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Exam 4: Completing the Accounting Cycle

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Question 61

True/False

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A company's post-closing trial balance has total debits of $40,350 and total credits of $40,650.Accordingly,the company should review for errors in the closing process.

A) True
B) False

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Question 62

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On a work sheet,a loss is indicated if the total of the Income Statement Debit column exceeds the total of the Income Statement Credit column.

A) True
B) False

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Question 63

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

A classified balance sheet:

If all columns balance upon completion of a work sheet,you can be sure that no errors were made in preparing the work sheet.

The following information is available for Crandall Company before closing the accounts.After all of the closing entries are made,what will be the balance in the Crandall,Capital account?

Current liabilities are cash and other resources that are expected to be sold,collected or used within one year or the company's operating cycle whichever is longer.

Intangible assets are long-term resources that benefit business operations that usually lack physical form and have uncertain benefits.

If the Balance Sheet and Statement of Owner's Equity columns of a work sheet fail to balance when the amount of the net income is added to the Balance Sheet and Statement of Owner's Equity Credit column,the cause could be:

Income Summary is a temporary account only used for the closing process.

J.Awn,the proprietor of Awn Services,withdrew $8,700 from the business during the current year.The entry to close the withdrawals account at the end of the year is:

The first five steps in the accounting cycle include analyzing transactions,journalizing,posting,preparing an unadjusted trial balance,and recording adjusting entries.

The current ratio is computed by dividing current liabilities by current assets.

Epee Inc.frequently has accrued revenues at the end of its fiscal year that should be recorded for proper financial statement presentation.Epee Inc.'s fiscal year ends on September 30 of the current year.Epee Inc.has determined through an evaluation of invoices and services rendered that $32,000 of services has been provided as of September 30,but not yet billed.The total contract to be billed for services when completed will be $60,000.Record the following entries: (a)Accrual of the revenues on September 30. (b)Receipt of payment from customers on October 9 for the services rendered,assuming that Epee does not prepare reversing entries. (c)Assuming that Epee prepares reversing entries,reverse the adjusting entry made on September 30. (d)Assuming that Epee prepares reversing entries,receipt of the payment for the total contract amount on October 9.

Closing entries are required at the end of each accounting period to close all ledger accounts.

A company had revenues of $75,000 and expenses of $62,000 for the accounting period.The owner withdrew $8,000 in cash during the same period.Which of the following entries could not be a closing entry?

The following information has been gathered for Stylish Co.to assist in preparing its year-end adjusting entries at December 31: (a)The company has earned $2,500 of rental revenue that has not yet been received or recorded. (b)Stylish has recorded $3,200 of unearned service fees.At year-end,$1,500 of this amount has been earned. (c)Depreciation on equipment for the year is $7,800. (d)Employees have earned but have not yet been paid $2,750 in salaries. Identify which of the above accounting adjustment would be reversed assuming Stylish Co.uses reversing entries.

The steps in the closing process are (1)close credit balances in revenue accounts to Income Summary; (2)close credit balances in expense accounts to Income Summary; (3)close Income Summary to Owner's Capital; (4)close Withdrawals to Owner's Capital.

The work sheet is a required report.

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: