Question 1

The closing process includes which of the following?

Accepted Answer

The closing process involves closing the balances of the revenue, expense, and dividend accounts to zero. This is done to prepare the accounts for the next accounting period and to ensure that the retained earnings account reflects the current year's net income. Only closing the balance of the retained earnings account to zero (A) or only closing the balances of revenue and expense accounts to zero (C) would not accurately reflect the company's financial performance and may cause errors in future accounting periods. Closing only the dividends account to zero (B) would not be sufficient for the closing process as it does not address the revenue and expense accounts.

Question 2

Which of the following is a possible closing entry?

Accepted Answer

Closing entries involve transferring balances from temporary accounts like revenues and expenses to permanent accounts like Retained Earnings. Debiting Service Revenue and crediting Retained Earnings is a typical closing entry to transfer net income to equity.

Question 3

A list of all accounts and their balances after posting closing entries is referred to as:

Accepted Answer

A post-closing trial balance is a list of all accounts and their balances after closing entries have been made. It is used to ensure that all temporary accounts have been closed and that the permanent accounts have the correct balances. The other options listed are not correct as an adjusted trial balance is a list of accounts and their balances after adjusting entries have been made, an accounting trial balance is not a commonly used term, and a trial balance is a list of all accounts and their balances before any adjusting or closing entries have been made.

Question 4

A company performs $4,200 of services during the month and receives full cash payment from customers at the time of service.Record the cash receipt using (a)accrual-basis accounting and (b)cash-basis accounting.

Accepted Answer

The answer of A company performs $4,200 of services during...

Question 5

A company receives $2,500 cash from customers for services to be provided next month.Record the cash receipt using (a)accrual-basis accounting and (b)cash-basis accounting.

Accepted Answer

The answer of A company receives $2,500 cash from customers...

Question 6

Of the following six accounts,which ones have temporary balances: (1)Service Revenue
(2)Dividends
(3)Salaries Expense
(4)Common Stock
(5)Retained Earnings
(6)Cash

Accepted Answer

Service Revenue, Dividends, and Salaries Expense are all temporary accounts because they are closed out at the end of each accounting period. Common Stock, Retained Earnings, and Cash are all permanent accounts because their balances carry over from one accounting period to the next.

Question 7

The ending Retained Earnings balance of Juan's Mexican Restaurant chain increased by $3.2 million from the beginning of the year.The company declared a dividend of $1.3 million during the year.What was the net income earned during the year?

Accepted Answer

The increase in Retained Earnings was $3.2 million, which means the company had a net income of $3.2 million (since Retained Earnings represents the accumulation of net income over time). However, the company also declared a dividend of $1.3 million, which means this amount needs to be subtracted from the net income to arrive at the final answer: $3.2 million - $1.3 million = $1.9 million. Therefore, the correct choice is C.

Question 8

A company performs $2,800 of services during the month and bills customers.The customers are expected to pay next month.Record the customer billing using (a)accrual-basis accounting and (b)cash-basis accounting.

Accepted Answer

The answer of A company performs $2,800 of services during...

Question 9

A post-closing trial balance:

Accepted Answer

A post-closing trial balance is prepared after closing entries have been made, which transfers the balances of temporary accounts to the permanent accounts. Therefore, the balances of all temporary accounts, including revenue, expenses, and dividends, should be zero, and the balances of all permanent accounts, such as assets, liabilities, and owners' equity, should reflect their final balances after the closing process. Option A is incorrect because adjusting entries are made before closing entries, so a trial balance taken after adjusting entries is not the same as the post-closing trial balance. Option B is incorrect because it refers to an unadjusted trial balance taken before any adjusting entries have been made. Option D is incorrect because a post-closing trial balance is not adjusted for cash-basis accounting, as the closing entries are made regardless of the accounting method used.

Question 10

A company reports the following amounts: Assets = $6,000;Liabilities = $2,000;Stockholders' equity = $4,000;Dividends = $500;Revenues = $5,000;and Expenses = $3,000.What amount is reported for net income?

Accepted Answer

The answer of A company reports the following amounts: Assets...

Question 11

A company pays $1,700 cash to employees for work performed during the month.Record the payment using (a)accrual-basis accounting and (b)cash-basis accounting.

Accepted Answer

The answer of A company pays $1,700 cash to employees...

Question 12

The Retained Earnings account had a beginning credit balance of $26,000.During the period,the business had a net loss $12,000,and the company paid dividends of $8,000.The ending balance in the Retained Earnings account is:

Accepted Answer

The answer of The Retained Earnings account had a beginning...

Question 13

For each transaction below,calculate the amount of expense to be recognized in the current period using accrual-basis accounting:
(a)Paid $3,500 on account for supplies purchased last period.All supplies were used last month.
(b)Paid $5,000 cash for advertising in the current period.
(c)Employees worked in the current period but will not be paid until the following period,$4,500.

Accepted Answer

The answer of For each transaction below,calculate the amount of...

Question 14

A company receives a $700 utility bill for the current month but does not plan to pay the bill until early next month.Record the receipt of the utility bill using (a)accrual-basis accounting and (b)cash-basis accounting.

Accepted Answer

The answer of A company receives a $700 utility bill...

Question 15

Permanent accounts would not include:

Accepted Answer

The answer of Permanent accounts would not include:
...

Question 16

Which one of the following accounts would NOT have a balance after closing entries?

Accepted Answer

Dividends account is a temporary account that only records the distribution of profits to shareholders. It is closed at the end of the accounting period and its balance is transferred to retained earnings, resulting in a zero balance.

Question 17

Temporary accounts would not include:

Accepted Answer

Temporary accounts are accounts that are closed at the end of the accounting period to transfer the balances either to the income statement or the retained earnings section of the balance sheet. Salaries Payable is a liability account and is a permanent account that carries over to the next accounting period. Advertising Expense and Supplies Expense are both temporary accounts that are closed at the end of the period. Dividends are a distribution of earnings and are not related to income or expenses, but they are also a permanent account that carries over to the next accounting period.

Question 18

Frosty Inc.has the following balances on December 31 prior to closing entries:  Based upon the balances above,what net adjustment would be made to Retained Earnings due to closing entries?

Accepted Answer

The answer of Frosty Inc.has the following balances on December...

Question 19

For each transaction below,calculate the amount of revenue to be recognized in the current period using accrual-basis accounting:
(a)Performed $24,000 of services during the month and received full cash payment from customers at the time of service.
(b)Performed $9,000 of services during the month and billed customers.Customers are expected to pay next month.
(c)Received $12,000 cash from customers for services to be provided next month.

Accepted Answer