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Exam 4: Completing the Accounting Cycle

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Question 21

Multiple Choice

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What is the last account that should be listed in the Post Closing Trial Balance?

A) Income Summary
B) Capital account
C) Cash
D) Fees Earned

E) A) and C)
F) All of the above

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Question 22

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During the closing process, some balance sheet accounts are closed and end the period with a zero balance.

A) True
B) False

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Question 23

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The majority of businesses end their fiscal year on December 31.

Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the adjusted trial balance at December 31, 2010. Prepare the closing entry required to transfer the income or loss at the end of the period.

If working papers are not considered part of the formal accounting records, then why are they used?

Use the following worksheet to answer the following questions. The journal entry to close revenues would be:

Which of the accounts below would not appear in the balance sheet columns of the worksheet?

The Statement of Owner's Equity should be prepared

Prepare an income statement and a statement of owner's equity for the month ended September 30, 2010 from the T-accounts below of Carson Company.

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.

The accounting cycle requires three trial balances be done. In what order should they be prepared?

The most important output of the accounting cycle is the financial statements.

After all adjustments have been made, but before the accounts have been closed, the following balances were taken from the ledger of Ramona's Designs: Journalize the entries to close the appropriate accounts.

Round tripping is a fraudulent scheme where business A artificially inflates revenue by lending money to customer B who uses that money to buy products from A.

An indication that the work sheet columns are in balance and the work sheet is completed is

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.

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

You evaluate loan requests as part of your job at Beach Front National Bank. One loan request you received is from Surfer Dude Supplies, a small proprietorship. Tracy Roberts, the owner, is requesting $75,000 and brings you a trial balance (or Statement of Accounts) for his first year of operations ended December 31, 2010. REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of financial statements from his accountant would be more useful for evaluating the loan request?

The following is the adjusted trial balance for Sandeep Company. Prepare closing entries and the post closing trial balance.

Use the following information in the adjusted trial balance for Stockton Company to answer the following questions. Determine the net income (loss) for the period.