Question 1

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period? 
A)$1,400.
B)$1,855.
C)$1,905.
D)$2,060.
E)$4,670.

Accepted Answer

The answer of A company's December 31 work sheet for...

Question 2

Which of the following statements is incorrect?
A)Working papers are useful aids in the accounting process.
B)On the work sheet,the effects of the accounting adjustments are shown on the account balances.
C)After the work sheet is completed,it can be used to help prepare the financial statements.
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

On the work sheet, the adjusted amounts are sorted into columns based on whether the accounts are nominal or real accounts, not whether they are used in preparing the unadjusted or adjusted trial balance.

Question 3

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?  
A)$3,305.
B)$4,180.
C)$2,350.
D)$2,540.
E)$3,225.

Accepted Answer

The answer of A company's December 31 work sheet for...

Question 4

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 retained earnings account is the:
A)Income Summary account.
B)Closing account.
C)Balance column account.
D)Contra account.
E)Nominal account.

Accepted Answer

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 retained earnings account is called the Income Summary account. The Income Summary account is a nominal account which is used only in the closing process to transfer the balances of all revenue and expense accounts. The net balance of the Income Summary account is then transferred to the retained earnings account, which is a real account, to update the equity section of the balance sheet. Therefore, option A, Income Summary account, is the correct answer.

Question 5

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)the Adjustments debit column and the Adjustments credit column.
B)the Unadjusted Trial Balance debit column and the Adjustments credit column.
C)it is not practical to enter Net Income (or Net Loss)on the work sheet.
D)the Balance Sheet & Statement of Retained Earnings debit column and the Income Statement credit column.
E)the Income Statement debit column and the Balance Sheet & Statement of Retained Earnings credit column.

Accepted Answer

The net income is the difference between the Income Statement credit and debit columns. To balance the worksheet, this amount is entered as a credit in the Income Statement and as a debit in the Balance Sheet & Statement of Retained Earnings.

Question 6

A company had revenues of $75,000 and expenses of $62,000 for the accounting period.Dividends of $8,000 were paid in cash during the same period.Which of the following entries could not be a closing entry?
A)Debit Income Summary $13,000; credit Retained earnings $13,000.
B)Debit Income Summary $75,000; credit Revenues $75,000.
C)Debit Revenues $75,000; credit Income Summary $75,000.
D)Debit Income Summary $62,000,credit Expenses $62,000.
E)Debit Retained earnings $8,000,credit Dividends $8,000.

Accepted Answer

This entry cannot be a closing entry because it would result in a zero balance in the Income Summary account, which is not the purpose of a closing entry. The purpose of a closing entry is to transfer the balances of revenue and expense accounts to the Income summary account, and then transfer the balance of the Income summary account to the Retained earnings account. Therefore, the closing entry should involve both the Income Summary and Retained earnings accounts. Choices A, C, D and E all involve one or both of these accounts, making them potential closing entries.

Question 7

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

Accepted Answer

Pro forma statements show the financial statements as if proposed transactions had already occurred, allowing for analysis and preparation for potential future outcomes.

Question 8

Castillo Services paid K.Castillo,the sole shareholder of Castillo Services,$5,700 in dividends during the current year.The entry to close the dividends account at the end of the year is:
A)Debit Dividends $5,700; credit Cash,$5,700
B)Debit Retained earnings $5,700; credit Dividends $5,700
C)Debit Dividends $5,700; credit Retained earnings $5,700
D)Debit Retained earnings $5,700,credit Salary Expense $5,700
E)Debit Income Summary $5,700; credit Retained earnings $5,700

Accepted Answer

The correct entry to close the dividends account involves debiting Retained Earnings and crediting Dividends. This reflects the reduction in retained earnings due to the payment of dividends.

Question 9

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 decrease in net income.
B)$200 increase in net income.
C)$200 difference between the debit and credit columns of the Unadjusted Trial Balance.
D)$200 of prepaid insurance.
E)An error in the financial statements.

Accepted Answer

The adjusting entry to record the expired rent reduces the balance of the Prepaid Rent account by $200 (from $600 to $400). This is an expense that is recognized in the current period and will decrease net income. Therefore, the correct choice is A) $200 decrease in net income.

Question 10

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

Accepted Answer

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

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 Retained Earnings-Credit and Income Statement-Credit.
B)Balance Sheet and Statement of Retained Earnings-Debit and Income Statement-Debit.
C)Income Statement-Debit and Income Statement-Credit.
D)Balance Sheet and Statement of Retained Earnings-Debit and Balance Sheet and Statement of Retained Earnings-Credit.
E)Balance Sheet and Statement of Retained Earnings-Debit; and Income Statement-Credit.

Accepted Answer

Accumulated Depreciation is a contra asset account and appears on the credit side of the Balance Sheet. Service Fees Earned is revenue and appears on the credit side of the Income Statement.

Question 12

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000.The ending retained earnings balance after closing is:
A)$185,000
B)$63,300
C)$81,300
D)$360,300
E)$378,300

Accepted Answer

The ending retained earnings balance is calculated by adding net income (revenues - expenses) to the beginning retained earnings balance and then subtracting dividends. Net income is $185,000 - $103,700 = $81,300. Adding this to the beginning retained earnings ($297,000) gives $378,300, and then subtracting dividends ($18,000) results in an ending balance of $360,300.

Question 13

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)Adjusted trial balance.
B)Work sheet.
C)Post-closing trial balance.
D)Unadjusted trial balance.
E)General ledger.

Accepted Answer

A work sheet is an optional tool used to prepare a company's financial statements. It includes columns for the unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements. The purpose of the work sheet is to help ensure that all necessary adjustments have been made before finalizing the financial statements.

Question 14

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

Accepted Answer

The unadjusted columns of a work sheet are used to prepare an adjusted trial balance, which will ultimately be used to prepare the company's financial statements. Therefore, the balances in the unadjusted columns should agree with the balances reflected in the company's unadjusted trial balance.

Question 15

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)An expense amount placed in the Balance Sheet Credit column.
B)A revenue amount placed in the Balance Sheet Debit column.
C)A liability amount placed in the Income Statement Credit column.
D)An asset amount placed in the Balance Sheet Credit column.
E)A liability amount placed in the Balance Sheet Debit column.

Accepted Answer

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

Question 16

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

Accepted Answer

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

Question 17

High Step Shoes had annual revenues of $185,000,expenses of $103,700,and dividends of $18,000 during the current year.The retained earnings 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 Retained earnings $297,000; credit Income Summary $297,000
B)Debit Retained earnings $63,300; credit Income Summary $63,300
C)Debit Income Summary $63,300; credit Retained earnings $63,300
D)Debit Income Summary $81,300,credit Retained earnings $81,300
E)Debit Retained earnings $81,300; credit Income Summary $81,300

Accepted Answer

The answer of High Step Shoes had annual revenues of...

Question 18

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

Accepted Answer

To find the Adjusted Trial Balance, we need to add the adjustments to the Unadjusted Trial Balance.

Adjusted Trial Balance = Unadjusted Trial Balance + Adjustments

Adjusted Trial Balance = $84,000 + $1,200 - $700 + $500 - $800 + $400

Adjusted Trial Balance = $85,700

Therefore, the answer is C, $85,700.

Question 19

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)$325 debit.
B)$325 credit.
C)$425 debit.
D)$750 debit.
E)$425 credit.

Accepted Answer

The balance of Store Supplies is adjusted by crediting $425 for supplies used, reducing the original $750 balance to $325 ($750 - $425). This adjusted amount is a debit balance, as supplies are an asset.

Question 20

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000.The Net Income for the year is:
A)$185,000
B)$63,300
C)$81,300
D)$360,300
E)$378,300

Accepted Answer

Net Income is calculated as Revenues minus Expenses, which is $185,000 - $103,700 = $81,300.

Quiz 3: Adjusting Accounts for Financial Statements

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

Which of the following statements is incorrect?

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

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 retained earnings account is the:

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 company had revenues of $75,000 and expenses of $62,000 for the accounting period.Dividends of $8,000 were paid in cash during the same period.Which of the following entries could not be a closing entry?

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

Castillo Services paid K.Castillo,the sole shareholder of Castillo Services,$5,700 in dividends during the current year.The entry to close the dividends account at the end of the year is:

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:

Which of the following errors would cause the Balance Sheet and Statement of Retained Earnings columns of a work sheet to be out of balance?

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

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000.The ending retained earnings balance after closing 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) :

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

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:

If the Balance Sheet and Statement of Retained Earnings columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Retained Earnings 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:

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000.The Net Income for the year is: