Chapter 4

All income statement accounts will be closed at the end of the period.

assets liabilities and owner's equity are permanent (real) accounts and do not get closed at the end of the period

balance sheet accounts

closing entries

the post-closing trial balance will generally have fewer accounts than the trial balance

what is the first account that should be listed in the post-closing trial balance

which of the accounts below would be closed by posting a debit to the account? unearned revenue fees earned josh morton drawing miscellaneous expense

Which of the following account groups includes temporary (nominal) accounts? a. Cash, Dividends, Wages Payable b. Prepaid Insurance, Equipment, Fees Earned c. Common Stock, Dividends, Net Income d. Rent Revenue, Fees Earned, Miscellaneous Expense

Which of the following accounts should be closed to the capital account at the end of the year? Service Revenue Equipment Prepaid Insurance Unearned Rent

which of the following accounts will be debited in the closing entry at the end of the year rent expense fees earned unearned fees depreciation expense

income statement

statement of owner's equity

balance sheet

cash

accounts receivable

Less: Allowance for Doubtful Accounts

prepaid expense

accounts payable

notes payable

Unearned Revenue

capital

drawing

fees earned

sales

interest revenue

cost of merchandise sold

rent expense

utilities expense

depreciation expense

equipment

less accumulated depreciation

revenue and expense account flow into

assets liability and owner's equity account flow into

owner's capital and drawing flow into

The balance of the accumulated depreciation account on the adjusted trial balance of the end-of-period spreadsheet would be reported on which of the following financial statements?

The balance of the owner's drawing account on the adjusted trial balance of the end-of-period spreadsheet is reported on which of the following financial statements?

Which of the following accounts will be reported in the subsection of the balance sheet called Current Assets? a. Land, Accumulated Depreciation, Cash b. Prepaid Insurance, Supplies, Office Equipment c. Cash, Accounts Receivable, Supplies d. Accounts Receivable, Accounts Payable, Unearned Revenue

Which of the following are examples of subsections found on a classified balance sheet? a. Liabilities; Long-Term Liabilities; Owner's Equity b. Owner's Equity; Liabilities; Property, Plant, and Equipment c. Assets; Current Assets; Long-Term Liabilities d. Current Assets; Long-Term Liabilities; Property, Plant, and Equipment

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. a. $8,400 b. $3,250 c. $11,500 d. None of these choices are correct.

What is the purpose of the owner capital account in the closing process?

Which of the following accounts will not be closed at the end of the accounting cycle? a. Nominal accounts b. Real accounts c. Temporary accounts d. Revenue accounts

Which of the following accounts will be closed with a debit? a. Rent Revenue b. Miscellaneous Expense c. Notes Receivable d. Cash

Of the following steps of the accounting cycle, which step should be completed last? a. Adjusting entries are journalized and posted to the ledger. b. Financial statements are prepared. c. Closing entries are journalized and posted to the ledger. d. Transactions are posted to the ledger.

Which of the following steps is optional during the closing process? a. A post-closing trial balance is prepared. b. An end-of-period spreadsheet is prepared. c. Adjusting entries are journalized and posted to the ledger. d. An unadjusted trial balance is prepared.

In which of the following steps of the accounting cycle will the owner capital account be used? a. Step 9: Journalizing and posting closing entries b. Step 10: Preparing a post-closing trial balance c. Step 3: Preparing an unadjusted trial balance d. Step 5: Preparing an optional end-of-period spreadsheet

The following are reasons to close the accounts at the end of the year except a. to prepare the accounts for the next accounting period. b. to close all real accounts. c. to update the capital account. d. to close all nominal accounts.

The journal entry to record cash received from clients on account would include a a. debit to Fees Earned. b. debit to Accounts Receivable. c. credit to Fees Earned. d. credit to Accounts Receivable

The annual accounting period (fiscal year) most commonly adopted by businesses is a. January 1 to December 31. b. June 1 to May 31. c. April 1 to March 31. d. December 1 to November 30.

he fiscal year selected by a company a. should end during the busiest month of the company's operating cycle. b. is not characterized by any of these answer choices. c. will be different each year. d. must always be adjusted to the calendar year.

Working capital is a. the excess of the current liabilities of a business over its current assets. b. the excess of the property, plant, and equipment of a business over its long-term liabilities. c. the excess of the current assets of a business over its current liabilities. d. None of these choices are correct.

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 detail in the owner's capital account in the general ledger? a. There may have been additional investments made during the year reflected in the balance. b. There may have been additional losses incurred during the year reflected in the balance. c. There may have been additional withdrawals made during the year reflected in the balance. d. There may have been additional revenue made during the year reflected in the balance.

hich of the following is the last step during the posting process? a. Determine the new balance of the ledger account. b. Enter the date of the transaction in the ledger account. c. Enter the ledger account number in the Post. Ref. column of the journal. d. Enter the journal page number in the Post. Ref. column of the ledger account.

A company's net income or net loss for a period is determined during which of the following steps of the accounting cycle? a. when an unadjusted trial balance is prepared b. when transactions are posted to the ledger c. when financial statements are prepared d. when a post-closing trial balance is prepared

The posting of depreciation expense will be done during which step of the accounting cycle? a. Step 7: Preparing the financial statements b. Step 4: Assembling and analyzing adjustment data c. Step 1: Analyzing and recording transactions in the journal d. Step 6: Journalizing and posting adjusting entries

When the end-of-period spreadsheet is complete, the adjustment columns should have

Diane's Designs purchased a one-year liability insurance policy on March 1 of a year for $8,400 and recorded it as a prepaid expense. Which of the following amounts would be recorded as insurance expense during the adjusting process at the end of Diane's first month of operations on March 31?

By matching revenues and expenses in the same period in which they incur

Supplies are recorded as assets when purchased. Therefore, the credit to Supplies in the adjusting entry is for the amount of supplies

Which of the accounts below would not appear in the balance sheet columns of the end-of-period spreadsheet? Service Revenue Terry James, Drawing and Unearned Revenue Terry James, Drawing Unearned Revenue

Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as a(n)

The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is

The account type and normal balance of Unearned Revenue is

Given the following Account Balances, the entry to close Capital during step one of the two step closing process would be a ______________. Fees Earned $1,000 Rent Expense $600

The type of account and normal balance of Prepaid Insurance is

Which of the following is not an essential part of the accounting records? the chart of accounts the journal the ledger the end-of-period spreadsheet

Prepaid insurance is reported on the balance sheet as a

Accrued expenses are ordinarily reported on the balance sheet as

Accounts payable would appear on the balance sheet as a(n)

Accumulated Depreciation and Depreciation Expense are classified, respectively, as

If there is a balance in the unearned subscriptions account after adjusting entries are made, it represents a(n)

Which one of the fixed asset accounts listed below will not have a related contra asset account? Building Land Office Equipment Delivery Equipment

The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n)

What effect will this adjustment have on the accounting records? Unearned Revenue 6,375 Fees Earned 6,375

The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed

Prepaid rent, representing rent for the next six months' occupancy, would be reported on the tenant's balance sheet as a(n)

As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called

The unexpired insurance at the end of the fiscal period represents

An end-of-period spreadsheet includes columns for

The end-of-period spreadsheet

How will the following adjusting journal entry affect the accounting equation? Unearned Subscriptions 11,500 Subscriptions Earned 11,500

Generally accepted accounting principles require that companies use the ____ of accounting.

the type of account and normal balance of unearned consulting fee is

The account type and normal balance of Fees earned is

accrued revenues would appear on the balance sheet as

current assets

notes receivable

property, plant and equipment

classified blanace sheet

assets commonly divided into 2 sections on balance sheet

liabilities divided into 2 sections on balance sheet

long term liabilities

permanent or real accounts

temporary or nominal accounts

First closing entry

second closing entry

accounting cycle

step 1

step 2

step 3

step 4

step 5

step 6

step 7

step 8

step 9

step 10

fiscal year

natural business cycle

Liquidity

solvency

working capital

current ratio

statement of cash flow

true

balance sheet

Decrease net income

cash

income statement

true

management, creditor, investors

decrease accounts payable: decrease cash

all of the information from the journal was correctly transferred to the ledger

Debit supplies; credit accounts payable

debit accounts receivable; credit fees earned

revenues, expenses, and drawing

debit supplies expense $400; Credit supplies $400

income statement

assets, liabilities, owner's equity, revenues, and expenses

only permanent accounts

3241

posting

asset

unadjusted, adjusted, post-closing

journal

posting

expenses

liabilities

transactions are posted to the ledger

after the closing entries are posted

increase the cash account

income statement, statement of owner's equity, balance sheet

to zero out temporary accounts to prepare for the next accounting period