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Exam 4: Completing the Accounting Cycle and Classifying Accounts

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Question 21

Multiple Choice

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After all appropriate closing entries to the following accounts have been made,what will be the balance in the Jeff Corvette,Capital account?

A) $65,000.
B) $80,000.
C) $130,000.
D) $145,000.
E) $280,000.

F) B) and E)
G) C) and D)

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Question 22

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Internal documents prepared by accountants when organizing the information presented in formal reports to internal and external decision makers are called:

A) Adjusting papers.
B) Statement papers.
C) Working papers.
D) Closing papers.
E) Business papers.

F) B) and D)
G) B) and C)

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Question 23

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An unclassified balance sheet provides more information to users than a classified balance sheet.

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

Income Summary is a temporary account.

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

On the work sheet,a net income is entered in the Income Statement Credit column and in the Statement of Changes in Equity or Balance Sheet Debit column.

Describe a work sheet and explain why it is useful.

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 owner's capital account is the:

The adjusted trial balance of Sara's Photography follows:

Reversing entries are optional.

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 step in the accounting process,is a(n) :

A current ratio of 1.1 suggests that a company has ____________ current assets to cover current liabilities.

Identify the steps in the accounting cycle.

The current ratio:

Current liabilities include accounts receivable,unearned revenues,and taxes owed.

Real accounts are:

After posting the entries to close all revenue and expense accounts,Hatfield Company's Income Summary account has a credit balance of $6,000,and the Hatfield,Withdrawals account has a debit balance of $2,500.These balances indicate that net income for the accounting period amounted to $3,500.

Closing entries are needed at the end of the fiscal period to close all ledger accounts.

To prepare the balance sheet,all necessary numbers can be found in the balance sheet columns of the work sheet,including ending capital.