Question 1

On a work sheet,adjusted balances of revenues and expenses are sorted to the Income Statement columns.

Accepted Answer

Adjusted balances of revenues and expenses are transferred to the Income Statement columns of the worksheet.

Question 2

Revenue and expense accounts are permanent accounts and should not be closed at the end of the fiscal period.

Accepted Answer

Revenue and expense accounts are temporary accounts that are closed at the end of the fiscal period to transfer their balances to permanent equity accounts, such as Retained Earnings, to prepare the accounts for the next period.

Question 3

If interim financial statements are required,adjusting entries must be journalized and posted to obtain the adjusted data needed for their preparation.

Accepted Answer

False

Question 4

On the work sheet,a loss is indicated if the total of the Income Statement Debit column exceeds the total of the Income Statement Credit column.

Accepted Answer

This statement is true. A loss occurs when the expenses (Debits in the Income Statement column) exceed the revenue (Credits in the Income Statement column), resulting in a negative net income. So, if the Debit column total is higher than the Credit column total, it indicates a loss.

Question 5

To prepare the balance sheet,all necessary numbers can be found in the balance sheet columns of the work sheet,including ending capital.

Accepted Answer

The balance sheet columns of the work sheet provide the necessary information for preparing the balance sheet except for the ending capital, which is calculated using information from the income statement and adjustments columns.

Question 6

A work sheet can be prepared manually or with a computer spreadsheet program.

Accepted Answer

A work sheet can be prepared either manually using pen and paper or with a computer spreadsheet program like Microsoft Excel, Google Sheets, etc.

Question 7

A work sheet is prepared before entering the adjustments in the accounts.

Accepted Answer

A worksheet is used to summarize and organize information for the preparation of financial statements and to help prepare adjusting entries. Therefore, it is prepared before entering adjustments in the accounts.

Question 8

Revenue accounts should begin each accounting period with zero balances.

Accepted Answer

Revenue accounts are temporary accounts that are closed at the end of each accounting period. To ensure accurate measurement of revenue for the current period, these accounts should begin with zero balances at the start of the period.

Question 9

A work sheet is a substitute for the financial statements.

Accepted Answer

A worksheet is a tool used by accountants to help prepare financial statements, but it is not a substitute for the actual financial statements themselves. The financial statements provide a summary of a company's financial performance, whereas a worksheet is a working document used to organize and analyze financial data.

Question 10

Closing entries are normally entered in the General Journal and then recorded on the work sheet.

Accepted Answer

Closing entries are made in the General Journal and then posted to the General Ledger, not recorded on the work sheet. The work sheet is used for planning and adjusting entries, not for recording closing entries.

Question 11

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Accepted Answer

The closing process is a necessary step in the accounting cycle that prepares accounts for the next accounting period by zeroing out temporary accounts and transferring their balances to permanent accounts. This step typically takes place at the end of each accounting period.

Question 12

The work sheet is used to record transactions as they occur.

Accepted Answer

The worksheet is a tool used for planning and adjusting entries before those adjustments are posted to the ledger, not for recording transactions as they occur. Transactions are initially recorded in journals, not worksheets.

Question 13

Adjusting entries are normally entered in the General Journal before they are recorded on the work sheet.

Accepted Answer

The answer of Adjusting entries are normally entered in the...

Question 14

On the work sheet,a net income is entered in the Income Statement Credit column and in the Statement of Changes in Equity or Balance Sheet Debit column.

Accepted Answer

Net income is entered as a credit in the Income Statement Credit column, but it is entered as a credit in the Statement of Changes in Equity column and as a debit in the Balance Sheet column.

Question 15

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

Accepted Answer

Closing revenue and expense accounts means transferring the balances to the Income Summary account, which ultimately results in the Net Income (or Loss) being calculated. This process resets the revenue and expense accounts for the next accounting period.

Question 16

A work sheet is a tool of the accountant for bringing together information needed in preparing the statements,adjusting the accounts,and preparing closing entries.

Accepted Answer

A worksheet is a tool used by accountants to bring together information needed to prepare financial statements, adjust accounts, and prepare closing entries. The worksheet is a working paper that assists in the process of creating final financial statements.

Question 17

If all columns balance upon completion of a work sheet,you can be sure that no errors were made in preparing the work sheet.

Accepted Answer

Balancing columns in a worksheet does not guarantee the absence of errors; it only indicates that the total debits equal the total credits. Errors such as omitted entries, double entries, or misclassifications can still occur without affecting the balance.

Question 18

To prepare the income statement all necessary numbers can be found in the income statement columns of the work sheet,including the net income or net loss.

Accepted Answer

The income statement columns of the work sheet contain all necessary information, including the net income or net loss, which is used to prepare the income statement.

Question 19

Accounts that appear in the balance sheet are often called permanent or nominal accounts.

Accepted Answer

Accounts that appear in the balance sheet are called permanent accounts, while accounts that appear in the income statement are called nominal accounts.

Question 20

Financial statements prepared from a work sheet offer more information than if it is not used and statements are just prepared from an adjusted trial balance.

Accepted Answer

A worksheet is a tool for preparation and does not affect the amount of information presented in the financial statements; the content and detail in the financial statements are determined by the accounting policies and standards applied, not by whether a worksheet is used.

Quiz 4: Completing the Accounting Cycle and Classifying Accounts