The balance of the accumulated depreciation account on the adjusted trial balance of the end-of-period spreadsheet would flow into which of the following financial statements? |
The balance sheet. |
The balance of the owner’s drawing account on the adjusted trial balance of the end-of-period spreadsheet flows into which of the following financial statements? |
The statement of owner’s equity |
Which of the following is not true regarding the flow of information from the adjusted trial balance on the end-of-period spreadsheet? |
The income summary balance flows into the income statement. |
When pulling the owner’s capital balance from the end-of-period spreadsheet into the statement of owner’s equity, why is it also important to check the owner’s capital account in the general ledger? |
There may have been additional investments made during the year reflected in the balance. |
Which of the following will be reported in the subsection of the balance sheet called current assets? |
Cash, accounts receivable, supplies |
Which of the following are examples of subsections found on a classified balance sheet? |
Current assets; long-term liabilities; property, plant, and equipment |
The following is the statement of owner’s equity for Cloud Computer Service Company. |
$6,837 |
The clearing account used to close the temporary accounts and which will also be closed before the finish of the accounting cycle is |
Income Summary |
What is the purpose of the income summary account? |
Income Summary is used as a temporary clearing account to transfer the nominal accounts to the capital account. |
The purpose of the post-closing trial balance is |
to verify that the ledger is in balance at the beginning of the next period. |
After the first two closing entries have been made, the Income Summary account has a debit of $49,850 and a credit of $78,200. The third closing entry would include |
a debit to Income Summary for $28,350. |
Of the following steps of the accounting cycle, which step should be completed last? |
Closing entries are journalized and posted to the ledger |
Of the following, which step is not a requirement during the accounting cycle? |
An end-of-period spreadsheet is prepared. |
Which of the following is not an actual step in the accounting cycle? |
Decisions are made after reviewing the financial statements. |
In which of the following steps of the accounting cycle will the clearing account be used? |
Step 9: Journalizing and posting closing entries |
What is the major difference between the post-closing trial balance and the other two trial balances? |
The post-closing trial balance is the only one to include only real accounts. |
The following are reasons to close the accounts at the end of the year except |
to close all real accounts. |
The fiscal year selected by a company |
is not characterized by any of these answer choices. |
A calendar year ends |
on December 31 of each year. |
Why is it favorable to select a fiscal year that ends when the operating cycle is at its lowest point? |
The business has more time to analyze the results of operations and to prepare financial statements. |
A Vail, Colorado snow ski supplier would most likely pick which of the following dates to end its fiscal year? |
June 30 |
The ability to convert assets into cash is called |
liquidity. |
Working capital is |
the excess of the current assets of a business over its current liabilities. |
The numerator in the current ratio calculation is |
Current Assets. |
the following data were taken from the records of Menendez Company: What is Menendez Company’s working capital? |
$1,500 |
Which of the following is true regarding the end-of-period spreadsheet? |
Amounts are read across a row and added or subtracted to determine the amounts to insert in the Adjusted Trial Balance columns. |
Using an end-of-period spreadsheet, the flow of accounting information moves from the |
adjusted trial balance to the financial statements. |
Which of the following will increase owner’s equity on the statement of owner’s equity? |
Owner’s investments, net income |
Based on the following information, determine the amount of equipment on the balance sheet. Total liabilities and owner’s equity equals $44,750; total current assets equals $19,800; land equals $15,000; and accumulated depreciation–equipment equals $1,550. |
11500 |
Which of the following accounts will be closed with a credit? |
Depreciation Expense |
Which of the following is the last step of the posting process? |
Enter the ledger account number in the Post. Ref. column of the journal |
A company’s net income or net loss for a period is determined during which of the following steps of the accounting cycle? |
When financial statements are prepared. |
The annual accounting period (fiscal year) most commonly adopted by businesses is |
January 1 to December 31. |
The ability of a business to pay its debts is called |
solvency |
The following data were taken from the records of Action Company and Brown Company: |
would be more eager to extend credit to Brown Company. |
Which of the following is true regarding the flow of information from the adjusted trial balance on the end-of-period spreadsheet? |
The revenue and expense account balances flow into the income statement. |
The following data were taken from the records of Menendez Company: |
1,43 |
Which of the following is not true regarding the flow of information from the adjusted trial balance on the end-of-period spreadsheet? |
The income summary balance flows into the income statement. |
The listing of expenses on the income statement is ordered |
by size, beginning with the largest item and putting miscellaneous expense as the last item. |
When pulling the owner’s capital balance from the end-of-period spreadsheet into the statement of owner’s equity, why is it also important to check the owner’s capital account in the general ledger? |
There may have been additional investments made during the year reflected in the balance. |
Based on the following information, determine the amount of net income or net loss. Total revenues equal $25,700 and total expenses equal $17,500. |
net income of $8,200 |
Which of the following accounts will be closed with a debit? |
revenue |
Which of the following steps is optional during the closing process? |
An end-of-period spreadsheet is prepared. |
The posting of depreciation expense will be done during which step of the accounting cycle? |
Step 6: Journalizing and posting adjusting entries |
The natural business year ends |
when business activities have reached the lowest point in a company’s annual operating cycle. |
Which of the following entries need not be posted to the ledger? |
all must be posted to ledger |
chapter 4 Completing the Accounting Cycle
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