Answer

The Adjusted Trial Balance is prepared to verify that the debits and credits are in balance after the adjusting entries have been posted. This ensures accuracy in the financial statements that are prepared using the trial balance.

Question 16

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

Accepted Answer

This is true as the capital and drawing account balances are typically part of the owner's equity section on the balance sheet.

Question 17

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

Accepted Answer

The answer of Since the adjustments are entered on the...

Question 18

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 a credit item in the Income Statement debit column and a debit item in the Balance Sheet credit column according to the rules of double-entry accounting. However, it is also acceptable to show net income in the Income Statement credit column and the Balance Sheet debit column, as long as the amounts are appropriately offset by other entries.

Question 19

Accumulated Depreciation appears on the

Accepted Answer

Accumulated Depreciation is a contra asset account that appears in the Property, Plant, and Equipment section of the balance sheet. It represents the cumulative amount of depreciation expense charged against an asset over its useful life.

Question 20

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

A net loss is shown in the debit column of the Income Statement and the credit column of the Balance Sheet on a worksheet.

Quiz 4: Completing the Accounting Cycle