Chapter 4 example #56946

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? a. the balance sheet b. the statement of owner's equity c. the income statement d. All of these financial statements are correct.

Using an end-of-period spreadsheet, the flow of accounting information moves from the a. financial statements to the adjusted trial balance. b. unadjusted trial balance to the financial statements. c. adjusted trial balance to the financial statements. d. adjusting entries straight to the financial statements.

The listing of expenses on the income statement is ordered a. by size, beginning with the smallest item. b. by size, beginning with the largest item and putting miscellaneous expense as the last item. c. by account number in the general ledger. d. alphabetically.

What is the purpose of the owner capital account in the closing process? a. Owner capital is used to verify that net income or loss is reported correctly. b. Owner capital is used as a temporary account. c. Owner capital is where the period's net income or loss is transferred. d. Owner capital is a clearing account used to zero out all real accounts.

Which of the following accounts will be closed with a credit? a. Accumulated Depreciation b. Notes Payable c. Fees Earned d. Depreciation Expense

In the closing process, Owner Capital was debited for $49,850 and credited for $78,200. The company has a. incurred a net loss of $28,350. b. earned net income of $28,350. c. incurred a net loss of $49, 850. d. earned a net income of $78,200.

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

Which of the following entries need not be posted to the ledger? a. Closing entries b. Adjusting entries c. Entries of routine business transactions d. All journal entries must be posted to the ledger.

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

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

The journal entry to record cash received from cash clients for fees earned during the current period would include a. a credit to Cash. b. a credit to Accounts Receivable. c. a credit to Fees Earned. d. None of these choices are correct.

The natural business year ends a. when business activities have reached the lowest point in a company's annual operating cycle. b. when business activities have reached the highest point in a company's annual operating cycle. c. when the business has achieved a profit. d. six months after a company's fiscal year-end.

A calendar year ends a. on any day on the calendar the business decides is best for it. b. one year from the date the business began operations. c. at the end of the natural business cycle. d. on December 31 of each year.

The ability of a business to pay its debts is called a. liquidity. b. solvency. c. fiscal year. d. currency.

The ability to convert assets into cash is called a. liquidity. b. solvency. c. currency. d. capitalization.

Which of the following statements is true? a. The current ratio is not useful in making comparisons with industry averages. b. Working capital is more useful than the current ratio in making comparisons across companies. c. The current ratio is more useful than working capital in making comparisons across companies. d. All of these statements are true.