Question 1

Which of the following statements is incorrect?

Accepted Answer

The incorrect statement is D because on the work sheet, the accountant sorts the adjusted amounts into columns according to whether the accounts are used in preparing the income statement or the balance sheet, not the unadjusted trial balance or the adjusted trial balance.

Question 2

A 10-column spreadsheet used to draft a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements, and which is an optional step in the accounting process, is a(n)

Accepted Answer

A 10-column worksheet is a tool used by accountants to help prepare financial statements. It includes columns for the unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements. While it is not technically a required step in the accounting process, many accountants find it helpful in organizing their work and ensuring accuracy. The worksheet is not a final accounting document, but rather a tool that helps in the preparation of financial statements.

Question 3

Accounts that are used to describe assets, liabilities, and equity, that are not closed as long as the company continues to own the assets, owe the liabilities, or have equity, and whose balances appear on the balance sheet are called

Accepted Answer

Permanent accounts are used to describe assets, liabilities, and equity and are not closed as long as the company continues to own the assets, owe the liabilities, or have equity. The balances of permanent accounts appear on the balance sheet.

Question 4

The income summary has a zero balance after which step in the closing process

Accepted Answer

The income summary has a zero balance after step 3 in the closing process, which is when the income summary account is closed to retained earnings.

Question 5

Accounts that are used to describe revenues, expenses, and owner's withdrawals, and are closed at the end of the reporting period, are

Accepted Answer

Temporary accounts are accounts that are used to record revenues, expenses, and owner's withdrawals for a specific period of time. They are temporary because they are closed at the end of the reporting period (usually at the end of the fiscal year) and their balances are transferred to the owner's equity account or to a retained earnings account. The purpose of closing temporary accounts is to reset the balances to zero and start fresh for the next reporting period. Examples of temporary accounts include revenue accounts, expense accounts, and owner's withdrawal account.

Question 6

Closing the temporary accounts at the end of each accounting period

Accepted Answer

Closing the temporary accounts (revenue, expense, and withdrawals) serves to transfer the effects of these accounts to the proper equity account on the balance sheet, prepares the withdrawals account for use in the next period, and gives the revenue and expense accounts zero balances. Additionally, closing the withdrawals account gives it a zero balance. Therefore, all of these options are correct.

Question 7

The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments columns contain entries for the following: (1) Office supplies used during the period, $1,200. (2) Expiration of prepaid rent, $700. (3) Accrued salaries expense, $500. (4) Depreciation expense, $800. (5) Accrued repair service fees receivable, $400. The Adjusted Trial Balance columns total

Accepted Answer

The total of the Adjusted Trial Balance columns is equal to the total of the Unadjusted Trial Balance columns plus the net amount of the adjustments. The net amount of the adjustments is the total of the debit adjustments minus the total of the credit adjustments. In this case, the total of the debit adjustments is $1,200 + $800 = $2,000, and the total of the credit adjustments is $700 + $500 + $400 = $1,600. Therefore, the net amount of the adjustments is $2,000 - $1,600 = $400. The total of the Adjusted Trial Balance columns is therefore $84,000 + $400 = $85,700.

Question 8

Another name for income summary accounts is

Accepted Answer

Income summary accounts are temporary accounts because they are used only in the closing process to transfer balances from revenue and expense accounts to retained earnings (or owner's equity) account. Once the closing process is complete, income summary accounts have a zero balance and are no longer used.

Question 9

Which of the following errors would cause the balance sheet columns of a work sheet to be out of balance?

Accepted Answer

The answer of Which of the following errors would cause...

Question 10

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming year and to update the owner's capital account for the events of the year just finished are

Accepted Answer

Closing entries are recorded at the end of each accounting period to close out the revenue, expense, and withdrawals accounts and transfer their balances to the owner's capital account. This process prepares the accounts for the upcoming year and updates the owner's capital account for the events of the year just finished. Adjusting entries are recorded throughout the accounting period to ensure that the financial statements are accurate and complete, while final entries and worksheet entries are not commonly used terms in accounting.

Question 11

If, in preparing a work sheet, an adjusted trial balance amount is sorted to the wrong work sheet column, the Balance Sheet columns will balance on completing the work sheet, but with the wrong profit, if the amount sorted in error is

Accepted Answer

The answer of If, in preparing a work sheet, an...

Question 12

Internal documents prepared by accountants when organizing the information presented in formal reports to internal and external decision makers are called

Accepted Answer

Internal documents prepared by accountants when organizing the information presented in formal reports to internal and external decision makers are called working papers. These are used to support the information in financial statements and provide evidence for any audit that may be conducted. Working papers can include financial calculations, notes, and other relevant documentation that supports the accuracy and validity of financial statements.

Question 13

The Unadjusted Trial Balance columns of the work sheet show the balance in the Office Supplies account at $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Balance Sheet columns is

Accepted Answer

The amount shown in the Balance Sheet columns for Office Supplies would be $325 debit, calculated as the original balance of $750 minus the $425 of supplies used during the period. This reflects the remaining value of office supplies.

Question 14

When closing entries are made

Accepted Answer

Closing entries are made to close all temporary accounts (revenues, expenses, dividends) to a permanent account (usually Retained Earnings) to prepare the company's books for the next fiscal period. Permanent accounts, such as assets, liabilities, and equity accounts, are not closed.

Question 15

If the Balance Sheet columns of a work sheet fail to balance when the amount of profit is added to the Balance Sheet Credit column, the cause could be

Accepted Answer

If the Balance Sheet columns fail to balance after adding the profit amount to the Credit column, it means that the Debit side has a larger total than the Credit side. This could be caused by a liability amount entered in the Balance Sheet Debit column. Liabilities typically have credit balances and should be entered on the Credit column. If entered on the Debit column, it will throw off the balance of the Balance Sheet.

Question 16

Accumulated Depreciation, Equipment, Accounts Receivable, and Service Revenue would be sorted to which respective columns in completing a work sheet?

Accepted Answer

Accumulated Depreciation is a contra asset account and appears on the Balance Sheet as a credit. Equipment is an asset and appears on the Balance Sheet as a debit. Accounts Receivable is an asset and appears on the Balance Sheet as a debit. Service Revenue is an income account and appears on the Income Statement as a credit.

Question 17

A company shows an $800 balance in Prepaid Insurance in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired insurance of $600. This adjusting entry results in

Accepted Answer

The adjusting entry for expired insurance will decrease the balance in Prepaid Insurance by $600, resulting in a new balance of $200 ($800 - $600). This decrease in assets (Prepaid Insurance) will result in a decrease in profit by the same amount, $600. Therefore, the correct answer is A, $600 less profit.

Question 18

Which of the following statements is incorrect?

Accepted Answer

Permanent accounts are not another name for temporary accounts. Permanent accounts are accounts that have a continuous balance and are not closed at the end of the accounting period, whereas temporary accounts are closed at the end of the accounting period.

Question 19

The information on a work sheet can be used to prepare

Accepted Answer

The information on a work sheet can be used to prepare year-end financial statements, adjusting entries, closing entries, and interim financial statements, so all of these options are correct.

Question 20

The following items appeared on December 31 Excel work sheet. Based on the following information, what is profit for the year?

Accepted Answer

The answer of The following items appeared on December 31...

Quiz 4: Completing the Accounting Cycle and Classifying Accounts

Which of the following statements is incorrect?

A 10-column spreadsheet used to draft a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements, and which is an optional step in the accounting process, is a(n)

Accounts that are used to describe assets, liabilities, and equity, that are not closed as long as the company continues to own the assets, owe the liabilities, or have equity, and whose balances appear on the balance sheet are called

The income summary has a zero balance after which step in the closing process

Accounts that are used to describe revenues, expenses, and owner's withdrawals, and are closed at the end of the reporting period, are

Closing the temporary accounts at the end of each accounting period

Another name for income summary accounts is

Which of the following errors would cause the balance sheet columns of a work sheet to be out of balance?

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming year and to update the owner's capital account for the events of the year just finished are

If, in preparing a work sheet, an adjusted trial balance amount is sorted to the wrong work sheet column, the Balance Sheet columns will balance on completing the work sheet, but with the wrong profit, if the amount sorted in error is

Internal documents prepared by accountants when organizing the information presented in formal reports to internal and external decision makers are called

The Unadjusted Trial Balance columns of the work sheet show the balance in the Office Supplies account at $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Balance Sheet columns is

When closing entries are made

If the Balance Sheet columns of a work sheet fail to balance when the amount of profit is added to the Balance Sheet Credit column, the cause could be

Accumulated Depreciation, Equipment, Accounts Receivable, and Service Revenue would be sorted to which respective columns in completing a work sheet?

A company shows an $800 balance in Prepaid Insurance in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired insurance of $600. This adjusting entry results in

Which of the following statements is incorrect?

The information on a work sheet can be used to prepare

The following items appeared on December 31 Excel work sheet. Based on the following information, what is profit for the year?