Question 1

The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750.The Adjustments columns show that $425 of these supplies was used during the period.The amount shown as Office Supplies in the Balance Sheet columns of the work sheet is:
A)$325 debit
B)$325 credit
C)$425 debit
D)$750 debit
E)$750 credit

Accepted Answer

The unadjusted balance of $750 minus the used supplies of $425 results in $325 remaining as the balance for Office Supplies, which is shown as a debit in the Balance Sheet columns.

Question 2

The alternative method of accounting for prepayments
A)Initially records all prepaid expenses with debits to expense accounts.
B)Initially records all prepaid expenses with credits to expense accounts.
C)Requires an adjusting entry because expenses are understated.
D)Requires an adjusting entry if the prepaid is consumed during the period.
E)Requires an adjusting entry because net income is understated.

Accepted Answer

Prepaid expenses are initially recorded as debits to expense accounts, and an adjusting entry is needed to allocate the expense over the period it benefits.

Question 3

Which of the following statements is true?
A)Retained earnings must be closed each accounting period.
B)A post-closing trial balance should include only permanent accounts.
C)Information on the work sheet can be used in place of preparing financial statements.
D)By using a work sheet to prepare adjusting entries,you need not post these entries to the ledger accounts
E)Closing entries are only necessary if errors have been made.

Accepted Answer

A post-closing trial balance includes only permanent accounts, which are not closed at the end of the accounting period. Retained earnings is an example of a temporary account, which is closed at the end of the period. Information on the work sheet can help in preparing financial statements but is not a substitute for them. Adjusting entries must be posted to the ledger accounts to update the balances. Closing entries are necessary to transfer the net income or loss to the retained earnings account.

Question 4

A company had revenues of $75,000 and expenses of $62,000 and paid $1,000 dividends during the accounting period.Which of the following entries could not be a closing entry for this company?
A) 
B) 
C) 
D) 
E)

Accepted Answer

The answer of A company had revenues of $75,000 and...

Question 5

The Income Summary account is used:
A)To adjust and update asset and liability accounts.
B)To close the revenue and expense accounts.
C)To determine the appropriate dividend amount.
D)In some situations to replace the income statement.
E)To replace the retained earnings account in some businesses.

Accepted Answer

The Income Summary account is used to close the revenue and expense accounts at the end of an accounting period. The balances of the revenue and expense accounts are transferred to the Income Summary account, which is then closed to retained earnings or owner's equity.

Question 6

An error is indicated if the following account has a balance appearing on the post-closing trial balance:
A)Office Equipment
B)Accumulated Depreciation-Office Equipment
C)Depreciation Expense-Office Equipment
D)Common Stock
E)Salaries Payable

Accepted Answer

Depreciation Expense-Office Equipment should not appear on the post-closing trial balance as it is a temporary account that is closed at the end of the accounting period. The post-closing trial balance only includes permanent accounts, such as Office Equipment (A), Accumulated Depreciation-Office Equipment (B), Common Stock (D), and Salaries Payable (E).

Question 7

Accumulated depreciation,accounts receivable,and service fees earned would be sorted to which respective columns in completing a work sheet?
A)Balance Sheet-Credit; Balance Sheet Debit; and Income Statement-Credit.
B)Balance Sheet-Debit; Balance Sheet-Credit; and Income Statement-Credit.
C)Income Statement-Debit; Balance Sheet-Debit; and Income Statement-Credit.
D)Income Statement-Debit; Income Statement-Debit; and Balance Sheet-Credit.
E)Balance Sheet-Credit; Income Statement-Debit; and Income Statement-Credit.

Accepted Answer

Accumulated depreciation is a contra asset account and appears as a credit on the balance sheet. Accounts receivable is an asset and appears as a debit on the balance sheet. Service fees earned is a revenue account and appears as a credit on the income statement.

Question 8

Which of the following errors would cause the Balance Sheet columns of a work sheet to be out of balance?
A)Entering an asset amount in the Income Statement Debit column.
B)Entering a liability amount in the Income Statement Credit column.
C)Entering an expense amount in the Balance Sheet Debit column.
D)Entering a revenue amount in the Balance Sheet Debit column.
E)Entering a liability amount in the Balance Sheet Credit column.

Accepted Answer

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

Question 9

A trial balance prepared after the closing entries have been journalized and posted is the:
A)Unadjusted trial balance
B)Post-closing trial balance
C)General ledger
D)Adjusted trial balance
E)Work sheet

Accepted Answer

A post-closing trial balance is prepared after the closing entries have been made and posted. It includes only permanent accounts, as temporary accounts have been closed out. An unadjusted trial balance is prepared prior to making adjusting entries, a general ledger is a record of all transactions, an adjusted trial balance is prepared after adjusting entries have been made, and a work sheet is a tool used to prepare financial statements.

Question 10

The following items appeared on a company's December 31 work sheet for the current period.Based on the following information,what is net income for the current period? 
A)$1,400
B)$1,855
C)$1,905
D)$2,060
E)$4,670

Accepted Answer

The answer of The following items appeared on a company's...

Question 11

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.) 
A)$16,780 debit
B)$7,180 credit
C)$16,780 credit
D)$18,280 credit
E)$23,780 credit

Accepted Answer

To find the amount that will be posted to Retained Earnings in the process of closing the Income Summary account, we need to calculate the balance of the Income Summary account first.

The balance of the Income Summary account is the difference between the total revenue and the total expenses:

Total revenue - Total expenses = Income Summary

$112,300 - $95,520 = $16,780

Next, we need to transfer this balance to Retained Earnings by making a closing entry. Since the balance of the Income Summary account is a credit balance, we need to debit the Income Summary account and credit Retained Earnings:

Income Summary $16,780 debit
Retained Earnings $16,780 credit

Therefore, the answer is option C, which shows the amount of $16,780 being posted to Retained Earnings.

Question 12

A post-closing trial balance includes:
A)All ledger accounts with balances,none of which can be temporary accounts.
B)All ledger accounts with balances,none of which can be permanent accounts.
C)All ledger accounts with balances,which include some temporary and some permanent accounts.
D)Only revenue and expense accounts.
E)Only asset accounts.

Accepted Answer

A post-closing trial balance includes all ledger accounts with balances, but only permanent accounts, as temporary accounts (like revenues and expenses) are closed at the end of the accounting period.

Question 13

Awn Services paid a dividend of $8,700 during the current year.The entry to close the dividend account at the end of the year is:
A) 
B) 
C) 
D) 
E)

Accepted Answer

The answer of Awn Services paid a dividend of $8,700...

Question 14

The Retained Earnings account has a credit balance of $17,000 before closing entries are made.If total revenues for the period are $55,200,total expenses are $39,800 and dividends are $9,000,what is the ending balance in the Retained Earnings account after all closing entries are made?
A)$8,000
B)$15,400
C)$23,400
D)$17,000
E)$32,400

Accepted Answer

The ending balance in the Retained Earnings account can be calculated using the formula:

Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends

In this case, the Beginning Retained Earnings is given as $17,000.

The Net Income can be calculated by subtracting the total expenses from the total revenues:

Net Income = Total Revenue - Total Expenses
Net Income = $55,200 - $39,800
Net Income = $15,400

Finally, subtract the dividends from the net income:

Ending Retained Earnings = $17,000 + $15,400 - $9,000
Ending Retained Earnings = $23,400

Therefore, the ending balance in the Retained Earnings account after all closing entries are made is $23,400. The correct answer is C.

Question 15

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:
A)Income Summary account
B)Closing account
C)Balance column account
D)Contra account
E)Nominal account

Accepted Answer

The Income Summary account is used to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account during the closing process. This account is also used to determine the amount to be transferred to retained earnings.

Question 16

Which of the following statements regarding financial statement preparation is false?
A)Financial statements can be prepared from information in the adjusted trial balance.
B)The Sarbanes-Oxley Act requires that financial statements filed with the Securities and Exchange Commission include declarations by the CEO and CFO of the company.
C)It makes sense to prepare the balance sheet first because it contains information needed on the income statement.
D)When preparing financial statements an adjusted trial balance is easier to work with than the entire ledger.
E)The income statement is prepared first.

Accepted Answer

It does not make sense to prepare the balance sheet first because it is based on information from both the income statement and statement of cash flows. Therefore, it is more efficient to prepare the income statement and statement of cash flows first before creating the balance sheet.

Question 17

A company shows a $600 balance in prepaid insurance in the Unadjusted Trial Balance columns of the work sheet.The Adjustments columns show expired insurance of $200.This adjusting entry results in:
A)$200 less in net income.
B)$200 more in net income.
C)$200 difference between the debit and credit columns of the unadjusted trial balance.
D)$200 of prepaid insurance.
E)An error in the financial statements.

Accepted Answer

The adjusting entry for expired insurance reduces the balance of prepaid insurance by $200, resulting in a new balance of $400 ($600 - $200). Since prepaid insurance is an asset account, a decrease in its balance will decrease net income, resulting in $200 less in net income.

Question 18

The following information is available for the Travis Travel Agency.After the closing entries have been journalized and posted,what will be the balance in the Retained Earnings account? 
A)$65,000
B)$80,000
C)$130,000
D)$145,000
E)$280,000

Accepted Answer

The answer of The following information is available for the...

Question 19

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 tool in the accounting process is a(n):
A)Adjusted trial balance
B)Work sheet
C)Post-closing trial balance
D)Unadjusted trial balance
E)General ledger

Accepted Answer

The 10-column spreadsheet described is a work sheet, which is an optional tool used in the accounting process to help draft financial statements. The other answer choices (adjusted trial balance, post-closing trial balance, unadjusted trial balance, and general ledger) are all important components of the accounting process, but they are not specifically related to the 10-column work sheet.

Question 20

Statements that show the effects of proposed transactions as if the transactions had already occurred are called:
A)Pro forma statements
B)Professional statements
C)Simplified statements
D)Temporary statements
E)Interim statements

Accepted Answer

Pro forma statements are used to show the potential effects of proposed transactions, such as mergers or acquisitions, as if they have already happened. These statements allow businesses to forecast the financial impact of these transactions and make informed decisions about whether or not to move forward with them.

Quiz 3: Adjusting Accounts for Financial Statements

The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750.The Adjustments columns show that $425 of these supplies was used during the period.The amount shown as Office Supplies in the Balance Sheet columns of the work sheet is:

The alternative method of accounting for prepayments

Which of the following statements is true?

A company had revenues of $75,000 and expenses of $62,000 and paid $1,000 dividends during the accounting period.Which of the following entries could not be a closing entry for this company?

The Income Summary account is used:

An error is indicated if the following account has a balance appearing on the post-closing trial balance:

Accumulated depreciation,accounts receivable,and service fees earned would be sorted to which respective columns in completing a work sheet?

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

A trial balance prepared after the closing entries have been journalized and posted is the:

The following items appeared on a company's December 31 work sheet for the current period.Based on the following information,what is net income for the current period?

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

A post-closing trial balance includes:

Awn Services paid a dividend of $8,700 during the current year.The entry to close the dividend account at the end of the year is:

The Retained Earnings account has a credit balance of $17,000 before closing entries are made.If total revenues for the period are $55,200,total expenses are $39,800 and dividends are $9,000,what is the ending balance in the Retained Earnings account after all closing entries are made?

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:

Which of the following statements regarding financial statement preparation is false?

A company shows a $600 balance in prepaid insurance in the Unadjusted Trial Balance columns of the work sheet.The Adjustments columns show expired insurance of $200.This adjusting entry results in:

The following information is available for the Travis Travel Agency.After the closing entries have been journalized and posted,what will be the balance in the Retained Earnings account?

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 tool in the accounting process is a(n) :

Statements that show the effects of proposed transactions as if the transactions had already occurred are called: