Question 1

The Income Statement columns in the work sheet show that debits total $55,800 and credits total $62,705. What does this information mean to the accountant?

Accepted Answer

The difference between credits and debits ($62,705 - $55,800) indicates a net income of $6,905.

Question 2

The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet columns with a debit total of $630,430 and a credit total of $614,210. This is before the amount for net income or net loss has been included. In preparing the income statement from work sheet, what is the amount of net income or net loss?

Accepted Answer

The answer of The end-of-period spreadsheet (work sheet) for the...

Question 3

Tracy Roberts, the sole stockholder of Surfer Dude Supplies, is requesting a $75,000 loan from the bank where you work as a loan officer. He brings to you the following trial balance (or statement of accounts) as of the end of his first year of operations.
(a) What three accounts do you think should be relabeled for greater clarity?
(b) What adjustments might be necessary before an accurate set of financial statements could be prepared?

Accepted Answer

The answer of Tracy Roberts, the sole stockholder of Surfer...

Question 4

On January 1, 2011, the retained earnings account of Crystal Pool Service Company had a balance of $252,000. During the year, the company issued an additional $20,000 of capital stock and paid $52,400 in dividends. For the year ended December 31, 2011, Crystal Pool Service Company reported a net income of $72,300. Prepare a retained earnings statement for the year ended December 31, 2011.

Accepted Answer

The answer of On January 1, 2011, the retained earnings...

Question 5

The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current liabilities, (d) long-term liabilities, or (e) stockholders' equity section of the December 31, 2011, balance sheet of Brock Pool Service Company.

Accepted Answer

The answer of The following accounts appear in an adjusted...

Question 6

Which account would not appear in the Balance Sheet columns of the work sheet?

Accepted Answer

Rent Earned is a revenue account, and revenue accounts appear in the Income Statement columns of the work sheet, not the Balance Sheet columns. Dividends and Unearned Revenue are both balance sheet accounts and would appear in the Balance Sheet columns.

Question 7

Which of the following is not an essential part of the accounting records?

Accepted Answer

A work sheet is a tool used to prepare adjusting and closing entries and is not considered an essential part of the accounting records. Journals, ledgers, and charts of accounts are all necessary components for maintaining accurate accounting records.

Question 8

Which of the accounts below would appear in the Balance Sheet columns of the work sheet?

Accepted Answer

Prepaid Rent is a balance sheet account as it represents a prepaid expense that has not yet been used up or expired. Service Revenue and Supplies Expense are both income statement accounts and would appear in the Income Statement columns of the work sheet.

Question 9

After net income is entered on the work sheet, the Balance Sheet Debit and Credit columns must

Accepted Answer

The Balance Sheet Debit and Credit columns must equal each other to ensure that the accounting equation (assets = liabilities + equity) is in balance. They do not need to be the same amount as any other columns on the work sheet.

Question 10

After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns show debits of $36,678 and the credits of $41,101. This indicates that

Accepted Answer

The difference between the total debits and the total credits is $4,423, which means that the company has a net loss of $4,423 for the period.

Question 11

Which of the statements below indicates that a company earned a net income for the period?

Accepted Answer

The Income Statement columns on the work sheet show the revenues and expenses for the period. If the sum of the credits (revenues) exceeds the sum of the debits (expenses), then the company earned a net income for the period. Option A refers to the Balance Sheet, which does not provide information about net income. Option C indicates that the company had a net loss for the period. Option D refers to cash flows, which may not reflect the company's net income.

Question 12

On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the work sheet would

Accepted Answer

Since the company collected revenue in advance and credited a liability account, it means that the liability account was initially increased. Therefore, at year end, the adjusting entry would be to decrease the same liability account to reflect the revenue that has been earned and recognized during the year. So, option D is the correct answer.

Question 13

On September 1, the company pays rent for twelve months in advance and debits an asset account. At year end, the adjusting entry on the work sheet would

Accepted Answer

The adjusting entry at year-end would be to decrease the asset account (prepaid rent) and increase the expense account (rent expense) to recognize the portion of the rent that has been used during the year. This will result in an increase in the expense account, hence the correct answer is A.

Question 14

Explain the differences between a nonclassified balance sheet and a classified balance sheet.

Accepted Answer

The answer of Explain the differences between a nonclassified balance...

Question 15

After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $37,875 and $32,735, respectively. What is the amount of net income or net loss for the period?

Accepted Answer

The total of the debit columns is greater than the total of the credit columns, indicating a net income for the period. The difference between the two totals is $5,140, which is the amount of net income.

Question 16

The work sheet at the end of July has $5,350 in the Balance Sheet credit column for Accumulated Depreciation. The work sheet at the end of August has $6,700 in the Balance Sheet credit column for Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of August?

Accepted Answer

The increase in Accumulated Depreciation from July to August is $6,700 - $5,350 = $1,350. This means that the company recorded $1,350 of depreciation expense during the month of August. Therefore, the correct choice is A) $1,350.

Question 17

Which item would appear in the Income Statement columns of the work sheet?

Accepted Answer

Net Loss is an item that appears in the Income Statement columns of the work sheet, as it helps to calculate the net income or loss for the period. Equipment, Unearned Fees, and Prepaid Expense are all balance sheet items and would appear in the Balance Sheet columns.

Question 18

Which of the items below does not appear on the work sheet?

Accepted Answer

The answer of Which of the items below does not...

Question 19

After all of the account balances have been extended to the Income Statement columns of the work sheet, the totals of the debit and credit columns are $77,500 and $85,300, respectively. What is the amount of the net income or net loss for the period?

Accepted Answer

The net income is the difference between the total credits and the total debits. In this case, the total credits are $85,300 and the total debits are $77,500. Therefore, the net income is $85,300 - $77,500 = $7,800.

Question 20

An indication that the work sheet columns are in balance and the work sheet is completed is

Accepted Answer

The answer of An indication that the work sheet columns...

Quiz 4: Completing the Accounting Cycle