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Exam 4: Completing the Accounting Cycle

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Question 41

True/False

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Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts.

A) True
B) False

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Question 42

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Prepaid insurance is reported on the balance sheet as a

A) current asset
B) fixed asset
C) current liability
D) long-term liability

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

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Question 43

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Which of the items below does not appear on the work sheet?

The following are all the steps in the accounting cycle.List them in the order in which they should be done. - Closing entries are journalized and posted to the ledger. - An unadjusted trial balance is prepared. - An optional end-of-period spreadsheet (work sheet)is prepared. - A post-closing trial balance is prepared. - Adjusting entries are journalized and posted to the ledger. - Transactions are analyzed and recorded in the journal. - Adjustment data are assembled and analyzed. - Financial statements are prepared. - An adjusted trial balance is prepared. - Transactions are posted to the ledger.

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

Indicate whether each of the following would be reported in the financial statements as a(n)(a)current asset, (b)current liability, (c)revenue,or (d)expense:

The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance.

The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work sheet.Indicate whether each balance should be extended to (a)the Income Statement columns or (b)the Balance Sheet columns.

It is necessary to post the closing entries to the general ledger.

Hakik Enterprises offers rug cleaning services to business clients.Below is the work sheet containing the trial balance for the month ended July 31,2012. Journalize adjusting entries based on the work sheet trial balance and the adjustment data provided below. a)The equipment is estimated to last for 5 years with no salvage value.The asset will be depreciated evenly over its useful life.Record one month's depreciation. b)Accrued wages,$2. c)Unused supplies on hand,$8. d)Of the unearned revenue,75% has been earned. e)Unexpired insurance remaining at the end of the month,$9.

Closing entries

Once an account has been closed for the period,inserting a line in the balance columns zeros out the account,making it ready for the following period.

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

The chart of accounts,the journal,and the ledger are essential parts of the accounting system.

On which financial statement will Income Summary be shown?

The accumulated depreciation account is closed to the income summary account.

Identify which of the following accounts should be closed with a debit or a credit to Income Summary at the end of the fiscal year.If it is not closed to Income Summary,mark as n/a. 1.Utilities Payable 2.Utilities Expense 3.Supplies 4.Supplies Expense 5.Fees Earned 6.Unearned Fees 7.Accounts Receivable 8.Dividends 9.Capital Stock 10.Accumulated Depreciation - Equipment 11.Depreciation Expense - Equipment 12.Equipment 13.Prepaid Insurance 14.Insurance Expense 15.Retained Earnings

The proper sequence of steps in the accounting cycle is as follows

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

After net income is entered on the work sheet,the Balance Sheet Debit and Credit columns must