Question 1

Which of these steps of the accounting cycle occur at year-end only (as opposed to during the accounting period, or at the end of the accounting period)?

Accepted Answer

Journalizing and posting closing entries occur only at year-end after all other steps of the accounting cycle have been completed in order to close temporary accounts and prepare for the new accounting period. Analyzing business transactions, journalizing transactions, and posting to ledger accounts occur throughout the accounting period as transactions occur.

Question 2

On May 25, Mt. Hood Company received a $370 check from Douglas Fir for services to be performed in the future. The bookkeeper for Mt. Wood Company incorrectly debited Cash for $370 and credited Accounts Receivable for $370. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should:

Accepted Answer

The original entry debited Cash and credited Accounts Receivable when it should have debited Accounts Receivable and credited Unearned Service Revenue. To correct this error, we need to reverse the entry and then record it correctly. This means we need to debit Accounts Receivable (to reduce it) and credit Unearned Service Revenue (to increase it) for $370, which is option D. Option A would be incorrect because it would incorrectly increase Cash and decrease Unearned Service Revenue. Option B would be incorrect because it would incorrectly increase Service Revenue and decrease Accounts Receivable. Option C would be incorrect because it would incorrectly decrease Cash and increase Accounts Receivable.

Question 3

Eastwood Post Pavillion received a $650 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $560 and a credit to Service Revenue $560. The correcting entry is

Accepted Answer

The correct entry needs to increase Cash by the $90 underreported amount and correct the Service Revenue by debiting it $560 to reverse the initial error, while crediting Accounts Receivable $650 to reflect the payment received.

Question 4

Which is not a difference between adjusting and correcting entries?

Accepted Answer

Adjusting entries are posted before closing entries, not after. Correcting entries can be made at any time before the financial statements are finalized, but they do not have to be posted before closing entries.

Question 5

Which of these steps of the accounting cycle occur at the end of the accounting period (as opposed to during the accounting period, or at year-end only)?

Accepted Answer

The preparation of a trial balance is typically done at the end of the accounting period to ensure that all debits and credits are in balance before preparing financial statements. The other steps listed (analyzing business transactions, journalizing transactions, and posting to the ledger) occur throughout the accounting period as transactions are processed.

Question 6

An unacceptable way to make a correcting entry is to

Accepted Answer

Erasing the incorrect entry is unacceptable because it does not leave a clear trail of the mistake and how it was corrected. It is important to have a clear and visible record of corrections made to accounting entries for auditing and accountability purposes. The other choices provide clear and visible records of the correcting entries.

Question 7

Truffles Company paid $860 on account to a creditor. The transaction was erroneously recorded as a debit to Cash of $680 and a credit to Accounts Receivable, $680. The correcting entry is

Accepted Answer

The answer of Truffles Company paid $860 on account to...

Question 8

Bonita Arcade paid the weekly payroll on January 2 by debiting Salaries and Wages Expense for $45,000. The accountant preparing the payroll entry overlooked the fact that Salaries and Wages Expense of $23,000 had been accrued at year end on December 31. The correcting entry is

Accepted Answer

The correcting entry would be to credit Salaries and Wages Payable for $23,000 and debit Salaries and Wages Expense for $23,000. This would reverse the accrual recorded at year end and correct the error in the payroll entry. Choice C reflects this entry.

Question 9

On March 8, Saltwater Taffy Company bought supplies on account from the Sweet Honey Company for $440. Saltwater Taffy Company incorrectly debited Equipment for $400 and credited Accounts Payable for $400. The entries have been posted to the ledger. The correcting entry should be:

Accepted Answer

The answer of On March 8, Saltwater Taffy Company bought...

Question 10

Which of these steps of the accounting cycle occur during the accounting period (as opposed to at the end of the accounting period, or at year-end only)?

Accepted Answer

Analyzing business transactions occurs throughout the accounting period as transactions occur.

Question 11

Four of the nine steps in the accounting cycle are: W. Prepare a trial balance.
X. Journalize and post adjusting entries.
Y. Prepare an adjusted trial balance.
Z. Prepare financial statements
In what order do these four steps occur?

Accepted Answer

The correct order is: Prepare a trial balance (W), Journalize and post adjusting entries (X), Prepare an adjusted trial balance (Y), and Prepare financial statements (Z).

Question 12

On Feb. 2, Ben's Cafe journalized and posted a $70 cash collection on account from a customer as a debit to Cash $70 and a credit to Service Revenue $70. The correcting entry should include a

Accepted Answer

The original entry incorrectly credited Service Revenue instead of Accounts Receivable. The correcting entry should debit Service Revenue to reverse the incorrect credit.

Question 13

If the accounting records are free of errors,

Accepted Answer

Correcting entries are only needed if there are errors in the accounting records. If the records are free of errors, no correcting entries are necessary. Adjusting entries, however, are still needed to account for accruals and deferrals.

Question 14

Four of the nine steps in the accounting cycle are: W. Journalize the transactions.
X. Post to the ledger accounts.
Y. Journalize and post closing entries.
Z. Prepare a trial balance.
In what order do these four steps occur?

Accepted Answer

The correct order is to first journalize the transactions (W), then post to the ledger accounts (X), prepare a trial balance (Z), and finally journalize and post closing entries (Y).

Question 15

Which one of the following statements concerning the accounting cycle is incorrect?

Accepted Answer

The steps in the accounting cycle are not all mandatory for every accounting period. For example, adjusting entries are only required at the end of an accounting period, while closing entries are only required at the end of the fiscal year.

Question 16

If errors occur in the recording process, they

Accepted Answer

Errors should be corrected as soon as they are discovered to ensure accurate financial statements and prevent the perpetuation of errors in future periods. Waiting until the end of the period or until closing entries are prepared may result in further errors or complications. Waiting until the next accounting period is not an option as it would result in inaccurate financial statements for the current period.

Question 17

Correcting entries are made

Accepted Answer

Correcting entries are made whenever an error is discovered, regardless of the accounting period. It is important to rectify any errors as soon as they are discovered to ensure accurate financial statements.

Question 18

Correcting entries

Accepted Answer

Correcting entries can involve any combination of accounts that need correction, including both balance sheet accounts and income statement accounts. Therefore, option D is the correct answer.

Question 19

Which is true?

Accepted Answer

A trial balance is prepared after all transactions have been recorded in the journal and posted to the ledger accounts. It ensures that debits and credits are equal, and assists in preparing financial statements. Option A is incorrect because an adjusted trial balance is prepared before the financial statements. Option B is incorrect because a post-closing trial balance is prepared after the financial statements. Option C is incorrect because adjusting entries are prepared before closing entries.

Question 20

A correcting entry

Accepted Answer

A correcting entry may involve any combination of accounts to correct errors made in the accounting records. It is not the same as a closing entry, which is a separate step in the accounting cycle. While correcting entries are often necessary, they are not always required in every accounting period.

Quiz 6: Completing a Worksheet and Completing the Accounting Cycle

Which of these steps of the accounting cycle occur at year-end only (as opposed to during the accounting period, or at the end of the accounting period) ?