Question 1

The Dividends account is closed to the Income Summary account in order to properly determine net income (or loss) for the period.

Accepted Answer

False

Question 2

The balance of the depreciation expense account will appear in the income statement debit column of a worksheet.

Accepted Answer

Depreciation expense is subtracted from revenue in the income statement, resulting in a decreased net income. Therefore, it appears as a debit in the income statement column of a worksheet.

Question 3

No permanent account balances are changed in the closing process.

Accepted Answer

False

Question 4

The adjustments on a worksheet can be posted directly to the accounts in the ledger from the worksheet.

Accepted Answer

Adjustments on a worksheet are used for planning purposes and must be journalized and posted to the ledger accounts as separate transactions, not directly from the worksheet.

Question 5

If a worksheet is used, financial statements can be prepared before adjusting entries are journalized.

Accepted Answer

Using a worksheet allows for the preparation of financial statements before adjusting entries are journalized because the worksheet captures the effects of adjusting entries in a temporary section before transferring them to the general ledger accounts.

Question 6

The amounts appearing on an income statement should agree with the amounts appearing on the post-closing trial balance.

Accepted Answer

The income statement reports revenues and expenses for a specific period and does not include balance sheet accounts, which are the accounts that appear on the post-closing trial balance. The post-closing trial balance includes only permanent accounts (assets, liabilities, and equity) and not the temporary accounts (revenues, expenses, dividends) that are closed to equity and appear on the income statement.

Question 7

Closing the Dividends account to Retained Earnings is not necessary if net income is greater than dividends paid during the period.

Accepted Answer

The answer of Closing the Dividends account to Retained Earnings...

Question 8

The post-closing trial balance is entered in the first two columns of a worksheet.

Accepted Answer

The post-closing trial balance is not entered in the first two columns of a worksheet; instead, the adjusted trial balance figures are entered in these columns. The post-closing trial balance is prepared after the closing entries are made and typically does not appear on the worksheet itself.

Question 9

The Dividends account is a permanent account whose balance is carried forward to the next accounting period.

Accepted Answer

The answer of The Dividends account is a permanent account...

Question 10

The adjusted trial balance columns of a worksheet are obtained by subtracting the adjustment columns from the trial balance columns.

Accepted Answer

The adjusted trial balance columns are obtained by adding the adjustment columns to the trial balance columns.

Question 11

It is not necessary to prepare formal financial statements if a worksheet has been prepared because financial position and net income are shown on the worksheet.

Accepted Answer

While a worksheet may show financial position and net income, formal financial statements are still necessary to present the information in a clear and organized manner that complies with accounting standards.

Question 12

After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.

Accepted Answer

This is because closing entries transfer the balances of temporary accounts (such as revenue, expenses, and dividends) to the retained earnings or owner's equity account, resulting in a zero balance for those temporary accounts.

Question 13

The last 2 columns on a worksheet prepared under IFRS contains data for the Retained Earnings Statements.

Accepted Answer

The answer of The last 2 columns on a worksheet...

Question 14

Closing revenue and expense accounts to the Income Summary account is an optional bookkeeping procedure.

Accepted Answer

Closing revenue and expense accounts to the Income Summary account is a necessary bookkeeping procedure to determine the overall net income or loss of a company for a specific period. This process is done at the end of the accounting period as part of the closing entries.

Question 15

If total credits in the income statement columns of a worksheet exceed total debits, the enterprise has net income.

Accepted Answer

This statement is correct. Total credits exceeding total debits indicates that the enterprise has more income than expenses, resulting in net income.

Question 16

Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year.

Accepted Answer

Closing entries are necessary to properly match revenues and expenses for a particular period and transfer the balances to the next period. This ensures accurate financial reporting and facilitates the preparation of future financial statements.

Question 17

The format of the data in the Statement of Financial Position columns of the worksheet is the same as the format of the Statement of Financial Position.

Accepted Answer

The answer of The format of the data in the...

Question 18

Closing entries are journalized after adjusting entries have been journalized.

Accepted Answer

Closing entries are made after adjusting entries are journalized in order to transfer the balances of revenue, expense, and withdrawal accounts to the owner's capital account.

Question 19

The procedures used to prepare the worksheet are the same under both IFRS and GAAP.

Accepted Answer

The procedures used to prepare the worksheet, including the steps for adjusting entries, closing entries, and preparing financial statements, are generally the same under both IFRS and GAAP. However, there may be some differences in specific requirements or terminology used within the worksheet process.

Question 20

A worksheet is a mandatory form that must be prepared along with an income statement and statement of financial position.

Accepted Answer

A worksheet is not a mandatory form, but it is a helpful tool used to organize and prepare financial statements.

Quiz 4: Completing the Accounting Cycle