Question 1

The two optional steps in the accounting cycle are preparing
A)a post-closing trial balance and reversing entries.
B)a worksheet and post-closing trial balances.
C)reversing entries and a worksheet.
D)an adjusted trial balance and a post-closing trial balance.

Accepted Answer

The two optional steps in the accounting cycle are reversing entries and a worksheet. Prepare a worksheet to ensure accuracy before creating financial statements and use reversing entries to simplify the next month's accounting process. Though, an adjusted trial balance and a post-closing trial balance are both required steps in the accounting cycle.

Question 2

An unacceptable way to make a correcting entry is to
A)reverse the incorrect entry.
B)erase the incorrect entry.
C)compare the incorrect entry with the correct entry and make a correcting entry to correct the accounts.
D)correct it immediately upon discovery.

Accepted Answer

Erasing the incorrect entry is not an acceptable way to make a correcting entry as it leaves no record of the error or the correction. It is important to keep a clear audit trail of all financial transactions. Instead, the correct way is to either reverse the incorrect entry or make a correcting entry to correct the accounts. It is also important to correct any errors as soon as they are discovered.

Question 3

The following information is for Bright Eyes Auto Supplies:  The total dollar amount of liabilities to be classified as current liabilities is
A)$50,000.
B)$130,000.
C)$180,000.
D)$330,000.

Accepted Answer

The answer of The following information is for Bright Eyes...

Question 4

Which of the following steps in the accounting cycle may be performed most frequently?
A)Prepare a post-closing trial balance
B)Journalize closing entries
C)Post closing entries
D)Prepare a trial balance

Accepted Answer

Preparing a trial balance is the step that is most frequently performed in the accounting cycle. It is done at the end of every accounting period to ensure that the debits and credits in the ledger accounts are equal and accurate.

Question 5

Which of the following depicts the proper sequence of steps in the accounting cycle?
A)Journalize the transactions, analyze business transactions, prepare a trial balance
B)Prepare a trial balance, prepare financial statements, prepare adjusting entries
C)Prepare a trial balance, prepare adjusting entries, prepare financial statements
D)Prepare a trial balance, post to ledger accounts, post adjusting entries

Accepted Answer

The proper sequence of steps in the accounting cycle is to first prepare a trial balance, then prepare adjusting entries, and finally prepare financial statements. Option A is incorrect because the analysis of business transactions comes before journalizing them. Option B is incorrect because financial statements cannot be prepared until after adjusting entries have been made. Option D is incorrect because posting to ledger accounts should happen after adjusting entries have been made.

Question 6

Correcting entries
A)always affect at least one balance sheet account and one income statement account.
B)affect income statement accounts only.
C)affect balance sheet accounts only.
D)may involve any combination of accounts in need of correction.

Accepted Answer

Correcting entries can involve any combination of accounts that need correction, including both balance sheet accounts and income statement accounts. Therefore, option D is the correct answer.

Question 7

The following information is for Sunny Day Real Estate:  The total dollar amount of assets to be classified as investments is
A)$0.
B)$70,000.
C)$85,000.
D)$155,000.

Accepted Answer

The answer of The following information is for Sunny Day...

Question 8

Which of the following steps in the accounting cycle would not generally be performed daily?
A)Journalize transactions
B)Post to ledger accounts
C)Prepare adjusting entries
D)Analyze business transactions

Accepted Answer

Adjusting entries are typically made at the end of an accounting period to ensure the accuracy of financial statements. They are not made on a daily basis. Journalizing transactions, posting to ledger accounts, and analyzing business transactions are all steps that may be performed daily as part of ongoing accounting procedures.

Question 9

The following information is for Sunny Day Real Estate:  The total dollar amount of liabilities to be classified as current liabilities is
A)$15,000.
B)$60,000.
C)$75,000.
D)$160,000.

Accepted Answer

The information provided does not give us a breakdown of the liabilities, but we can assume that all liabilities listed are current since there is no mention of long-term liabilities. Therefore, we add up all liabilities listed which equals $75,000.

Question 10

The following information is for Bright Eyes Auto Supplies:  The total dollar amount of assets to be classified as current assets is
A)$140,000.
B)$220,000.
C)$360,000.
D)$500,000.

Accepted Answer

The answer of The following information is for Bright Eyes...

Question 11

The following information is for Bright Eyes Auto Supplies:  The total dollar amount of assets to be classified as investments is
A)$0.
B)$140,000.
C)$180,000.
D)$250,000.

Accepted Answer

The answer of The following information is for Bright Eyes...

Question 12

If errors occur in the recording process, they
A)should be corrected as adjustments at the end of the period.
B)should be corrected as soon as they are discovered.
C)should be corrected when preparing closing entries.
D)cannot be corrected until the next accounting period.

Accepted Answer

Errors should be corrected as soon as they are discovered in order to maintain the accuracy of the financial records. Waiting until the end of the period may result in further errors and can make it difficult to identify the root cause of the mistake. Waiting until closing entries may also result in inaccurate financial statements. Errors should be corrected immediately to prevent further complications.

Question 13

The first required step in the accounting cycle is
A)reversing entries.
B)journalizing transactions in the book of original entry.
C)analyzing transactions.
D)posting transactions.

Accepted Answer

Analyzing transactions is the first step in the accounting cycle. This involves reviewing the source documents and identifying the financial transactions that have occurred. This step is important because it sets the foundation for all subsequent steps in the accounting cycle. Once transactions have been analyzed and properly identified, they can then be recorded in the book of original entry (journalized), posted to the general ledger, and so on.

Question 14

A correcting entry
A)must involve one balance sheet account and one income statement account.
B)is another name for a closing entry.
C)may involve any combination of accounts.
D)is a required step in the accounting cycle.

Accepted Answer

A correcting entry may involve any combination of accounts, not just one balance sheet account and one income statement account. It is not necessarily another name for a closing entry and may not always be a required step in the accounting cycle.

Question 15

All of the following are property, plant, and equipment except
A)supplies.
B)machinery.
C)land.
D)buildings.

Accepted Answer

Supplies are not considered property, plant, and equipment. They are classified as inventory. Machinery, land, and buildings are all examples of property, plant, and equipment.

Question 16

Merriweather Post Pavillion received a $820 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $280 and a credit to Service Revenue $280. The correcting entry is
A)debit Cash, $820; credit Accounts Receivable, $820.
B)debit Cash, $540 and Accounts Receivable, $280; credit Service Revenue, $820.
C)debit Cash, $540 and Service Revenue, $280; credit Accounts Receivable, $820.
D)debit Accounts Receivable, $820; credit Cash, $540 and Service Revenue, $280.

Accepted Answer

The correcting entry should debit the proper account (Accounts Receivable) for the full amount received ($820) and credit the incorrect accounts (Cash and Service Revenue) for their respective amounts ($540 and $280). Therefore, the correct entry is to debit Cash for $540 and Service Revenue for $280, and credit Accounts Receivable for $820. The correct entry is C.

Question 17

The following information is for Bright Eyes Auto Supplies:  The total dollar amount of assets to be classified as property, plant, and equipment is
A)$390,000.
B)$450,000.
C)$570,000.
D)$630,000.

Accepted Answer

The answer of The following information is for Bright Eyes...

Question 18

The following information is for Sunny Day Real Estate:  The total dollar amount of assets to be classified as property, plant, and equipment is
A)$200,000.
B)$220,000.
C)$285,000.
D)$305,000.

Accepted Answer

The answer of The following information is for Sunny Day...

Question 19

The following information is for Sunny Day Real Estate:  The total dollar amount of assets to be classified as current assets is
A)$105,000.
B)$175,000.
C)$190,000.
D)$260,000.

Accepted Answer

The answer of The following information is for Sunny Day...

Question 20

On May 25, Yellow House Company received a $650 check from Grizzly Bean for services to be performed in the future. The bookkeeper for Yellow House Company incorrectly debited Cash for $650 and credited Accounts Receivable for $650. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should:
A)debit Cash $650 and credit Unearned Service Revenue $650.
B)debit Accounts Receivable $650 and credit Service Revenue $650.
C)debit Accounts Receivable $650 and credit Cash $650.
D)debit Accounts Receivable $650 and credit Unearned Service Revenue $650.

Accepted Answer

The mistake made by the bookkeeper was to incorrectly record the receipt of cash as a credit to Accounts Receivable instead of a credit to Unearned Service Revenue. To correct this entry, the bookkeeper should debit the incorrect account (Accounts Receivable) and credit the correct account (Unearned Service Revenue) for the same amount of $650. Therefore, the correct entry to be made to correct the error is:

Debit Accounts Receivable $650
Credit Unearned Service Revenue $650

Quiz 4: Completing the Accounting Cycle

The two optional steps in the accounting cycle are preparing

An unacceptable way to make a correcting entry is to

The following information is for Bright Eyes Auto Supplies: The total dollar amount of liabilities to be classified as current liabilities is

Which of the following steps in the accounting cycle may be performed most frequently?

Which of the following depicts the proper sequence of steps in the accounting cycle?

Correcting entries

The following information is for Sunny Day Real Estate: The total dollar amount of assets to be classified as investments is

Which of the following steps in the accounting cycle would not generally be performed daily?

The following information is for Sunny Day Real Estate: The total dollar amount of liabilities to be classified as current liabilities is

The following information is for Bright Eyes Auto Supplies: The total dollar amount of assets to be classified as current assets is

The following information is for Bright Eyes Auto Supplies: The total dollar amount of assets to be classified as investments is

If errors occur in the recording process, they

The first required step in the accounting cycle is

A correcting entry

All of the following are property, plant, and equipment except

Merriweather Post Pavillion received a $820 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $280 and a credit to Service Revenue $280. The correcting entry is

The following information is for Bright Eyes Auto Supplies: The total dollar amount of assets to be classified as property, plant, and equipment is

The following information is for Sunny Day Real Estate: The total dollar amount of assets to be classified as property, plant, and equipment is

The following information is for Sunny Day Real Estate: The total dollar amount of assets to be classified as current assets is