Question 1

The work sheet is not considered a part of the formal accounting records.

Accepted Answer

The worksheet is a tool used to help prepare the formal accounting records, but is not considered a part of the formal records themselves. It is a working document used to organize and summarize adjusting entries before they are posted to the general ledger.

Question 2

Reversing entries are recorded after adjusting entries have been recorded and before closing entries are recorded for the same period.

Accepted Answer

Reversing entries are recorded at the beginning of the new accounting period, after the closing entries have been made for the previous period, not before the closing entries.

Question 3

A work sheet heading is dated for a period of time.

Accepted Answer

A worksheet heading typically includes a date or date range to indicate the period of time that it covers.

Question 4

The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial Balance column totals and the Adjustments column totals.

Accepted Answer

The totals of the Adjusted Trial Balance columns are not simply the sum of the Trial Balance and Adjustments columns; they reflect the original balances adjusted for any changes, which may involve adding or subtracting adjustments.

Question 5

The trial balance may be listed on the work sheet instead of being prepared separately.

Accepted Answer

The trial balance can be listed on the work sheet in the appropriate section, instead of being prepared as a separate document.

Question 6

If the totals of the Income Statement Debit and Credit columns of a work sheet are $27,000 and $29,000, respectively, after all account balances have been extended, the amount of the net loss is $2,000.

Accepted Answer

The difference between the Debit and Credit columns should represent the net income, not the net loss. Therefore, the net loss would be -$2,000.

Question 7

Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post them to the ledger.

Accepted Answer

The adjustments must be recorded in the journal and posted to the ledger to update the accounts and ensure that the financial statements reflect the correct information. The work sheet is a tool used to prepare the financial statements and is not a substitute for actually recording and posting the adjustments.

Question 8

The balance in the capital account on the worksheet will equal the amount presented in the balance sheet.

Accepted Answer

The balance in the capital account on the worksheet may not equal the amount presented in the balance sheet due to adjustments for items like net income, withdrawals, or additional investments that are accounted for in the financial statements.

Question 9

On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns.

Accepted Answer

This is true, as the capital and drawing account balances are necessary components for calculating the owner's equity section of the balance sheet.

Question 10

After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet, the difference between the initial totals of the Balance Sheet Debit and Credit columns is net income or net loss.

Accepted Answer

The difference between the initial totals of the Balance Sheet Debit and Credit columns after extending account balances from the Adjusted Trial Balance on the work sheet represents the company's net income (if credits exceed debits) or net loss (if debits exceed credits). This difference is necessary to balance the two sides of the balance sheet.

Question 11

What is the major difference between the unadjusted trial balance and the adjusted trial balance?
A) The adjusted trial balance will show the net income (loss) as an additional account.
B) Unlike the adjusted trial balance, the unadjusted trial balance will continue with the end-of-period processing even if it is not in balance.
C) The adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts.
D) The adjusted trial balance will be used to record the adjustments for the period.

Accepted Answer

The major difference between the unadjusted trial balance and the adjusted trial balance is that the adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts. The adjustments are made to ensure that the accounts accurately reflect the financial transactions of the period, and these adjustments are reflected in the adjusted trial balance. The unadjusted trial balance, on the other hand, is prepared before the adjustments are made and does not reflect these adjustments. Therefore, the adjusted trial balance provides a more accurate picture of the company's financial position at the end of the period.

Question 12

The income statement is prepared from the adjusted trial balance or the Income Statement columns on the work sheet.

Accepted Answer

The income statement can be prepared from either the adjusted trial balance or the Income Statement columns on the work sheet.

Question 13

After net income or loss is entered on the work sheet, the Debit column total must equal the Credit column total for the Balance Sheet pair of columns.

Accepted Answer

This is because the Balance Sheet pair of columns represent the assets on one side and the liabilities and equity on the other, and they must always be balanced.

Question 14

The balances of the capital accounts from the Adjusted Trial Balance columns of the work sheet are extended to the Statement of Owner's Equity columns.

Accepted Answer

The answer of The balances of the capital accounts from...

Question 15

Net income is shown on the work sheet in the Income Statement Debit column and the Balance Sheet Credit column.

Accepted Answer

Net income is a credit to the Income Statement Debit column and a debit to the Balance Sheet Credit column. This represents the increase in retained earnings on the balance sheet due to the net income earned during the period.

Question 16

A net loss is shown on the work sheet in the Credit columns of both the Income Statement columns and the Balance Sheet columns.

Accepted Answer

A net loss is shown in the Debit column of the Income Statement section and in the Credit column of the Balance Sheet section on a work sheet.

Question 17

The chart of accounts, the journal, and the ledger are essential parts of the accounting system.

Accepted Answer

The chart of accounts, journal, and ledger are all fundamental components of the accounting system. The chart of accounts sets up the categories in which financial transactions will be recorded, the journal records those transactions in chronological order, and the ledger shows the balances of each account after transactions have been posted. Together, these three elements serve as the foundation of financial recordkeeping and reporting.

Question 18

The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements.

Accepted Answer

A worksheet is indeed a working paper that helps accountants summarize adjusting entries and account balances to prepare financial statements.

Question 19

A reversing entry reverses the effects of an adjusting entry from the previous period.​

Accepted Answer

A reversing entry is made in the current period to reverse the effects of an adjusting entry made in the previous period so that the accounts can be recorded accurately in the new period.

Question 20

Accrued fees earned are recorded during the adjusting process. The reversing entry will leave a debit balance in Fees Earned as of the first day of the next period.

Accepted Answer

Accrued fees earned are recorded as an asset on the balance sheet, and the reversing entry will leave a debit balance in Fees Earned as of the first day of the next period. This is because the fees have been earned but not yet received in cash.

Quiz 4: Completing the Accounting Cycle