Question 1

Reversing entries are:
A) Optional.
B) Linked to accrued assets and liabilities that were created by adjusting entries at the end of the previous accounting period.
C) Used to simplify a company's record keeping.
D) Dated the first day of the next accounting period.
E) All of these answers are correct.

Accepted Answer

Reversing entries are optional, linked to accrued assets and liabilities from adjusting entries, used to simplify record keeping, and dated the first day of the next accounting period, making all the options correct.

Question 2

Reversing entries:
A) Are optional.
B) Are mandatory.
C) Fix errors in journal entries.
D) Are required by CRA.
E) Are not posted to the ledger.

Accepted Answer

Reversing entries are optional and are often used to facilitate the recording of transactions in the following period. They do not fix errors in journal entries and are not required by the CRA. They are posted to the ledger in order to undo the original transaction, making it easier to record the correct entry in the following period.

Question 3

The unadjusted trial balance of Edward Pace,CGA is entered on the work sheet below.Complete the work sheet using the following information:
(a)Salaries earned by employees but unpaid and unrecorded,$500.
(b)An inventory of supplies showed $800 of unused supplies on hand.
(c)Estimated depreciation on equipment,$1,300.

Accepted Answer

The answer of The unadjusted trial balance of Edward Pace,CGA...

Question 4

Explain why temporary accounts are closed each period.

Accepted Answer

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Question 5

Using the following partial Excel work sheet for Cozy Motel,prepare the Income Statement,the Statement of Changes in Equity,and an unclassified Balance Sheet for the company.Assume the owner did not make any investments in the business during the year.

Accepted Answer

The answer of Using the following partial Excel work sheet...

Question 6

The current ratio:
A) Is current assets divided by current liabilities.
B) Helps to assess a company's ability to pay its debts in the near future.
C) Suggests there may be problems in a business if it is less than 1.
D) Is a measure of a company's liquidity.
E) All of these answers are correct.

Accepted Answer

All of the given choices are correct. The current ratio is calculated by dividing current assets by current liabilities, and it helps to assess a company's ability to pay its debts in the near future. A current ratio less than 1 may suggest there are problems in a business as it may not be able to meet its short-term obligations. The current ratio is commonly used as a measure of a company's liquidity.

Question 7

Explain why closing entries are a necessary step in the accounting cycle.

Accepted Answer

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Question 8

Calculate the current ratio in each of the following cases.

Accepted Answer

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Question 9

Shown below is Bill Brady Law's adjusted trial balance at the end of its annual accounting period.  Prepare the necessary closing entries.

Accepted Answer

The answer of Shown below is Bill Brady Law's adjusted...

Question 10

Describe a work sheet and explain why it is useful.

Accepted Answer

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Question 11

Presented below are the year-end balances at October 31 of Max Missle Paintball Co.All accounts have normal balances.  Prepare the necessary closing entries at October 31.

Accepted Answer

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Question 12

Using the following partial Excel work sheet for Gold Forest Service Co.,prepare the Income Statement,the Statement of Changes in Equity,and an unclassified Balance Sheet.Assume the owner did not make any investments in the business during the year.

Accepted Answer

The answer of Using the following partial Excel work sheet...

Question 13

In the blank space beside each numbered item,enter the letter of its balance sheet classification.If the item should not appear on the balance sheet,enter "z" in the blank.

Accepted Answer

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Question 14

Below is an alphabetical listing of General Ledger accounts with identifying numbers for Scott's Suntanning Parlour.Indicate the accounts debited and credited in each of the following transactions by placing the proper account identifying number(s)in the columns to the right of each transaction.

Accepted Answer

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Question 15

(A)In a sole proprietorship,Income Summary is closed to what account? (B)In following the steps of the accounting cycle,what two steps must be done before preparation of an unadjusted trial balance?

Accepted Answer

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Question 16

The adjusted trial balance of Sara's Photography follows:

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Question 17

The alphabetized adjusted trial balance for SimCo Electrical Outfitters at August 31,2015,is shown below.Identify how each account balance would be classified on a balance sheet given the following classification symbols:

Accepted Answer

The answer of The alphabetized adjusted trial balance for SimCo...

Question 18

The following are the steps in the accounting cycle.List them in the order in which they are completed:
Completing the work sheet
Posting
Preparing an unadjusted trial balance
Journalizing
Preparing the statements
Closing the temporary accounts
Adjusting the ledger accounts
Preparing a post-closing trial balance

Accepted Answer

The answer of The following are the steps in the...

Question 19

Explain the purpose of closing entries and describe the closing process.

Accepted Answer

The answer of Explain the purpose of closing entries and...

Question 20

The current ratio:
A) Is used to measure a company's profitability.
B) Is used to measure the relationship between assets and long-term debt.
C) Measures the effect of operating income on profit.
D) Is used to evaluate a company's ability to pay its short-term obligations.
E) Only relates to long term liabilities.

Accepted Answer

The current ratio is a liquidity ratio that measures a company's ability to pay its short-term obligations. It is calculated by dividing current assets by current liabilities. A higher current ratio indicates a better ability to pay off short-term debts.

Quiz 4: Completing the Accounting Cycle and Classifying Accounts

Reversing entries are:

Reversing entries: