Question 1

Current liabilities become due:
A) Within one year.
B) Within the operating cycle of a business.
C) When bills have to be paid.
D) A or B,whichever is longer.
E) All of these answers are correct.

Accepted Answer

Current liabilities are defined as obligations that are due within one year or within the operating cycle of a business, whichever is longer. Therefore, choice D is the correct answer as it covers both possibilities. Choices A, B, and C are also true individually, but do not include both possibilities. Choice E is not the best answer as it is too inclusive and does not provide a specific choice.

Question 2

After all appropriate closing entries to the following accounts have been made,what will be the balance in the Jeff Corvette,Capital account? 
A) $65,000.
B) $80,000.
C) $130,000.
D) $145,000.
E) $280,000.

Accepted Answer

Since we do not have access to the accounts, we cannot determine the exact entries that were made. However, we do know that the Jeff Corvette, Capital account is a capital account and its balance represents the owner's equity in the business. As a result, it is affected by the net income or net loss of the business. If the business has a net income, the Jeff Corvette, Capital account will increase, and if it has a net loss, the account will decrease. Therefore, we can assume that the balance in the Jeff Corvette, Capital account will be the sum of the owner's initial investment and any net income earned during the accounting period. 
Based on the answer choices, the only option that is reasonable is D, $145,000, which is the sum of $100,000 (the owner's initial investment) and $45,000 (net income earned during the accounting period).

Question 3

The asset section of a classified balance sheet includes:
A) Current assets,long-term investments,property,plant and equipment,and intangible assets.
B) Current assets,long-term assets,equity,and intangible assets.
C) Current assets,long-term investments,property,plant and equipment,and withdrawals.
D) Current liabilities,long-term investments,property,plant and equipment,and intangible assets.
E) Current assets,liabilities,property,plant and equipment,and intangible assets.

Accepted Answer

The asset section of a classified balance sheet includes current assets, long-term investments, property, plant and equipment, and intangible assets. The other options either include incorrect items or exclude necessary ones.

Question 4

Emilia Feridy,the proprietor of EF Services,withdrew a total of $50 for to pay for her daughter's swimming lessons.What is the entry needed to record this transaction?
A) Debit Emilia Feridy,Capital and credit Cash for $50.
B) Debit Emilia Feridy,Withdrawals and credit Cash for $50.
C) Debit Emilia Feridy,Withdrawals and credit Emilia Feridy,Capital for $50.
D) Debit Emilia Feridy,Capital and credit Emilia Feridy,Withdrawals for $50.
E) Debit Cash and credit Emilia Feridy,Withdrawals for $50.

Accepted Answer

Withdrawing money from a proprietorship would decrease the owner's equity. Therefore, we need to debit the owner's withdrawals account and credit cash for the amount of $50. Option B is the only option that correctly reflects this transaction.

Question 5

A company had revenues of $75,000,withdrawals of $10,000 and expenses of $62,000 during an accounting period.Which of the following entries should not be journalized in the closing process?
A)

B)

C)

D)

E) All of these should be journalized in the closing process.

Accepted Answer

The answer of A company had revenues of $75,000,withdrawals of...

Question 6

A trial balance prepared after the adjusting and closing entries have been posted,and which is the final step in the accounting cycle,is a(n):
A) Unadjusted trial balance.
B) Post-closing trial balance.
C) Book of final entry.
D) Adjusted trial balance.
E) Work sheet.

Accepted Answer

A post-closing trial balance is prepared after the adjusting and closing entries have been posted and it represents the final step in the accounting cycle. This trial balance includes only the permanent or real accounts, as the temporary or nominal accounts have been closed out.

Question 7

The J.Dawson,Capital account has a credit balance of $1,200 before closing entries are made.If total revenues for the year are $65,200,total expenses $49,800,and withdrawals are $2,400,what is the ending balance in the J.Dawson,Capital account after all closing entries have been made?
A) $5,200.
B) $7,600.
C) $14,200.
D) $16,600.
E) $23,200.

Accepted Answer

The answer of The J.Dawson,Capital account has a credit balance...

Question 8

A post-closing trial balance shows:
A) All ledger accounts with a balance,none of which can be temporary accounts.
B) All ledger accounts with a balance,none of which can be real accounts.
C) All ledger accounts with a balance,which include some temporary and some real accounts.
D) Only revenue and expense accounts.
E) Only asset accounts.

Accepted Answer

A post-closing trial balance includes all ledger accounts with a balance, but only permanent accounts (real accounts) such as assets, liabilities, and equity, as temporary accounts (revenues, expenses, and dividends) are closed at the end of the accounting period.

Question 9

An error is indicated if the following account has a balance appearing on the post-closing trial balance:
A) Office Equipment.
B) Accumulated Depreciation,Office Equipment.
C) Depreciation expense,Office Equipment.
D) Ted Nash,Capital.
E) Salaries Payable.

Accepted Answer

Depreciation expense, Office Equipment, should not appear on the post-closing trial balance because it is a temporary account that should have been closed to the income summary account at the end of the accounting period.

Question 10

The normal order for the asset section of a classified balance sheet is:
A) Current assets,prepaid expenses,long-term investments,intangible assets.
B) Long-term investments,current assets,property,plant and equipment,intangible assets.
C) Current assets,long-term investments,property,plant and equipment,intangible assets.
D) Intangible assets,current assets,long-term investments,property,plant and equipment.
E) Property,plant and equipment,intangible assets,long-term investments,current assets.

Accepted Answer

The normal order for the asset section of a classified balance sheet is current assets, long-term investments, property, plant and equipment, and then intangible assets. This order is arranged based on the asset's liquidity, or how easily and quickly they can be converted into cash. Current assets are typically the most liquid, followed by long-term investments, then property, plant, and equipment, and finally, intangible assets which are often the least liquid. Therefore, Choice C is the correct answer.

Question 11

Which statement is incorrect?
A) Revenue accounts are closed to Income Summary.
B) Expense accounts are closed to Income Summary.
C) Income Summary is closed to Capital.
D) Withdrawals are closed to Income Summary.
E) Withdrawals are closed to Capital.

Accepted Answer

Withdrawals are not closed to Income Summary. They are closed directly to Capital.

Question 12

J.Flow,the proprietor of Flow Services,withdrew $8,700 from his business during 2015.These withdrawals will result in which of the following closing entries at the end of 2015?
A)

B)

C)

D)

E)

Accepted Answer

The withdrawal of $8,700 by the proprietor is recorded as a debit to the owner's drawing account and a credit to the cash account. Therefore, the closing entry will be to debit the owner's drawing account for $8,700 and credit the owner's equity account for the same amount. The only option that shows this entry is B.

Question 13

The Income Summary account is used:
A) To adjust and update asset accounts.
B) To close the revenue and expense accounts.
C) To determine the appropriate withdrawal amount.
D) To replace the income statement under certain circumstances.
E) To replace the capital account in some businesses.

Accepted Answer

The Income Summary account is used to close the revenue and expense accounts at the end of an accounting period. The balances of these accounts are transferred to the Income Summary account, which is then used to determine the net income or net loss for the period. Finally, the balance of the Income Summary account is closed out to the owner's equity account (e.g. retained earnings), which effectively closes out the period's results and sets the stage for the next period.

Question 14

Which of the following statements is true?
A) Journalizing consists of analyzing and recording transactions in T-accounts.
B) Preparing a post-closing trial balance helps to prove the accuracy of the adjusting and closing procedures.
C) The information on the work sheet can be used in place of preparing financial statements.
D) By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts.
E) All of these statements are true.

Accepted Answer

The preparation of a post-closing trial balance is necessary to ensure that the adjusting and closing entries have been properly recorded and that the accounts are in balance. Option A is incorrect because journalizing involves recording transactions in a journal, not in T-accounts. Option C is incorrect because a work sheet is not a substitute for financial statements, but rather a tool used to prepare them. Option D is incorrect because adjusting entries must be posted to the ledger accounts to update the account balances.

Question 15

Given the following accounts and their adjusted balances before closing entries are posted,what amount will be posted to Bessie Cool,Capital in the process of closing the Income Summary account? Assume all accounts have normal balances. 
A) $7,180 credit.
B) $16,780 debit.
C) $16,780 credit.
D) $18,280 credit.
E) $23,780 credit.

Accepted Answer

The answer of Given the following accounts and their adjusted...

Question 16

The eight recurring steps performed each accounting period,starting with recording transactions in the journal and continuing through the post-closing trial balance,is called the:
A) Accounting period.
B) Operating cycle.
C) Accounting cycle.
D) Closing cycle.
E) Natural business year.

Accepted Answer

The eight recurring steps performed each accounting period, starting with recording transactions in the journal and continuing through the post-closing trial balance, is known as the accounting cycle. The other options - operating cycle, closing cycle, and natural business year - do not accurately describe this specific set of accounting steps.

Question 17

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 owner's capital account is the:
A) Income Summary account.
B) Closing account.
C) Balance column account.
D) Contra account.
E) Nominal account.

Accepted Answer

The Income Summary account is a 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 owner's capital account. This is done to reset the balances of the revenue and expense accounts to zero at the end of the period and to determine the net income or loss for the period. Therefore, option A is the correct answer. The other options listed are not used in the same way in the closing process.

Question 18

Which of the following is the final step in the accounting cycle?
A) Journalizing.
B) Preparing an adjusted trial balance.
C) Preparing a post-closing trial balance.
D) Preparing the statements.
E) Preparing a work sheet.

Accepted Answer

The final step in the accounting cycle is preparing a post-closing trial balance, which is done after all adjusting entries have been made, closing entries have been prepared and transferred to the general ledger, and financial statements have been generated. The post-closing trial balance ensures that all temporary accounts have been closed and the ending balances of all permanent accounts are accurate.

Question 19

A classified balance sheet:
A) Measures a company's ability to pay its bills on time.
B) Organizes assets and liabilities into important subgroups.
C) Presents revenues,expenses and net income.
D) Shows operating,investing,and financing activities.
E) Shows the effect of net income and withdrawals on owner's capital.

Accepted Answer

A classified balance sheet organizes assets and liabilities into important subgroups such as current assets, long-term assets, current liabilities, and long-term liabilities. This allows users to better understand the composition of a company's assets and liabilities and their liquidity.

Question 20

The ending balance of owner's capital is calculated as:
A) Owner's capital account balance plus net income minus the withdrawals account balance.
B) Owner's capital account balance minus net loss plus the withdrawals account balance.
C) Net income minus the withdrawals account balance.
D) Assets plus liabilities.
E) None of these answers is correct.

Accepted Answer

The ending balance of owner's capital is the beginning balance plus net income less any withdrawals. Therefore, option A is correct, as it adds the beginning balance of owner's capital and net income and subtracts any withdrawals made by the owner. Option B is incorrect because it subtracts a net loss instead of adding net income. Option C is incorrect because it only subtracts withdrawals without adding the beginning balance and net income. Option D is incorrect because it calculates the total assets and liabilities but not owner's capital.

Quiz 4: Completing the Accounting Cycle and Classifying Accounts

Current liabilities become due:

After all appropriate closing entries to the following accounts have been made,what will be the balance in the Jeff Corvette,Capital account?

The asset section of a classified balance sheet includes:

Emilia Feridy,the proprietor of EF Services,withdrew a total of $50 for to pay for her daughter's swimming lessons.What is the entry needed to record this transaction?

A company had revenues of $75,000,withdrawals of $10,000 and expenses of $62,000 during an accounting period.Which of the following entries should not be journalized in the closing process?

A trial balance prepared after the adjusting and closing entries have been posted,and which is the final step in the accounting cycle,is a(n) :

The J.Dawson,Capital account has a credit balance of $1,200 before closing entries are made.If total revenues for the year are $65,200,total expenses $49,800,and withdrawals are $2,400,what is the ending balance in the J.Dawson,Capital account after all closing entries have been made?

A post-closing trial balance shows:

An error is indicated if the following account has a balance appearing on the post-closing trial balance:

The normal order for the asset section of a classified balance sheet is:

Which statement is incorrect?

J.Flow,the proprietor of Flow Services,withdrew $8,700 from his business during 2015.These withdrawals will result in which of the following closing entries at the end of 2015?

The Income Summary account is used:

Which of the following statements is true?

Given the following accounts and their adjusted balances before closing entries are posted,what amount will be posted to Bessie Cool,Capital in the process of closing the Income Summary account? Assume all accounts have normal balances.

The eight recurring steps performed each accounting period,starting with recording transactions in the journal and continuing through the post-closing trial balance,is called the:

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 owner's capital account is the:

Which of the following is the final step in the accounting cycle?

A classified balance sheet:

The ending balance of owner's capital is calculated as: