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Exam 4: Completing the Accounting Cycle

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Question 1

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The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts on December 31st during the closing process would be:

A) Dec. 31 Fees Earned 750 Rent Revenue 175
Income Summary 925
B) Dec. 31 Income Summary 925 Fees Earned 750
Rent Revenue 175
C) Dec. 31 Revenues 575 Income Summary 575
D) Dec. 31 Income Summary 925 Revenues 925

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

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Question 2

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A fiscal year

A) ordinarily begins on the first day of a month and ends on the last day of the following twelfth month.
B) for a business is determined by the federal government.
C) always begins on January 1 and ends on December 31 of the same year.
D) should end at the height of the business's annual operating cycle.

E) B) and C)
F) A) and D)

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Question 3

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Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the adjusted trial balance at December 31, 2014. The entry required to close the expense accounts at the end of the period includes a:

Use the work sheet for Finley Company to answer the questions that follow. The ending balance in Retained Earnings is

Which account would not appear in the Balance Sheet columns of the work sheet?

Journalizing and posting closing entries must be completed before financial statements can be prepared.

Closing entries

Net income is shown on the work sheet in the Income Statement Debit column and the Balance Sheet Credit column.

After all of the account balances have been extended to the Income Statement columns of the work sheet, the totals of the debit and credit columns are $77,500 and $83,900, respectively. What is the amount of the net income or net loss for the period?

After posting the second closing entry to the income summary account, the balance will be equal to

After net income or loss is entered on the work sheet, the debit column total must equal the credit column total of the Balance Sheet columns.

Once the adjusting entries are posted, the adjusted trial balance is prepared to

The following adjusted trial balance is the result of the adjustments made at the end of the month of March for Erik Martin Company. Utilize these adjusted values to prepare the closing entries for Erik Martin Company.

During the end-of-period processing, which of the following best describes the logical order of steps?

The amount of the net income for a period appears on both the income statement and the balance sheet for that period.

Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities.

The fiscal year selected by companies

Real accounts are not permanent accounts.

Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted, will overstate or understate assets, liabilities, stockholders' equity, revenues, expenses, or net income. Indicate the amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-) for understate, and (NE) for no effect. 1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand. 2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years of insurance. 3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months rent.

After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet, the difference between the initial totals of the Balance Sheet debit and credit columns is net income or net loss.