Professional Documents
Culture Documents
Accounting Cycle
Student: ___________________________________________________________________________
1. Cross-referencing is useful in assuring that the debits and credits are in balance. True False
2. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are simply added to the account title column. True False
3. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements. True False
4. There is really no benefit in preparing financial statements in any particular order. True False
5. 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. True False
6. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the dollar amount. True False
7. The usual presentation of the retained earnings statement is (1) beginning retained earnings, (2) net income or loss, (3) dividends (4) ending retained earnings. True False
8. The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings. True False
9. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets. True False
12. Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities. True False
13. The amount of the net income for a period appears on both the income statement and the balance sheet for that period. True False
14. Accrued taxes payable are generally reported on the balance sheet as a current liability. True False
15. At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses. True False
17. Capital Stock and Dividends are reported in the stockholders equity section of the balance sheet. True False
18. Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current assets. True False
19. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as current assets. True False
20. Accrued expenses are ordinarily listed on the balance sheet as current assets. True False
21. Accrued revenues are ordinarily listed on the balance sheet as current liabilities. True False
22. The income statement is prepared from the adjusted trial balance or the income statement columns on the work sheet. True False
23. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short time before they expire. True False
26. The balance sheet accounts are referred to as real or permanent accounts. True False
27. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting period. True False
28. The income summary account is closed to the retained earnings account. True False
29. The accumulated depreciation account is closed to the income summary account. True False
30. The dividends account is closed to the income summary account. True False
31. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance. True False
32. Entries required to close the balances of the temporary accounts at the end of the period are called final entries. True False
33. Journalizing and posting closing entries must be completed before financial statements can be prepared. True False
34. During the closing process, some balance sheet accounts are closed and end the period with a zero balance. True False
35. Closing entries are entered directly on to the work sheet. True False
36. The post-closing trial balance will generally have fewer accounts than the trial balance. True False
37. A post-closing trial balance contains only asset and liability accounts. True False
38. A post-closing trial balance should be prepared before the financial statements are prepared. True False
39. Cash, Accounts Payable, and Capital Stock are real accounts and do not get closed at the end of the period. True False
40. The income summary account is also known as the clearing account. True False
41. All income statement accounts will be closed at the end of the period. True False
42. Balance Sheet accounts are not considered real accounts. True False
43. It is not necessary to post the closing entries to the general ledger. True False
44. 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. True False
45. The closing process is sometimes referred to as closing the books. True False
46. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts. True False
48. After analyzing transactions, the next step would be to post the transactions in the ledger. True False
49. The most important output of the accounting cycle is the financial statements. True False
50. The last step of the accounting cycle is to prepare a post-closing trial balance. True False
51. The accounting cycle begins with preparing an unadjusted trial balance. True False
52. Financial statements should be prepared before the closing entries are journalized and posted. True False
53. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period. True False
54. Any twelve-month accounting period adopted by a company is known as its fiscal year. True False
55. A fiscal year that ends when business activities have reached their lowest point is called the natural business year. True False
56. All companies must use a calendar year as their fiscal year. True False
57. The majority of businesses end their fiscal year on December 31. True False
58. The work sheet is not considered a part of the formal accounting records. True False
59. The balances of the equity accounts from the Adjusted Trial Balance columns of the work sheet are extended to the Retained Earnings Statement columns. True False
60. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements. True False
61. In a computerized accounting system, a work sheet may not be necessary because the software program automatically posts entries to the accounts and prepares financial statements. True False
62. The trial balance may be listed on the work sheet instead of being prepared separately. True False
63. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial Balance column totals and the Adjustments column totals. True False
64. A work sheet heading is dated for a period of time. True False
65. On the work sheet, the capital stock and dividends account balances are extended to the Balance Sheet columns. True False
66. 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. True False
67. 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. True False
68. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the Balance Sheet columns. True False
69. Net income is shown on the work sheet in the Income Statement Debit column and the Balance Sheet Credit column. True False
70. If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000, respectively, after all account balances have been extended, the amount of the net loss is $2,000. True False
71. The work sheet and the financial statements both require dollar signs. True False
72. The balance in the retained earnings account on the work sheet will equal the amount presented in the balance sheet. True False
73. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post them to the ledger. True False
74. The chart of accounts, the journal, and the ledger are essential parts of the accounting system. True False
75. What is the major difference between the unadjusted trial balance and the adjusted trial balance? A. The adjusted trial balance will show the net income (loss) as an additional account. B. Both will need to be in balance in order to continue with the end-of-period processing. C. The adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts. D. The unadjusted trial balance will be used to record the adjustments for the period.
76. Once the adjusting entries are posted, the adjusted trial balance is prepared to A. verify that the debits and credits are in balance B. verify that all of the adjustments were posted in the correct accounts C. verify that the net income (loss) is correct for the period D. verify the correct flow of accounts into the financial statements
77. When preparing the retained earnings statement, the beginning retained earnings balance can always be found A. in the Income Statement columns of the work sheet B. in the statement of cash flows C. in the general ledger D. in the Adjustments columns of the work sheet
78. Accumulated depreciation appears on the A. balance sheet in the current assets section B. balance sheet in the property, plant and equipment section C. balance sheet in the long-term liabilities section D. income statement as an operating expense
79. Notes receivable due in 350 days appear on the A. balance sheet in the current assets section B. balance sheet in the fixed assets section C. balance sheet in the current liabilities section D. income statement as an expense
80. Unearned Fees appear on the A. balance sheet in the current assets section B. balance sheet as a current liability C. balance sheet in the stockholders equity section D. income statement as revenue
81. Which one of the fixed asset accounts listed below will not have a related contra asset account? A. Office Equipment B. Land C. Delivery Equipment D. Building
82. Prepaid insurance is reported on the balance sheet as a A. current asset B. fixed asset C. current liability D. long-term liability
83. The income statement is prepared from: A. the adjusted trial balance. B. the income statement columns of the work sheet. C. either the adjusted trial balance or the income statement columns of the work sheet. D. both the adjusted trial balance and the income statement columns of the work sheet.
84. Round-tripping is when A. a selling company sells to a customer company with huge discounts. B. a selling company pretends to sell to a fictitious company with the intent of inflating revenues C. a selling company lends money to a customer company to increase assets. D. a selling company lends money to a customer company to be used to purchase goods from the selling company.
85. The retained earnings statement should be prepared A. before the income statement and after the balance sheet B. before the income statement and balance sheet C. after the income statement and balance sheet D. after the income statement and before the balance sheet
86. The income statement should be prepared A. before the retained earnings statement and balance sheet B. after the retained earnings statement and before the balance sheet C. after the retained earnings statement and balance sheet D. after the balance sheet and before the retained earnings statement
87. Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.
Stockton Company Adjusted Trial Balance For the Year Ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 6,030 2,100 700 13,700 $ 1,100 1,900 4,200 2,000 10,940 790 8,750 2,500 1,960 775 250 85 $28,890
$28,890
A. net income, $2,390 B. net loss, $790 C. net loss, $5,570 D. net income, $3,180
88. Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.
Stockton Company Adjusted Trial Balance For the Year Ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 6,030 2,100 700 13,700 $ 1,100 1,900 4,200 2,000 10,940 790 8,750 2,500 1,960 775 250 85 $28,890
$28,890
A. $10,150 B. $13,330 C. $14,120 D. $10,940 89. Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.
Stockton Company Adjusted Trial Balance For the Year Ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 6,030 2,100 700 13,700 $ 1,100 1,900 4,200 2,000 10,940 790 8,750 2,500 1,960 775 250 85 $28,890
$28,890
A. $23,630 B. $15,330 C. $21,430 D. $22,530 90. Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.
Stockton Company Adjusted Trial Balance For the Year Ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 6,030 2,100 700 13,700 $ 1,100 1,900 4,200 2,000 10,940 790 8,750 2,500 1,960 775 250 85 $28,890
$28,890
91. Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.
Stockton Company Adjusted Trial Balance For the Year Ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 6,030 2,100 700 13,700 $ 1,100 1,900 4,200 2,000 10,940 790 8,750 2,500 1,960 775 250 85 $28,890
$28,890
A. $1,900 B. $6,100 C. $4,200 D. $19,040 92. The balance sheet should be prepared A. before the income statement and the retained earnings statement B. before the income statement and after the retained earnings statement C. after the income statement and the retained earnings statement D. after the income statement and before the retained earnings statement
93. The retained earnings statement begins with the beginning balance followed by A. net income (loss) and dividends B. net income (loss) and issuances of capital stock C. issuances of capital stock and dividends D. issuances of capital stock, net income (loss), and dividends
94. The income statement will include A. revenues less expenses (ordered largest to smallest amount) with miscellaneous expense listed last B. revenues less expenses (ordered smallest to largest amounts) with miscellaneous expense listed last C. revenues less expenses (ordered in alphabetical order) D. revenues less expenses (order is not important)
95. The classified balance sheet will subsection the assets as follows A. Current Assets and Other Assets B. Current Assets and Property, Plant, and Equipment C. Current Assets and Long-Term Assets D. Other Assets and Property, Plant, and Equipment
96. The classified balance sheet will have liabilities divided into the following subsections A. Current Liabilities and Long-Term Liabilities B. Current Liabilities and Other Liabilities C. Other Liabilities and Long-Term Liabilities D. Present Liabilities and Tomorrows Liabilities
97. Current liabilities are those liabilities that A. will be paid in less than one year B. are due to be paid in 5 to 10 years C. are due to be paid in more than one year D. are owed to the stockholders and will never be paid
98. On the balance sheet, stockholders equity is A. added to assets and the two are equal to liabilities B. added to liabilities and the two are equal to assets C. subtracted from liabilities and the net amount is equal to assets D. subtracted from assets and the net amount is equal to net income
99. Balance sheet accounts A. represent amounts accumulated during a specific period of time B. are called real accounts C. have zero balances after the closing entries have been posted D. are equal to assets and liabilities
100. On which financial statement will Income Summary be shown? A. retained earnings statement B. balance sheet C. income statement D. none of these
101. Which of the following is not true about closing entries? A. There are four closing entries that update the retained earnings account. B. After the second closing entry, the income summary account is equal to the net income or (loss) for the period. C. All real accounts are closed at the end of the period. D. By closing nominal accounts at the end of the period to zero, it is possible to isolate next periods information correctly.
102. The income summary account is also called A. the imprest account B. the clearing account C. the adjustments account D. the helpful account
103. After posting the second closing entry to the income summary account, the balance will be equal to A. zero B. retained earnings C. revenues for the period D. the net income or (loss) for the period
104. What is the last account that should be listed in the post-closing trial balance? A. Income Summary B. Retained Earnings C. Cash D. Fees Earned
105. Which of the following account groups are all considered nominal accounts? A. Cash, Retained Earnings, Wages Payable B. Prepaid Insurance, Property, Plant & Equipment, Fees Earned C. Capital Stock, Dividends, Income Summary D. Rent Revenue, Fees Earned, Miscellaneous Expense
106. There are four closing entries. The first one is to close ____, the second one is to close ____, the third one is to close ____, and the last one is to close ____. A. revenues, expenses, income summary, dividends B. expenses, assets, income summary, capital stock C. retained earnings, dividends, income summary, assets D. dividends, income summary, expenses, revenues
107. Closing entries A. need not be journalized if adjusting entries are prepared B. need not be posted if the financial statements are prepared from the work sheet C. are not needed if adjusting entries are prepared D. must be journalized and posted
108. Closing entries are dated in the journal as of A. the date they are actually journalized, although they are generally prepared after the end of the accounting period B. the last day of the accounting period, although they are actually journalized after the end of the accounting period C. the first day of the accounting period, although they are actually journalized after the end of the accounting period D. the first day of the subsequent accounting period
109. Which of the accounts below would be closed by posting a debit to the account? A. Unearned Revenue B. Fees Earned C. Dividends D. Miscellaneous Expense
110. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? A. Supplies Expense B. Accumulated Depreciation C. Prepaid Insurance D. Unearned Rent
111. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? A. Salaries Expense B. Fees Earned C. Unearned Rent D. Depreciation Expense
112. Which of the following accounts will be closed to the retained earnings account at the end of the fiscal year? A. Rent Expense B. Fees Earned C. Income Summary D. Depreciation Expense
113. The entry to close the appropriate insurance account at the end of the accounting period is A. debit Income Summary; credit Prepaid Insurance B. debit Prepaid Insurance; credit Income Summary C. debit Insurance Expense; credit Income Summary D. debit Income Summary; credit Insurance Expense
114. Which of the following accounts ordinarily appears in the post-closing trial balance? A. Fees Earned B. Supplies Expense C. Dividends D. Unearned Rent
115. The post-closing trial balance differs from the adjusted trial balance in that it A. does not take into account closing entries B. does not take into account adjusting entries C. does not include balance sheet accounts D. does not include income statement accounts
116. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:
Accumulated Depreciation Fees Earned Depreciation Expense Insurance Expense Dividends Prepaid Insurance Supplies Supplies Expense
117. A summary of selected ledger accounts appear below for Albertos Plumbing Services for the current calendar year-end.
8,500
1/1 12/31
6,500 18,500
3,500 5,000
12/31
8,500
15,000 18,500
12/31
33,500
A. $16,500 B. $33,500 C. $18,500 D. $15,000 118. Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $5,400 and recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense during the adjusting process at the end of Amirs first month of operations on March 31st? A. $5,400. B. $540. C. $450. D. $500.
119. The journal entry to close the Fees Earned, $275, and Rent Revenue, $200, accounts on December 31st during the closing process would be A. Dec. 31 Fees Earned Rent Revenue Income Summary B. Dec. 31 Income Summary Fees Earned Rent Revenue C. Dec. 31 Revenues Income Summary D. Dec. 31 Income Summary Revenues 275 200 475 475 275 200 475 475 475 475
120. Use the work sheet for Finley Company to answer the questions that follow.
F i n le y C o m p a n y W o r k S h e et F o r t h e Y e a r E n d e d D e c e m b e r 3 1, 2 0 1 0 Adjusted Trial Balance Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock
Debit
Credit
Credit
Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss) 63,000 18,000 15,000 228,000 3,000
28,000 3,000 141,000 63,000 18,000 15,000 228,000 96,000 45,000 141,000 141,000 132,000 141,000 132,000 141,000
28,000
A. debit Income Summary, $141,000; credit Fees Earned, $141,000 B. debit Retained Earnings, $141,000; credit Fees Earned, $141,000 C. debit Fees Earned, $141,000; credit Income Summary, $141,000 D. credit Fees Earned, $141,000; credit Retained Earnings, $141,000
121. Use the work sheet for Finley Company to answer the questions that follow.
F i n le y C o m p a n y W o r k S h e et F o r t h e Y e a r E n d e d D e c e m b e r 3 1, 2 0 1 0 Adjusted Trial Balance Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock
Debit
Credit
Credit
Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss) 63,000 18,000 15,000 228,000 3,000
28,000 3,000 141,000 63,000 18,000 15,000 228,000 96,000 45,000 141,000 141,000 132,000 141,000 132,000 141,000
28,000
A. Wages Expense 63,000 Rent Expense 18,000 Depreciation Expense 15,000 Income Summary 96,000 B. Expenses 96,000 Income Summary 96,000 C. Wages Expense 63,000 Rent Expense 18,000 Depreciation Expense 15,000 Dividends 96,000 D. Income Summary 96,000 Wages Expense 63,000 Rent Expense 18,000 Depreciation Expense 15,000
122. Use the work sheet for Finley Company to answer the questions that follow.
F i n le y C o m p a n y W o r k S h e et F o r t h e Y e a r E n d e d D e c e m b e r 3 1, 2 0 1 0 Adjusted Trial Balance Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock
Debit
Credit
Credit
Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss) 63,000 18,000 15,000 228,000 3,000
28,000 3,000 141,000 63,000 18,000 15,000 228,000 96,000 45,000 141,000 141,000 132,000 141,000 132,000 141,000
28,000
A. debit Retained Earnings, $45,000; credit Income Summary, $45,000 B. debit Income Summary, $141,000; credit Retained Earnings, $141,000 C. debit Income Summary, $45,000; credit Retained Earnings, $45,000 D. debit Retained Earnings, $9,000; credit Income Summary, $9,000
123. Use the work sheet for Finley Company to answer the questions that follow.
F i n le y C o m p a n y W o r k S h e et F o r t h e Y e a r E n d e d D e c e m b e r 3 1, 2 0 1 0 Adjusted Trial Balance Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock
Debit
Credit
Credit
Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss) 63,000 18,000 15,000 228,000 3,000
28,000 3,000 141,000 63,000 18,000 15,000 228,000 96,000 45,000 141,000 141,000 132,000 141,000 132,000 141,000
28,000
A. debit Retained Earnings, $3,000; credit Dividends, $3,000 B. debit Retained Earnings, $12,000; credit Dividends, $12,000 C. debit Dividends, $3,000; credit Retained Earnings, $3,000 D. debit Dividends, $12,000; credit Retained Earnings, $12,000
124. Use the work sheet for Finley Company to answer the questions that follow.
F i n le y C o m p a n y W o r k S h e et F o r t h e Y e a r E n d e d D e c e m b e r 3 1, 2 0 1 0 Adjusted Trial Balance Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock
Debit
Credit
Credit
Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss) 63,000 18,000 15,000 228,000 3,000
28,000 3,000 141,000 63,000 18,000 15,000 228,000 96,000 45,000 141,000 141,000 132,000 141,000 132,000 141,000
28,000
A. $28,000 B. $70,000 C. $25,000 D. $73,000 125. The proper sequence for the steps in the accounting cycle is a follows A. analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial statements, journalize closing entries, analyze adjustment data and prepare adjusting entries B. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger C. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger D. prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries
126. The following are steps to the accounting cycle. Of the following, which step should be done first? A. Closing entries are journalized and posted to the ledger. B. Transactions are posted to the ledger. C. Adjusting entries are journalized and posted to the ledger. D. Financial statements are prepared.
127. The following are steps in the accounting cycle. Of the following, which would be prepared last? A. An adjusted trial balance is prepared. B. Transactions are posted to the ledger. C. An unadjusted trial balance is prepared. D. Adjusting entries are journalized and posted to the ledger.
128. The accounting cycle requires three trial balances be done. In what order should they be prepared? A. Post-closing, unadjusted, adjusted B. Unadjusted, post-closing, adjusted C. Unadjusted, adjusted, post-closing D. Post-closing, adjusted, unadjusted
129. The fiscal year selected by companies A. is the same as the calendar year. B. begins with the first day of the month and ends on the last day of the twelfth month. C. must always begin on January 1. D. will change each year.
130. 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.
131. The natural business year A. is a fiscal year that ends when business activities are at its lowest point. B. is a calendar year that ends when business activities are at its lowest point. C. is a fiscal year that ends when business activities are at its highest point. D. is a calendar year that ends when business activities are at its highest point.
132. In the accounting cycle, the last step is A. preparing the financial statements B. journalizing and posting the adjusting entries C. preparing a post-closing trial balance D. journalizing and posting the closing entries
133. During the end-of-period processing, which of the following best describes the logical order of steps? A. preparation of adjustments, adjusted trial balance, financial statements B. preparation of income statement, adjusted trial balance, balance sheet C. preparation of adjusted trial balance, cross-referencing, journalizing D. preparation of adjustments, adjusted trial balance, posting
134. The work sheet A. is an integral part of the accounting cycle. B. eliminates the need to rewrite the financial statements. C. is a working paper that is required. D. is used to summarize account balances and adjustments for the financial statements.
135. Which one of the steps below is not aided by the preparation of the work sheet? A. preparing the adjusted trial balance B. posting to the general ledger C. preparing the financial statements D. preparing the closing entries
136. A work sheet includes columns for A. adjusting entries B. closing entries C. reversing entries D. adjusting and closing entries
137. When a work sheet is complete, the adjustment columns should have A. total credits greater than total debits if a net income was earned B. total debits greater than total credits if a net loss was incurred C. total debits greater than total credits if a net income was earned D. total debits equal total credits
138. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on a work sheet A. is the amount of net income or loss B. indicates there is an error on the work sheet C. is not unusual when preparing the work sheet D. is the net difference between revenue, expenses, and dividends
139. Net income appears on the work sheet in the A. debit column of the Balance Sheet columns B. debit column of the Adjustments columns C. debit column of the Income Statement columns D. credit column of the Income Statement columns
140. A net loss appears on the work sheet in the A. debit column of the Balance Sheet columns B. credit column of the Balance Sheet columns C. debit column of the Income Statement columns D. credit column of the Adjustments columns
141. After net income is entered on the work sheet, the Balance Sheet Debit and Credit columns must A. be the same amount as the total amount of the Income Statement Debit and Credit columns B. equal each other C. be the same amount as the total amount in the Adjusted Trial Balance Debit and Credit columns D. not be equal to each other and need not be the same total amounts as any other pair of columns on the work sheet
142. Which of the statements below indicates that a company earned a net income for the period? A. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the work sheet. B. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet. C. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet. D. Cash inflows exceeded cash outflows.
143. Which item would appear in the Income Statement columns of the work sheet? A. Equipment B. Unearned Fees C. Prepaid Expense D. Net Loss
144. Which account would not appear in the Balance Sheet columns of the work sheet? A. Dividends B. Rent Earned C. Unearned Revenue D. Dividends and Unearned Revenue
145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet? A. Service Revenue B. Prepaid Rent C. Supplies Expense D. None are correct
146. The work sheet at the end of July has $5,350 in the Balance Sheet credit column for Accumulated Depreciation. The work sheet at the end of August has $6,700 in the Balance Sheet credit column for Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of August? A. $1,350 B. $6,700 C. $5,350 D. none of the above
147. Which of the items below does not appear on the work sheet? A. adjusting entries B. the unadjusted trial balance C. closing entries D. the dividends account
148. An indication that the work sheet columns are in balance and the work sheet is completed is A. the word "Total" is written at the bottom of each pair of columns B. each pair of columns is double underlined C. each pair of columns has the totals circled D. the final figures are written in ink
149. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $37,875 and $32,735, respectively. What is the amount of net income or net loss for the period? A. $5,140 net income B. $37,875 net loss C. $5,140 net loss D. $32,735 net income
150. 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 $85,300, respectively. What is the amount of the net income or net loss for the period? A. $7,800 net income B. $7,800 net loss C. $85,300 net income D. $77,500 net loss
151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At year end, the adjusting entry on the work sheet would A. increase an expense account B. decrease a liability account C. increase an asset account D. decrease an expense account
152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the work sheet would A. increase a liability account B. decrease an asset account C. decrease a revenue account D. decrease a liability account
153. Which of the following is not an essential part of the accounting records? A. journal B. ledger C. chart of accounts D. work sheet
154. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns show debits of $36,678 and the credits of $41,101. This indicates that A. neither net income or loss can be calculated because it is found on the income statement B. the company has a net loss of $4,423 for the period C. the company has a net income of $4,423 for the period D. The amounts are out of balance and need to be corrected
155. The Income Statement columns in the work sheet show that debits total $55,800 and credits total $62,705. What does this information mean to the accountant? A. Net income is equal to $6,905. B. Net loss is equal to $6,905. C. The accounts are out of balance, indicating an error has been made. D. The accounts have not been updated.
156. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the end-ofperiod spreadsheet (work sheet). Indicate whether each balance should be extended to an Income Statement column or (b) a Balance Sheet column. 1. 2. 3. 4. 5. 6. 7. 8. Capital Stock Retained Earnings Depreciation Expense Accumulated Depreciation Fees Earned Unearned Fees Supplies Supplies Expense
157. Tracy Roberts, the sole stockholder of Surfer Dude Supplies, is requesting a $75,000 loan from the bank where you work as a loan officer. He brings to you the following trial balance (or statement of accounts) as of the end of his first year of operations. (a) What three accounts do you think should be relabeled for greater clarity? (b) What adjustments might be necessary before an accurate set of financial statements could be prepared?
Surfer Dude Supplies Statement of Accounts December 31, 2011 Cash Billings Due from Others Office Supplies Trucks Equipment Amounts Owed to Others Investment in Business Service Revenues Wages Expense Rent Expense Insurance Expense Utilities Expenses Miscellaneous Expenses
2,050 15,070 7,470 26,370 8,090 2,850 23,500 73,650 30,050 7,330 2,400 700 470 100,000
100,000
158. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet columns with a debit total of $630,430 and a credit total of $614,210. This is before the amount for net income or net loss has been included. In preparing the income statement from work sheet, what is the amount of net income or net loss?
159. On January 1, 2011, the retained earnings account of Crystal Pool Service Company had a balance of $252,000. During the year, the company issued an additional $20,000 of capital stock and paid $52,400 in dividends. For the year ended December 31, 2011, Crystal Pool Service Company reported a net income of $72,300. Prepare a retained earnings statement for the year ended December 31, 2011.
160. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current liabilities, (d) long-term liabilities, or (e) stockholders equity section of the December 31, 2011, balance sheet of Brock Pool Service Company.
1. 2. 3. 4. 5. 6. 7. 8.
Retained Earnings Accumulated Depreciation Unearned Revenues Mortgage Payable Equipment Notes Payable (due in 2012) Cash Accounts Receivable
161. Explain the differences between a nonclassified balance sheet and a classified balance sheet.
162. List/describe the four closing entries in the order that they should occur.
163. After the accounts were adjusted at January 31, 2010, the end of the fiscal year, the following balances were taken from the ledger of Taylor Pool Service Company:
Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Supplies Expense Miscellaneous Expense
164. Prior to adjustment at August 31, 2011, Salary Expense has a debit balance of $298,500. Salaries owed but not paid as of the same date total $2,700.
Present the entries to record the followin g: (1) Accrued salaries as of August 31. (2) Closing of Salary Expense as of August 31.
165. Identify which of the following accounts should be closed to Income Summary at the end of the fiscal year. Record next to each account: a (Y) for YES, it should be closed to Income Summary; OR an (N) for NO, it would not be closed to Income Summary. 1. Utilities Payable 2. Utilities Expense 3. Supplies 4. Supplies Expense 5. Fees Earned 6. Unearned Fees 7. Accounts Receivable 8. Dividends 9. Retained Earnings 10. Accumulated Depreciation - Equipment 11. Depreciation Expense - Equipment 12. Equipment 13. Prepaid Insurance 14. Insurance Expense
166. Beachside Realty rents condominiums and furnishings. Its adjusted trial balance at December 31, 2011, is as follows:
Cash Accounts Receivable Interest Receivable Prepaid Insurance Notes Receivable (long-term) Equipment Accumulated Depreciation Accounts Payable Accrued Expenses Payable Income Taxes Payable Unearned Rental Fees Capital Stock Retained Earnings Dividends Rental Fees Earned Furniture Rental Revenue Interest Revenue Wages Expense Depreciation Expense Utilities Expense Insurance Expense Maintenance Expense Income Tax Expense
Credit Balances
1,500 1,400 2,920 1,700 500 3,000 5,200 2,000 41,000 1,200 100 19,000 1,800 320 700 9,000 2,700 58,520
58,520
Prepare the entry required to close the revenue accounts at the end of the period.
167. Beachside Realty rents condominiums and furnishings. Its adjusted trial balance at December 31, 2011, is as follows:
Cash Accounts Receivable Interest Receivable Prepaid Insurance Notes Receivable (long-term) Equipment Accumulated Depreciation Accounts Payable Accrued Expenses Payable Income Taxes Payable Unearned Rental Fees Capital Stock Retained Earnings Dividends Rental Fees Earned Furniture Rental Revenue Interest Revenue Wages Expense Depreciation Expense Utilities Expense Insurance Expense Maintenance Expense Income Tax Expense
Credit Balances
1,500 1,400 2,920 1,700 500 3,000 5,200 2,000 41,000 1,200 100 19,000 1,800 320 700 9,000 2,700 58,520
58,520
Prepare the entry required to close the expense accounts at the end of the period.
168. Beachside Realty rents condominiums and furnishings. Its adjusted trial balance at December 31, 2011, is as follows:
Cash Accounts Receivable Interest Receivable Prepaid Insurance Notes Receivable (long-term) Equipment Accumulated Depreciation Accounts Payable Accrued Expenses Payable Income Taxes Payable Unearned Rental Fees Capital Stock Retained Earnings Dividends Rental Fees Earned Furniture Rental Revenue Interest Revenue Wages Expense Depreciation Expense Utilities Expense Insurance Expense Maintenance Expense Income Tax Expense
Credit Balances
1,500 1,400 2,920 1,700 500 3,000 5,200 2,000 41,000 1,200 100 19,000 1,800 320 700 9,000 2,700 58,520
58,520
Prepare the closing entry required to transfer the income or loss at the end of the period.
169. Beachside Realty rents condominiums and furnishings. Its adjusted trial balance at December 31, 2011, is as follows:
Cash Accounts Receivable Interest Receivable Prepaid Insurance Notes Receivable (long-term) Equipment Accumulated Depreciation Accounts Payable Accrued Expenses Payable Income Taxes Payable Unearned Rental Fees Capital Stock Retained Earnings Dividends Rental Fees Earned Furniture Rental Revenue Interest Revenue Wages Expense Depreciation Expense Utilities Expense Insurance Expense Maintenance Expense Income Tax Expense
Credit Balances
1,500 1,400 2,920 1,700 500 3,000 5,200 2,000 41,000 1,200 100 19,000 1,800 320 700 9,000 2,700 58,520
58,520
Prepare the entry required to close the dividends account at the end of the period.
170. 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.
171. 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.
Hakik Enterprises Work Sheet For the Month Ended July 31, 2012 Adjusted Trial Balance Adjustments Trial Balance Debit Credit Debit Credit 36 12 56 12 60 12 20 32 30 54 4 80 28 20
Debit
Credit
Cash Prepaid Insurance Fees Receivable Supplies Equipment Accum. Depreciation Unearned Revenue Accounts Payable Wages Payable Capital Stock Retained Earnings Dividends Service Revenue Advertising Expense Wage Expense Insurance Expense Supplies Expense Depreciation Expense Totals
228
228
Enter the adjustments in the work sheet based on the data provided below. Then enter the adjusted account balances in the Adjusted Trial Balance columns. 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 months 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.
172. 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.
Hakik Enterprises Work Sheet For the Month Ended July 31, 2012 Adjusted Trial Balance Adjustments Trial Balance Debit Credit Debit Credit 36 12 56 12 60 12 20 32 30 54 4 80 28 20
Debit
Credit
Cash Prepaid Insurance Fees Receivable Supplies Equipment Accum. Depreciation Unearned Revenue Accounts Payable Wages Payable Capital Stock Retained Earnings Dividends Service Revenue Advertising Expense Wage Expense Insurance Expense Supplies Expense Depreciation Expense Totals
228
228
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 months 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.
173. If working papers are not considered part of the formal accounting records, then why are they used?
174. Explain how net income or loss is determined by using the work sheet.
175. 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.
Salaries Payable Fees Earned Accounts Payable Capital Stock Supplies Expense Unearned Rent
Retained Earnings Equipment Accounts Receivable Accumulated Depreciation Salary Expense Depreciation Expense
176. 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:
177. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for the year ended April 30, 2011, for Finnegan Co.:
Accumulated Depreciation Fees Earned Depreciation Expense Dividends Rent Expense Prepaid Insurance Supplies Supplies Expense Insurance Expense
178. The following revenue and expense account balances were taken from the Income Statement columns of the work sheet for Fraser Services Co. for the year ended December 31, 2011:
Depreciation Expense Insurance Expense Miscellaneous Expense Rent Expense Service Revenue Supplies Expense Utilities Expense Wages Expense
179. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2011 for Mackenzie Company:
Accumulated DepreciationTrucks Prepaid Rent Supplies Unearned Fees Trucks Cash Capital Stock Retained Earnings
180. Indicate whether each of the following would be reported in the section of financial statements identified as (a) current assets, (b) property, plant, and equipment, (c) current liabilities, (d) revenues, or (e) expenses:
Automobile Accumulated depreciation Rent expense Fees earned Salaries payable Prepaid rent Store supplies Advertising expense Unearned rent
Brock Morton Services Co. Balance Sheet For the Year Ended December 31, 2011 Assets Current assets: Cash Accounts payable Supplies Prepaid insurance Land Total current assets Liabilities Current liabilities: Accounts receivable Accum. depr.building Accum. depr.equipment Net income Total liabilities Stockholders Equity Wages payable Capital stock Retained earnings Total stockholders equity Total liabilities and stockholders equity
Property, plant, and equip: Building Equipment Total property, plant, and equipment Total assets
$131,510
(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.
182. The following is the adjusted trial balance for Nadia Company prepared at the end of Nadias fiscal year.
Nadia Company Adjusted Trial Balance December 31, 2011 Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable - Due on June 30, 2012 Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals
5,130 3,300 550 12,400 2,200 700 4,000 2,000 11,000 700 9,930 2,450 1,900 1,475 1,150 775 29,830
29,830
Prepare an income statement, retained earnings statement, and classified balance sheet.
183. Prepare an income statement and a retained earnings statement for the month ended August 31, 2011, from the following T accounts of Marley Company.
Prepaid Insurance
Unearned Revenues
Wages Payable
1,100
1,400 400
425
Income Summary
3,200
3,845 5,930
Wages Expense
Insurance Expense
Utilities Expense
95 95
184. Prepare an income statement and a retained earnings statement for the month ended September 30, 2011, from the T accounts below of Carson Company.
Prepaid Insurance
Unearned Revenues
Wages Payable
1,400
1,200 350
225
Income Summary
2400
4,760 610
Wages Expense
Insurance Expense
Utilities Expense
80 1,130 80
125 125
185. Selected ledger accounts appear below for Fulton Surveying Services for 2011.
Dividends 1/1 12/31 20,000 45,000 3/31 12/22 12,000 3,000 12/31 15,000
12/31
64,000
186. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the year ended March 31 for Boles Athletic Company, journalize the four closing entries.
Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Capital Stock Retained Earnings Dividends Fees Earned Salary Expense Rent Expense Depreciation Expense Supplies Expense Miscellaneous Expense
$ 30,000 45,200 5,000 169,900 $ 32,000 12,500 20,000 51,600 47,000 510,000 244,500 48,000 25,000 9,500 2,000 $626,100
$626,100
187. After all adjustments have been made, but before the accounts have been closed, the following balances were taken from the ledger of Ramonas Designs:
Accounts Payable Accounts Receivable Accumulated Depreciation Cash Depreciation Expense Equipment Insurance Expense Miscellaneous Expense Prepaid Insurance
Rent Expense Salary Expense Salaries Payable Service Revenue Supplies Supplies Expense Capital Stock Retained Earnings Dividends
188. On the basis of the following information taken from the Adjusted Trial Balance columns of the work sheet for the month ended September 30, prepare the closing entries for Perez Roofing Company.
Cash Accounts Receivable Office Supplies Repair Parts Machinery Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Service Revenue Wages Expense Office Supplies Expense Repair Parts Expense Depreciation Expense
22,500.00 3,575.00 2,850.00 13,785.00 27,750.00 3,250.00 1,150.00 6,500.00 5,000.00 17,500.00 1,750.00 47,200.00 4,840.00 1,275.00 925.00 1,350.00 80,600.00
80,600.00
189. 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.
Cash Accounts Receivable Office Supplies Store Supplies Machinery Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Service Revenue Wages Expense Office Supplies Expense Store Supplies Expense Depreciation Expense
24,750.00 5,750.00 3,525.00 4,785.00 9,750.00 2,150.00 3,550.00 7,500.00 10,000.00 9,725.00 6,250.00 36,500.00 6,425.00 1,465.00 5,150.00 1, 575.00 69,425.00
__ __ ___ 69,425.00
190. The following adjusted trial balance is the result of the adjustments made at the end of the month of July for Ladonna Douglas Company. Utilize these adjusted values to prepare the closing entries for Ladonna Douglas Company.
Cash Accounts Receivable Office Supplies Store Supplies Machinery Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Service Revenue Wages Expense Rent Expense Advertising Expense Office Supplies Expense Store Supplies Expense Depreciation Expense
34,750.00 9,750.00 2,525.00 4,785.00 20,750.00 2,150.00 14,300.00 11,500.00 7,500.00 46,225.00 3,250.00 41,500.00 37,425.00 3,000.00 2,750.00 1,465.00 2,150.00 575.00 123,175.00
191. Marcus Enterprises began in 2011 when Damien Marcus invested $8,000 in exchange for capital stock. The following is the work sheet for the company at the end of the first year in business. Marcus Enterprises Work Sheet For the Year Ended December 31, 2011
Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)
Credit
Debit
Credit
Credit
3,500 11,000 1,000 8,000 2,000 59,500 19,000 7,000 3,500 83,000 19,000 7,000 3,500 29,500 30,000 59,500 59,500 2,000
83,000
59,500 59,500
53,500 53,500
Prepare an income statement, retained earnings statement, and classified balance sheet for Marcus Enterprises for the year ended December 31, 2011.
192. Marcus Enterprises began in 2011 when Damien Marcus invested $8,000 in exchange for capital stock. The following is the work sheet for the company at the end of the first year in business. Marcus Enterprises Work Sheet For the Year Ended December 31, 2011
Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)
Credit
Debit
Credit
Credit
3,500 11,000 1,000 8,000 2,000 59,500 19,000 7,000 3,500 83,000 19,000 7,000 3,500 29,500 30,000 59,500 59,500 2,000
83,000
59,500 59,500
53,500 53,500
Prepare the required closing entries for Marcus Enterprises for the year ended December 31, 2011.
193. The following is the adjusted trial balance for Sandeep Company.
Sandeep Company Adjusted Trial Balance December 31, 2011 Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals
18,130 3,300 2,750 30,400 12,200 2,700 1,000 10,000 21,200 4,870 36,600 12,450 4,900 3,475 2,150 1,275 83,700
83,700
194. Reconstruct the adjusting and closing entries from the following T accounts.
Prepaid Insurance
Unearned Revenues
Wages Payable
1,200 1,000
530 530
Income Summary
2,100 0
4,655 5,280 0
Wages Expense
Insurance Expense
Utilities Expense
180 180 0
195. Reconstruct adjusting and closing entries for the month ended September 30, 2011 from the T accounts below.
Prepaid Insurance
Unearned Revenues
Wages Payable
1,350 1,220
385 385
Income Summary
2,400 0
6,090 580
Wages Expense
Insurance Expense
Utilities Expense
95 95 0
196.
1) Bowen Company is completing its first year of operations on April 30, 2012. Reconstruct the entries for the year ended April 30, 2012 from the T accounts below. Record them as follows: A - L Journal Entries M- R Adjusting Journal Entries 2) Prepare the income statement, retained earnings statement, and classified balance sheet from the T accounts. Prepare the four closing entries (S - V). Prepare the postclosing trial balance.
3) 4)
Cash
Supplies
Prepaid Insurance
8,500
870 540
1,940 725
Equipment
Accounts Payable
Wages Payable
2,500
130
870
225
Capital Stock
Dividends 350
Rent Expense
Insurance Expense
Miscellaneo us Expense
Income Summary
725
50
197. The balances in the ledger of Good Landscape Services as of January 31, 2012 before adjustments are as follows:
Retained Earnings Dividends Service Revenue Salary Expense Rent Expense Miscellaneous Expense
Adjustment data are as follows: supplies on hand, January 31, $1,800; insurance expired for January, $1,100; depreciation on equipment for January, $2,500; salaries accrued, January 31, $1,650. (a) (b) (c) Prepare a ten-column work sheet for Good Landscape Services for January, 2010. On the basis of the work sheet in (a), present the following in good order: (1) income statement, (2) retained earnings statement (no additional investments were made during the month), and (3) classified balance sheet. On the basis of the work sheet in (a), journalize the closing entries as of January 31, 2012.
198. Complete the following work sheet for Danilo Enterprises. Danilo Enterprises Work Sheet For the Year Ended December 31, 2011
Adjusted Trial Balance Income Statement B a l a n c e S h e e t Credit D Credit e b i t
Account Title
Debit
Debit
Credit
Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals
14,500 7,500 500 20,500 15,000 9,500 3,060 5,000 13,240 1,000 34,000 18,000 9,300 8,500 79,800
79,800
1. Cross-referencing is useful in assuring that the debits and credits are in balance. FALSE
2. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are simply added to the account title column. TRUE
3. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements. TRUE
4. There is really no benefit in preparing financial statements in any particular order. FALSE
5. 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. TRUE
6. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the dollar amount. TRUE
7. The usual presentation of the retained earnings statement is (1) beginning retained earnings, (2) net income or loss, (3) dividends (4) ending retained earnings. TRUE
8. The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings. TRUE
9. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets. FALSE
12. Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities. TRUE
13. The amount of the net income for a period appears on both the income statement and the balance sheet for that period. FALSE
14. Accrued taxes payable are generally reported on the balance sheet as a current liability. TRUE
15. At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses. FALSE
17. Capital Stock and Dividends are reported in the stockholders equity section of the balance sheet. FALSE
18. Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current assets. TRUE
19. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as current assets. FALSE
20. Accrued expenses are ordinarily listed on the balance sheet as current assets. FALSE
21. Accrued revenues are ordinarily listed on the balance sheet as current liabilities. FALSE
22. The income statement is prepared from the adjusted trial balance or the income statement columns on the work sheet. TRUE
23. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short time before they expire. FALSE
26. The balance sheet accounts are referred to as real or permanent accounts. TRUE
27. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting period. TRUE
28. The income summary account is closed to the retained earnings account. TRUE
29. The accumulated depreciation account is closed to the income summary account. FALSE
30. The dividends account is closed to the income summary account. FALSE
31. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance. FALSE
32. Entries required to close the balances of the temporary accounts at the end of the period are called final entries. FALSE
33. Journalizing and posting closing entries must be completed before financial statements can be prepared. FALSE
34. During the closing process, some balance sheet accounts are closed and end the period with a zero balance. FALSE
35. Closing entries are entered directly on to the work sheet. FALSE
36. The post-closing trial balance will generally have fewer accounts than the trial balance. TRUE
37. A post-closing trial balance contains only asset and liability accounts. FALSE
38. A post-closing trial balance should be prepared before the financial statements are prepared. FALSE
39. Cash, Accounts Payable, and Capital Stock are real accounts and do not get closed at the end of the period. TRUE
40. The income summary account is also known as the clearing account. TRUE
41. All income statement accounts will be closed at the end of the period. TRUE
42. Balance Sheet accounts are not considered real accounts. FALSE
43. It is not necessary to post the closing entries to the general ledger. FALSE
44. 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. TRUE
45. The closing process is sometimes referred to as closing the books. TRUE
46. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts. TRUE
48. After analyzing transactions, the next step would be to post the transactions in the ledger. FALSE
49. The most important output of the accounting cycle is the financial statements. TRUE
50. The last step of the accounting cycle is to prepare a post-closing trial balance. TRUE
51. The accounting cycle begins with preparing an unadjusted trial balance. FALSE
52. Financial statements should be prepared before the closing entries are journalized and posted. TRUE
53. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period. FALSE
54. Any twelve-month accounting period adopted by a company is known as its fiscal year. TRUE
55. A fiscal year that ends when business activities have reached their lowest point is called the natural business year. TRUE
56. All companies must use a calendar year as their fiscal year. FALSE
57. The majority of businesses end their fiscal year on December 31. TRUE
58. The work sheet is not considered a part of the formal accounting records. TRUE
59. The balances of the equity accounts from the Adjusted Trial Balance columns of the work sheet are extended to the Retained Earnings Statement columns. FALSE
60. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements. TRUE
61. In a computerized accounting system, a work sheet may not be necessary because the software program automatically posts entries to the accounts and prepares financial statements. TRUE
62. The trial balance may be listed on the work sheet instead of being prepared separately. TRUE
63. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial Balance column totals and the Adjustments column totals. FALSE
65. On the work sheet, the capital stock and dividends account balances are extended to the Balance Sheet columns. TRUE
66. 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. TRUE
67. 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. TRUE
68. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the Balance Sheet columns. FALSE
69. Net income is shown on the work sheet in the Income Statement Debit column and the Balance Sheet Credit column. TRUE
70. If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000, respectively, after all account balances have been extended, the amount of the net loss is $2,000. FALSE
71. The work sheet and the financial statements both require dollar signs. FALSE
72. The balance in the retained earnings account on the work sheet will equal the amount presented in the balance sheet. FALSE
73. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post them to the ledger. FALSE
74. The chart of accounts, the journal, and the ledger are essential parts of the accounting system. TRUE
75. What is the major difference between the unadjusted trial balance and the adjusted trial balance? A. The adjusted trial balance will show the net income (loss) as an additional account. B. Both will need to be in balance in order to continue with the end-of-period processing. C. The adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts. D. The unadjusted trial balance will be used to record the adjustments for the period.
76. Once the adjusting entries are posted, the adjusted trial balance is prepared to A. verify that the debits and credits are in balance B. verify that all of the adjustments were posted in the correct accounts C. verify that the net income (loss) is correct for the period D. verify the correct flow of accounts into the financial statements
77. When preparing the retained earnings statement, the beginning retained earnings balance can always be found A. in the Income Statement columns of the work sheet B. in the statement of cash flows C. in the general ledger D. in the Adjustments columns of the work sheet
78. Accumulated depreciation appears on the A. balance sheet in the current assets section B. balance sheet in the property, plant and equipment section C. balance sheet in the long-term liabilities section D. income statement as an operating expense
79. Notes receivable due in 350 days appear on the A. balance sheet in the current assets section B. balance sheet in the fixed assets section C. balance sheet in the current liabilities section D. income statement as an expense
80. Unearned Fees appear on the A. balance sheet in the current assets section B. balance sheet as a current liability C. balance sheet in the stockholders equity section D. income statement as revenue
81. Which one of the fixed asset accounts listed below will not have a related contra asset account? A. Office Equipment B. Land C. Delivery Equipment D. Building
82. Prepaid insurance is reported on the balance sheet as a A. current asset B. fixed asset C. current liability D. long-term liability
83. The income statement is prepared from: A. the adjusted trial balance. B. the income statement columns of the work sheet. C. either the adjusted trial balance or the income statement columns of the work sheet. D. both the adjusted trial balance and the income statement columns of the work sheet.
84. Round-tripping is when A. a selling company sells to a customer company with huge discounts. B. a selling company pretends to sell to a fictitious company with the intent of inflating revenues C. a selling company lends money to a customer company to increase assets. D. a selling company lends money to a customer company to be used to purchase goods from the selling company.
85. The retained earnings statement should be prepared A. before the income statement and after the balance sheet B. before the income statement and balance sheet C. after the income statement and balance sheet D. after the income statement and before the balance sheet
86. The income statement should be prepared A. before the retained earnings statement and balance sheet B. after the retained earnings statement and before the balance sheet C. after the retained earnings statement and balance sheet D. after the balance sheet and before the retained earnings statement
87. Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.
Stockton Company Adjusted Trial Balance For the Year Ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 6,030 2,100 700 13,700 $ 1,100 1,900 4,200 2,000 10,940 790 8,750 2,500 1,960 775 250 85 $28,890
$28,890
A. net income, $2,390 B. net loss, $790 C. net loss, $5,570 D. net income, $3,180
88. Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.
Stockton Company Adjusted Trial Balance For the Year Ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 6,030 2,100 700 13,700 $ 1,100 1,900 4,200 2,000 10,940 790 8,750 2,500 1,960 775 250 85 $28,890
$28,890
A. $10,150 B. $13,330 C. $14,120 D. $10,940 89. Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.
Stockton Company Adjusted Trial Balance For the Year Ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 6,030 2,100 700 13,700 $ 1,100 1,900 4,200 2,000 10,940 790 8,750 2,500 1,960 775 250 85 $28,890
$28,890
A. $23,630 B. $15,330 C. $21,430 D. $22,530 90. Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.
Stockton Company Adjusted Trial Balance For the Year Ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 6,030 2,100 700 13,700 $ 1,100 1,900 4,200 2,000 10,940 790 8,750 2,500 1,960 775 250 85 $28,890
$28,890
91. Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.
Stockton Company Adjusted Trial Balance For the Year Ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals $ 6,030 2,100 700 13,700 $ 1,100 1,900 4,200 2,000 10,940 790 8,750 2,500 1,960 775 250 85 $28,890
$28,890
A. $1,900 B. $6,100 C. $4,200 D. $19,040 92. The balance sheet should be prepared A. before the income statement and the retained earnings statement B. before the income statement and after the retained earnings statement C. after the income statement and the retained earnings statement D. after the income statement and before the retained earnings statement
93. The retained earnings statement begins with the beginning balance followed by A. net income (loss) and dividends B. net income (loss) and issuances of capital stock C. issuances of capital stock and dividends D. issuances of capital stock, net income (loss), and dividends
94. The income statement will include A. revenues less expenses (ordered largest to smallest amount) with miscellaneous expense listed last B. revenues less expenses (ordered smallest to largest amounts) with miscellaneous expense listed last C. revenues less expenses (ordered in alphabetical order) D. revenues less expenses (order is not important)
95. The classified balance sheet will subsection the assets as follows A. Current Assets and Other Assets B. Current Assets and Property, Plant, and Equipment C. Current Assets and Long-Term Assets D. Other Assets and Property, Plant, and Equipment
96. The classified balance sheet will have liabilities divided into the following subsections A. Current Liabilities and Long-Term Liabilities B. Current Liabilities and Other Liabilities C. Other Liabilities and Long-Term Liabilities D. Present Liabilities and Tomorrows Liabilities
97. Current liabilities are those liabilities that A. will be paid in less than one year B. are due to be paid in 5 to 10 years C. are due to be paid in more than one year D. are owed to the stockholders and will never be paid
98. On the balance sheet, stockholders equity is A. added to assets and the two are equal to liabilities B. added to liabilities and the two are equal to assets C. subtracted from liabilities and the net amount is equal to assets D. subtracted from assets and the net amount is equal to net income
99. Balance sheet accounts A. represent amounts accumulated during a specific period of time B. are called real accounts C. have zero balances after the closing entries have been posted D. are equal to assets and liabilities
100. On which financial statement will Income Summary be shown? A. retained earnings statement B. balance sheet C. income statement D. none of these
101. Which of the following is not true about closing entries? A. There are four closing entries that update the retained earnings account. B. After the second closing entry, the income summary account is equal to the net income or (loss) for the period. C. All real accounts are closed at the end of the period. D. By closing nominal accounts at the end of the period to zero, it is possible to isolate next periods information correctly.
102. The income summary account is also called A. the imprest account B. the clearing account C. the adjustments account D. the helpful account
103. After posting the second closing entry to the income summary account, the balance will be equal to A. zero B. retained earnings C. revenues for the period D. the net income or (loss) for the period
104. What is the last account that should be listed in the post-closing trial balance? A. Income Summary B. Retained Earnings C. Cash D. Fees Earned
105. Which of the following account groups are all considered nominal accounts? A. Cash, Retained Earnings, Wages Payable B. Prepaid Insurance, Property, Plant & Equipment, Fees Earned C. Capital Stock, Dividends, Income Summary D. Rent Revenue, Fees Earned, Miscellaneous Expense
106. There are four closing entries. The first one is to close ____, the second one is to close ____, the third one is to close ____, and the last one is to close ____. A. revenues, expenses, income summary, dividends B. expenses, assets, income summary, capital stock C. retained earnings, dividends, income summary, assets D. dividends, income summary, expenses, revenues
107. Closing entries A. need not be journalized if adjusting entries are prepared B. need not be posted if the financial statements are prepared from the work sheet C. are not needed if adjusting entries are prepared D. must be journalized and posted
108. Closing entries are dated in the journal as of A. the date they are actually journalized, although they are generally prepared after the end of the accounting period B. the last day of the accounting period, although they are actually journalized after the end of the accounting period C. the first day of the accounting period, although they are actually journalized after the end of the accounting period D. the first day of the subsequent accounting period
109. Which of the accounts below would be closed by posting a debit to the account? A. Unearned Revenue B. Fees Earned C. Dividends D. Miscellaneous Expense
110. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? A. Supplies Expense B. Accumulated Depreciation C. Prepaid Insurance D. Unearned Rent
111. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? A. Salaries Expense B. Fees Earned C. Unearned Rent D. Depreciation Expense
112. Which of the following accounts will be closed to the retained earnings account at the end of the fiscal year? A. Rent Expense B. Fees Earned C. Income Summary D. Depreciation Expense
113. The entry to close the appropriate insurance account at the end of the accounting period is A. debit Income Summary; credit Prepaid Insurance B. debit Prepaid Insurance; credit Income Summary C. debit Insurance Expense; credit Income Summary D. debit Income Summary; credit Insurance Expense
114. Which of the following accounts ordinarily appears in the post-closing trial balance? A. Fees Earned B. Supplies Expense C. Dividends D. Unearned Rent
115. The post-closing trial balance differs from the adjusted trial balance in that it A. does not take into account closing entries B. does not take into account adjusting entries C. does not include balance sheet accounts D. does not include income statement accounts
116. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:
Accumulated Depreciation Fees Earned Depreciation Expense Insurance Expense Dividends Prepaid Insurance Supplies Supplies Expense
117. A summary of selected ledger accounts appear below for Albertos Plumbing Services for the current calendar year-end.
8,500
1/1 12/31
6,500 18,500
3,500 5,000
12/31
8,500
15,000 18,500
12/31
33,500
A. $16,500 B. $33,500 C. $18,500 D. $15,000 118. Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $5,400 and recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense during the adjusting process at the end of Amirs first month of operations on March 31st? A. $5,400. B. $540. C. $450. D. $500.
119. The journal entry to close the Fees Earned, $275, and Rent Revenue, $200, accounts on December 31st during the closing process would be A. Dec. 31 Fees Earned Rent Revenue Income Summary B. Dec. 31 Income Summary Fees Earned Rent Revenue C. Dec. 31 Revenues Income Summary D. Dec. 31 Income Summary Revenues 275 200 475 475 275 200 475 475 475 475
120. Use the work sheet for Finley Company to answer the questions that follow.
F i n le y C o m p a n y W o r k S h e et F o r t h e Y e a r E n d e d D e c e m b e r 3 1, 2 0 1 0 Adjusted Trial Balance Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock
Debit
Credit
Credit
Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss) 63,000 18,000 15,000 228,000 3,000
28,000 3,000 141,000 63,000 18,000 15,000 228,000 96,000 45,000 141,000 141,000 132,000 141,000 132,000 141,000
28,000
A. debit Income Summary, $141,000; credit Fees Earned, $141,000 B. debit Retained Earnings, $141,000; credit Fees Earned, $141,000 C. debit Fees Earned, $141,000; credit Income Summary, $141,000 D. credit Fees Earned, $141,000; credit Retained Earnings, $141,000
121. Use the work sheet for Finley Company to answer the questions that follow.
F i n le y C o m p a n y W o r k S h e et F o r t h e Y e a r E n d e d D e c e m b e r 3 1, 2 0 1 0 Adjusted Trial Balance Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock
Debit
Credit
Credit
Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss) 63,000 18,000 15,000 228,000 3,000
28,000 3,000 141,000 63,000 18,000 15,000 228,000 96,000 45,000 141,000 141,000 132,000 141,000 132,000 141,000
28,000
A. Wages Expense 63,000 Rent Expense 18,000 Depreciation Expense 15,000 Income Summary 96,000 B. Expenses 96,000 Income Summary 96,000 C. Wages Expense 63,000 Rent Expense 18,000 Depreciation Expense 15,000 Dividends 96,000 D. Income Summary 96,000 Wages Expense 63,000 Rent Expense 18,000 Depreciation Expense 15,000
122. Use the work sheet for Finley Company to answer the questions that follow.
F i n le y C o m p a n y W o r k S h e et F o r t h e Y e a r E n d e d D e c e m b e r 3 1, 2 0 1 0 Adjusted Trial Balance Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock
Debit
Credit
Credit
Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss) 63,000 18,000 15,000 228,000 3,000
28,000 3,000 141,000 63,000 18,000 15,000 228,000 96,000 45,000 141,000 141,000 132,000 141,000 132,000 141,000
28,000
A. debit Retained Earnings, $45,000; credit Income Summary, $45,000 B. debit Income Summary, $141,000; credit Retained Earnings, $141,000 C. debit Income Summary, $45,000; credit Retained Earnings, $45,000 D. debit Retained Earnings, $9,000; credit Income Summary, $9,000
123. Use the work sheet for Finley Company to answer the questions that follow.
F i n le y C o m p a n y W o r k S h e et F o r t h e Y e a r E n d e d D e c e m b e r 3 1, 2 0 1 0 Adjusted Trial Balance Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock
Debit
Credit
Credit
Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss) 63,000 18,000 15,000 228,000 3,000
28,000 3,000 141,000 63,000 18,000 15,000 228,000 96,000 45,000 141,000 141,000 132,000 141,000 132,000 141,000
28,000
A. debit Retained Earnings, $3,000; credit Dividends, $3,000 B. debit Retained Earnings, $12,000; credit Dividends, $12,000 C. debit Dividends, $3,000; credit Retained Earnings, $3,000 D. debit Dividends, $12,000; credit Retained Earnings, $12,000
124. Use the work sheet for Finley Company to answer the questions that follow.
F i n le y C o m p a n y W o r k S h e et F o r t h e Y e a r E n d e d D e c e m b e r 3 1, 2 0 1 0 Adjusted Trial Balance Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock
Debit
Credit
Credit
Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss) 63,000 18,000 15,000 228,000 3,000
28,000 3,000 141,000 63,000 18,000 15,000 228,000 96,000 45,000 141,000 141,000 132,000 141,000 132,000 141,000
28,000
A. $28,000 B. $70,000 C. $25,000 D. $73,000 125. The proper sequence for the steps in the accounting cycle is a follows A. analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial statements, journalize closing entries, analyze adjustment data and prepare adjusting entries B. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger C. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger D. prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries
126. The following are steps to the accounting cycle. Of the following, which step should be done first? A. Closing entries are journalized and posted to the ledger. B. Transactions are posted to the ledger. C. Adjusting entries are journalized and posted to the ledger. D. Financial statements are prepared.
127. The following are steps in the accounting cycle. Of the following, which would be prepared last? A. An adjusted trial balance is prepared. B. Transactions are posted to the ledger. C. An unadjusted trial balance is prepared. D. Adjusting entries are journalized and posted to the ledger.
128. The accounting cycle requires three trial balances be done. In what order should they be prepared? A. Post-closing, unadjusted, adjusted B. Unadjusted, post-closing, adjusted C. Unadjusted, adjusted, post-closing D. Post-closing, adjusted, unadjusted
129. The fiscal year selected by companies A. is the same as the calendar year. B. begins with the first day of the month and ends on the last day of the twelfth month. C. must always begin on January 1. D. will change each year.
130. 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.
131. The natural business year A. is a fiscal year that ends when business activities are at its lowest point. B. is a calendar year that ends when business activities are at its lowest point. C. is a fiscal year that ends when business activities are at its highest point. D. is a calendar year that ends when business activities are at its highest point.
132. In the accounting cycle, the last step is A. preparing the financial statements B. journalizing and posting the adjusting entries C. preparing a post-closing trial balance D. journalizing and posting the closing entries
133. During the end-of-period processing, which of the following best describes the logical order of steps? A. preparation of adjustments, adjusted trial balance, financial statements B. preparation of income statement, adjusted trial balance, balance sheet C. preparation of adjusted trial balance, cross-referencing, journalizing D. preparation of adjustments, adjusted trial balance, posting
134. The work sheet A. is an integral part of the accounting cycle. B. eliminates the need to rewrite the financial statements. C. is a working paper that is required. D. is used to summarize account balances and adjustments for the financial statements.
135. Which one of the steps below is not aided by the preparation of the work sheet? A. preparing the adjusted trial balance B. posting to the general ledger C. preparing the financial statements D. preparing the closing entries
136. A work sheet includes columns for A. adjusting entries B. closing entries C. reversing entries D. adjusting and closing entries
137. When a work sheet is complete, the adjustment columns should have A. total credits greater than total debits if a net income was earned B. total debits greater than total credits if a net loss was incurred C. total debits greater than total credits if a net income was earned D. total debits equal total credits
138. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on a work sheet A. is the amount of net income or loss B. indicates there is an error on the work sheet C. is not unusual when preparing the work sheet D. is the net difference between revenue, expenses, and dividends
139. Net income appears on the work sheet in the A. debit column of the Balance Sheet columns B. debit column of the Adjustments columns C. debit column of the Income Statement columns D. credit column of the Income Statement columns
140. A net loss appears on the work sheet in the A. debit column of the Balance Sheet columns B. credit column of the Balance Sheet columns C. debit column of the Income Statement columns D. credit column of the Adjustments columns
141. After net income is entered on the work sheet, the Balance Sheet Debit and Credit columns must A. be the same amount as the total amount of the Income Statement Debit and Credit columns B. equal each other C. be the same amount as the total amount in the Adjusted Trial Balance Debit and Credit columns D. not be equal to each other and need not be the same total amounts as any other pair of columns on the work sheet
142. Which of the statements below indicates that a company earned a net income for the period? A. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the work sheet. B. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet. C. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet. D. Cash inflows exceeded cash outflows.
143. Which item would appear in the Income Statement columns of the work sheet? A. Equipment B. Unearned Fees C. Prepaid Expense D. Net Loss
144. Which account would not appear in the Balance Sheet columns of the work sheet? A. Dividends B. Rent Earned C. Unearned Revenue D. Dividends and Unearned Revenue
145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet? A. Service Revenue B. Prepaid Rent C. Supplies Expense D. None are correct
146. The work sheet at the end of July has $5,350 in the Balance Sheet credit column for Accumulated Depreciation. The work sheet at the end of August has $6,700 in the Balance Sheet credit column for Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of August? A. $1,350 B. $6,700 C. $5,350 D. none of the above
147. Which of the items below does not appear on the work sheet? A. adjusting entries B. the unadjusted trial balance C. closing entries D. the dividends account
148. An indication that the work sheet columns are in balance and the work sheet is completed is A. the word "Total" is written at the bottom of each pair of columns B. each pair of columns is double underlined C. each pair of columns has the totals circled D. the final figures are written in ink
149. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $37,875 and $32,735, respectively. What is the amount of net income or net loss for the period? A. $5,140 net income B. $37,875 net loss C. $5,140 net loss D. $32,735 net income
150. 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 $85,300, respectively. What is the amount of the net income or net loss for the period? A. $7,800 net income B. $7,800 net loss C. $85,300 net income D. $77,500 net loss
151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At year end, the adjusting entry on the work sheet would A. increase an expense account B. decrease a liability account C. increase an asset account D. decrease an expense account
152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the work sheet would A. increase a liability account B. decrease an asset account C. decrease a revenue account D. decrease a liability account
153. Which of the following is not an essential part of the accounting records? A. journal B. ledger C. chart of accounts D. work sheet
154. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns show debits of $36,678 and the credits of $41,101. This indicates that A. neither net income or loss can be calculated because it is found on the income statement B. the company has a net loss of $4,423 for the period C. the company has a net income of $4,423 for the period D. The amounts are out of balance and need to be corrected
155. The Income Statement columns in the work sheet show that debits total $55,800 and credits total $62,705. What does this information mean to the accountant? A. Net income is equal to $6,905. B. Net loss is equal to $6,905. C. The accounts are out of balance, indicating an error has been made. D. The accounts have not been updated.
156. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the end-ofperiod spreadsheet (work sheet). Indicate whether each balance should be extended to an Income Statement column or (b) a Balance Sheet column. 1. 2. 3. 4. 5. 6. 7. 8. Capital Stock Retained Earnings Depreciation Expense Accumulated Depreciation Fees Earned Unearned Fees Supplies Supplies Expense
1. 2. 3. 4. 5. 6. 7. 8.
Balance Sheet column Balance Sheet column Income Statement column Balance Sheet column Income Statement column Balance Sheet column Balance Sheet column Income Statement column
157. Tracy Roberts, the sole stockholder of Surfer Dude Supplies, is requesting a $75,000 loan from the bank where you work as a loan officer. He brings to you the following trial balance (or statement of accounts) as of the end of his first year of operations. (a) What three accounts do you think should be relabeled for greater clarity? (b) What adjustments might be necessary before an accurate set of financial statements could be prepared?
Surfer Dude Supplies Statement of Accounts December 31, 2011 Cash Billings Due from Others Office Supplies Trucks Equipment Amounts Owed to Others Investment in Business Service Revenues Wages Expense Rent Expense Insurance Expense Utilities Expenses Miscellaneous Expenses
2,050 15,070 7,470 26,370 8,090 2,850 23,500 73,650 30,050 7,330 2,400 700 470 100,000
100,000
(a) The following items should be relabeled for greater clarity: Billings Due from OthersAccounts Receivable Amounts Owed to OthersAccounts Payable Investment in BusinessCapital Stock (b) The following adjustments might be necessary before an accurate set of financial statements could be prepared:
No office supplies expense is shown. The office supplies account should be adjusted for the supplies used during the year. No depreciation expense is shown for the trucks or equipment accounts. An adjusting entry should be prepared for depreciation expense on each of these assets. An inquiry should be made as to whether any accrued expenses, such as wages or utilities, exist at the end of the year. An inquiry should be made as to whether any prepaid expenses, such as rent or insurance, exist at the end of the year. An inquiry should be made as to whether any dividends were paid by the company during the year. No dividends account is shown in the statement of accounts.
158. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet columns with a debit total of $630,430 and a credit total of $614,210. This is before the amount for net income or net loss has been included. In preparing the income statement from work sheet, what is the amount of net income or net loss?
159. On January 1, 2011, the retained earnings account of Crystal Pool Service Company had a balance of $252,000. During the year, the company issued an additional $20,000 of capital stock and paid $52,400 in dividends. For the year ended December 31, 2011, Crystal Pool Service Company reported a net income of $72,300. Prepare a retained earnings statement for the year ended December 31, 2011.
Crystal Pool Service Company Retained Earnings Statement For the Year Ended December 31, 2011 Retained earnings, January 1, 2011 Net income Less dividends Increase in retained earnings Retained earnings, December 31, 2011 $72,300 52,400
$252,000
19,900 $271,900
160. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current liabilities, (d) long-term liabilities, or (e) stockholders equity section of the December 31, 2011, balance sheet of Brock Pool Service Company.
1. 2. 3. 4. 5. 6. 7. 8.
Retained Earnings Accumulated Depreciation Unearned Revenues Mortgage Payable Equipment Notes Payable (due in 2012) Cash Accounts Receivable
1. 2. 3. 4. 5. 6. 7. 8.
(e) Stockholders equity (b) Property, plant, and equipment (c) Current liabilities (d) Long-term liabilities (b) Property, plant, and equipment (d) Long-term liabilities (a) Current assets (a) Current assets
161. Explain the differences between a nonclassified balance sheet and a classified balance sheet.
A classified balance sheet subsections assets as current assets and property, plant, and equipment. It also subsections liabilities as current liabilities and long-term liabilities.
162. List/describe the four closing entries in the order that they should occur.
1. 2. 3. 4.
Close revenues to Income Summary. Close expenses to Income Summary. Close Income Summary to Retained Earnings. Close Dividends to Retained Earnings.
163. After the accounts were adjusted at January 31, 2010, the end of the fiscal year, the following balances were taken from the ledger of Taylor Pool Service Company:
Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Supplies Expense Miscellaneous Expense
Journalize the four entries required to close the accounts Jan. 31 Fees Earned Income Summary 31 Income Summa ry Wages Expense Rent Expense Supplies Expense Miscellaneous Expense 31 Income Summa ry Retained Earnings 31 Retaine d Earning s Dividends 5,000 35,350 35,350 81,050 29,000 43,000 7,300 1,750 116,400 116,400
5,000
164. Prior to adjustment at August 31, 2011, Salary Expense has a debit balance of $298,500. Salaries owed but not paid as of the same date total $2,700.
Present the entries to record the followin g: (1) Accrued salaries as of August 31. (2) Closing of Salary Expense as of August 31.
(1) (2)
165. Identify which of the following accounts should be closed to Income Summary at the end of the fiscal year. Record next to each account: a (Y) for YES, it should be closed to Income Summary; OR an (N) for NO, it would not be closed to Income Summary. 1. Utilities Payable 2. Utilities Expense 3. Supplies 4. Supplies Expense 5. Fees Earned 6. Unearned Fees 7. Accounts Receivable 8. Dividends 9. Retained Earnings 10. Accumulated Depreciation - Equipment 11. Depreciation Expense - Equipment 12. Equipment 13. Prepaid Insurance 14. Insurance Expense
Utilities Payable Utilities Expense Supplies Supplies Expense Fees Earned Unearned Fees Accounts Receivable Dividends Retained Earnings Accumulated Depreciation - Equipment Depreciation Expense - Equipment Equipment Prepaid Insurance Insurance Expense
N Y N Y Y N N N N N Y N N Y
166. Beachside Realty rents condominiums and furnishings. Its adjusted trial balance at December 31, 2011, is as follows:
Cash Accounts Receivable Interest Receivable Prepaid Insurance Notes Receivable (long-term) Equipment Accumulated Depreciation Accounts Payable Accrued Expenses Payable Income Taxes Payable Unearned Rental Fees Capital Stock Retained Earnings Dividends Rental Fees Earned Furniture Rental Revenue Interest Revenue Wages Expense Depreciation Expense Utilities Expense Insurance Expense Maintenance Expense Income Tax Expense
Credit Balances
1,500 1,400 2,920 1,700 500 3,000 5,200 2,000 41,000 1,200 100 19,000 1,800 320 700 9,000 2,700 58,520
58,520
Prepare the entry required to close the revenue accounts at the end of the period.
Dec. 31
Rental Fees Earned Furniture Rental Revenue Interest Revenue Income Summary
167. Beachside Realty rents condominiums and furnishings. Its adjusted trial balance at December 31, 2011, is as follows:
Cash Accounts Receivable Interest Receivable Prepaid Insurance Notes Receivable (long-term) Equipment Accumulated Depreciation Accounts Payable Accrued Expenses Payable Income Taxes Payable Unearned Rental Fees Capital Stock Retained Earnings Dividends Rental Fees Earned Furniture Rental Revenue Interest Revenue Wages Expense Depreciation Expense Utilities Expense Insurance Expense Maintenance Expense Income Tax Expense
Credit Balances
1,500 1,400 2,920 1,700 500 3,000 5,200 2,000 41,000 1,200 100 19,000 1,800 320 700 9,000 2,700 58,520
58,520
Prepare the entry required to close the expense accounts at the end of the period.
Dec. 31
Income Summary Wages Expense Depreciation Expense Utilities Expense Insurance Expense Maintenance Expense Income Tax Expense
168. Beachside Realty rents condominiums and furnishings. Its adjusted trial balance at December 31, 2011, is as follows:
Cash Accounts Receivable Interest Receivable Prepaid Insurance Notes Receivable (long-term) Equipment Accumulated Depreciation Accounts Payable Accrued Expenses Payable Income Taxes Payable Unearned Rental Fees Capital Stock Retained Earnings Dividends Rental Fees Earned Furniture Rental Revenue Interest Revenue Wages Expense Depreciation Expense Utilities Expense Insurance Expense Maintenance Expense Income Tax Expense
Credit Balances
1,500 1,400 2,920 1,700 500 3,000 5,200 2,000 41,000 1,200 100 19,000 1,800 320 700 9,000 2,700 58,520
58,520
Prepare the closing entry required to transfer the income or loss at the end of the period.
Dec. 31
8,780 8,780
169. Beachside Realty rents condominiums and furnishings. Its adjusted trial balance at December 31, 2011, is as follows:
Cash Accounts Receivable Interest Receivable Prepaid Insurance Notes Receivable (long-term) Equipment Accumulated Depreciation Accounts Payable Accrued Expenses Payable Income Taxes Payable Unearned Rental Fees Capital Stock Retained Earnings Dividends Rental Fees Earned Furniture Rental Revenue Interest Revenue Wages Expense Depreciation Expense Utilities Expense Insurance Expense Maintenance Expense Income Tax Expense
Credit Balances
1,500 1,400 2,920 1,700 500 3,000 5,200 2,000 41,000 1,200 100 19,000 1,800 320 700 9,000 2,700 58,520
58,520
Prepare the entry required to close the dividends account at the end of the period.
Dec. 31
2,000 2,000
170. 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.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Transactions are analyzed and recorded in the journal. Transactions are posted to the ledger. An unadjusted trial balance is prepared. Adjustment data are assembled and analyzed. An optional end-of-period spreadsheet (work sheet) is prepared. Adjusting entries are journalized and posted to the ledger. An adjusted trial balance is prepared. Financial statements are prepared. Closing entries are journalized and posted to the ledger. A post-closing trial balance is prepared.
171. 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.
Hakik Enterprises Work Sheet For the Month Ended July 31, 2012 Adjusted Trial Balance Adjustments Trial Balance Debit Credit Debit Credit 36 12 56 12 60 12 20 32 30 54 4 80 28 20
Debit
Credit
Cash Prepaid Insurance Fees Receivable Supplies Equipment Accum. Depreciation Unearned Revenue Accounts Payable Wages Payable Capital Stock Retained Earnings Dividends Service Revenue Advertising Expense Wage Expense Insurance Expense Supplies Expense Depreciation Expense Totals
228
228
Enter the adjustments in the work sheet based on the data provided below. Then enter the adjusted account balances in the Adjusted Trial Balance columns. 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 months 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. Hakik Enterprises Work Sheet For the Month Ended July 31, 2012 Trial Balance Debit 36 12 56 12 60 Adjustments Credit Adjusted Trial Balance Debit Credit (e) (c) 12 20 32 30 54 4 80 28 20 (b) 2 (e) 3 (c) 4 (a) 1 25 (d) 15 28 22 3 4 1 231 4 95 (a) (d) 15 (b) 2 3 4 1
Cash Prepaid Insurance Fees Receivable Supplies Equipment Accum. Depreciation Unearned Revenue Accounts Payable Wages Payable Capital Stock Retained Earnings Dividends Service Revenue Advertising Expense Wage Expense Insurance Expense Supplies Expense Depreciation Expense Totals
Debit 36 9 56 8 60
Credit
13 5 32 2 30 54
228
228
25
231
172. 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.
Hakik Enterprises Work Sheet For the Month Ended July 31, 2012 Adjusted Trial Balance Adjustments Trial Balance Debit Credit Debit Credit 36 12 56 12 60 12 20 32 30 54 4 80 28 20
Debit
Credit
Cash Prepaid Insurance Fees Receivable Supplies Equipment Accum. Depreciation Unearned Revenue Accounts Payable Wages Payable Capital Stock Retained Earnings Dividends Service Revenue Advertising Expense Wage Expense Insurance Expense Supplies Expense Depreciation Expense Totals
228
228
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 months 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. Adjusting Entries Depreciation Expense Accum. Depr. - Equipment Wage Expense Wages Payable Supplies Expense Supplies Unearned Revenue Service Revenue Insurance Expense Prepaid Insurance
(a)
1 1 2 2 4 4 15 15 3 3
(b)
(c)
(d)
(e)
173. If working papers are not considered part of the formal accounting records, then why are they used?
Working papers are tools used by accountants to collect and summarize data for various analysis and reports.
174. Explain how net income or loss is determined by using the work sheet.
The difference between the debits and credits from the Income Statement columns are compared to the debits and credits from the Balance Sheet columns. They should be the same amounts but opposite from each other. If the debits are more than the credits on the income statement columns, signifying a net loss, then the credits should be higher than the debits on the balance sheet columns by the same amount. If the credits are more than the debits on the income statement columns, signifying a net income, then the debits should be higher than the credits on the balance sheet columns by the same amount.
175. 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.
Salaries Payable Fees Earned Accounts Payable Capital Stock Supplies Expense Unearned Rent
Retained Earnings Equipment Accounts Receivable Accumulated Depreciation Salary Expense Depreciation Expense
(a) (b)
176. 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:
(a) current asset (b) current liability (a) current asset (d) expense (d) expense (a) current asset (b) current liability (c) revenue
177. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for the year ended April 30, 2011, for Finnegan Co.:
Accumulated Depreciation Fees Earned Depreciation Expense Dividends Rent Expense Prepaid Insurance Supplies Supplies Expense Insurance Expense
Prepare an income statement. Finnegan Co. Income Statement For the Year Ended April 30, 2011 Fees earned Expenses: Rent expense Depreciation expense Insurance expense Supplies expense Total expenses Net income
178. The following revenue and expense account balances were taken from the Income Statement columns of the work sheet for Fraser Services Co. for the year ended December 31, 2011:
Depreciation Expense Insurance Expense Miscellaneous Expense Rent Expense Service Revenue Supplies Expense Utilities Expense Wages Expense
Prepare an income statement. Fraser Services Co. Income Statement For the Year Ended December 31, 2011 Service revenue Operating expenses: Wages expense Rent expense Utilities expense Depreciation expense Supplies expense Insurance expense Miscellaneous expense Total operating expenses Net loss
$ 92,500 $63,750 24,000 5,000 4,950 3,150 2,900 1,200 104,950 $ (12,450)
179. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2011 for Mackenzie Company:
Accumulated DepreciationTrucks Prepaid Rent Supplies Unearned Fees Trucks Cash Capital Stock Retained Earnings
Prepare a classified balance sheet. Mackenzie Company Balance Sheet April 30, 2011 Assets Current assets: Cash Supplies Prepaid rent Total current assets Property, plant, and equip.: Trucks Less accum. depr. Total property, plant and equipment Total assets
Liabilities $ 3,400 850 6,800 $11,050 $49,300 42,400 6,900 $17,950 Current liabilities: Unearned fees Stockholders Equity Capital stock $4,000 Retained earnings 6,640 Total stockholders equity Total liabilities and stockholders equity $ 7,310
10,640 $17,950
180. Indicate whether each of the following would be reported in the section of financial statements identified as (a) current assets, (b) property, plant, and equipment, (c) current liabilities, (d) revenues, or (e) expenses:
Automobile Accumulated depreciation Rent expense Fees earned Salaries payable Prepaid rent Store supplies Advertising expense Unearned rent
(b) property, plant, and equipment (b) property, plant, and equipment (e) expenses (d) revenues (c) current liabilities (a) current assets (a) current assets (e) expenses (c) current liabilities
Brock Morton Services Co. Balance Sheet For the Year Ended December 31, 2011 Assets Current assets: Cash Accounts payable Supplies Prepaid insurance Land Total current assets Liabilities Current liabilities: Accounts receivable Accum. depr.building Accum. depr.equipment Net income Total liabilities Stockholders Equity Wages payable Capital stock Retained earnings Total stockholders equity Total liabilities and stockholders equity
Property, plant, and equip: Building Equipment Total property, plant, and equipment Total assets
$131,510
(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.
(a) (1) (2) (3) (4) (5) (6) (7) (8) Date of statement should be "December 31, 2011" and not "For the Year Ended December 31, 2011." Accounts payable should be a current liability. Land is a fixed asset and should be listed as Property, Plant, and Equipment. Accumulated depreciation should be deducted from the related fixed asset in the Property, Plant, and Equipment section. An adding error was made in determining the amount of total assets. Accounts receivable should be a current asset. Net income would be reported on the income statement, not the balance sheet. Wages payable should be a current liability.
As set s C urr ent ass ets: $ 7,170 Ca sh 10,000 Ac co unt s rec eiv abl e 2,590 Su ppl ies 800 Pre pai d ins ura nce Tot al cur ren t ass ets Pr op ert y, pla nt, an d eq uip me nt: $24,000 La nd $43,700 Bu ildi ng $20,5 60
12,525 Le ss acc um . de pre cia tio n $29,250 Eq uip me nt 7,340 Le ss acc um . de pre cia tio n Tot al pro per ty, pla nt, an d eq uip me nt To tal ass ets Liabilities C urr ent lia bili ties : Accounts payable Wages payable Total liabilities
31,175
21,910
77,0 85
$97,6 45
Stockholders Equity Capital stock Retained earnings Total stockholders equity Total liabilities and stockholders equity
182. The following is the adjusted trial balance for Nadia Company prepared at the end of Nadias fiscal year.
Nadia Company Adjusted Trial Balance December 31, 2011 Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable - Due on June 30, 2012 Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals
5,130 3,300 550 12,400 2,200 700 4,000 2,000 11,000 700 9,930 2,450 1,900 1,475 1,150 775 29,830
29,830
Prepare an income statement, retained earnings statement, and classified balance sheet. Nadia Company Income Statement For the Year Ended December 31, 2011 Fees earned Expenses: Wages expense Rent expense Utilities expense Depreciation expense Miscellaneous expense Total expenses Net income
Nadia Company Retained Earnings Statement For Year Ended December 31, 2011 Retained earnings, January 1, 2011 Net income $ 2,180 Less dividends 700 Increase in retained earnings Retained earnings, December 31, 2011
$11,000
1,480 $12,480
Nadia Company Balance Sheet December 31, 2011 Assets Liabilities Current assets: Cash Accounts receivable Prepaid expenses Total current assets Property, plant, & equip.: Equipment Less: Accum depr. Total prop., plant, & equip. Total assets $ 5,130 3,300 550 $ 8,980 Stockholders Equity Capital stock Retained earnings Total stockholders equity Total liabilities and stockholders equity $ 2,000 12,480 $14,480 $19,180 Current liabilities Accounts payable Notes payable Total liabilities $ 700 4,000 $ 4,700
183. Prepare an income statement and a retained earnings statement for the month ended August 31, 2011, from the following T accounts of Marley Company.
Prepaid Insurance
Unearned Revenues
Wages Payable
1,100
1,400 400
425
Income Summary
3,200
3,845 5,930
Wages Expense
Insurance Expense
Utilities Expense
95 95
Marley Company Income Statement For the Month Ended August 31, 2011 Fees earned Expenses: Wages expense Rent expense Insurance expense Utilities expense Total expenses Net income
Marley Company Retained Earnings Statement For the Month Ended August 31, 2011 Retained earnings, August 1, 2011 Net income for the month Less dividends Increase in retained earnings Retained earnings, August 31, 2011
184. Prepare an income statement and a retained earnings statement for the month ended September 30, 2011, from the T accounts below of Carson Company.
Prepaid Insurance
Unearned Revenues
Wages Payable
1,400
1,200 350
225
Income Summary
2400
4,760 610
Wages Expense
Insurance Expense
Utilities Expense
80 1,130 80
125 125
Carson Company Income Statement For the Month Ended September 30, 2011 Fees earned Expenses: Wages expense Rent expense Insurance expense Utilities expense Total expenses Net loss
Carson Company Retained Earnings Statement For the Month Ended September 30, 2011 Retained earnings, September 1, 2011 Net loss for the month Dividends Decrease in retained earnings Retained earnings, September 30, 2011
185. Selected ledger accounts appear below for Fulton Surveying Services for 2011.
Dividends 1/1 12/31 20,000 45,000 3/31 12/22 12,000 3,000 12/31 15,000
12/31
64,000
Prepare a retained earnings statement. Fulton Surveying Services Retained Earnings Statement For the Year Ended December 31, 2011 Retained earnings, January 1, 2011 Net income Less dividends Increase in retained earnings Retained earnings, December 31, 2011
186. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the year ended March 31 for Boles Athletic Company, journalize the four closing entries.
Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Capital Stock Retained Earnings Dividends Fees Earned Salary Expense Rent Expense Depreciation Expense Supplies Expense Miscellaneous Expense
$ 30,000 45,200 5,000 169,900 $ 32,000 12,500 20,000 51,600 47,000 510,000 244,500 48,000 25,000 9,500 2,000 $626,100
$626,100
Mar. 31 31
Fees Earned Income Summary Income Summary Salary Expense Rent Expense Depreciation Expense Supplies Expense Miscellaneous Expense Income Summary Retained Earnings Retained Earnings Dividends
510,000 510,000 329,000 244,500 48,000 25,000 9,500 2,000 181,000 181,000 47,000 47,000
31 31
187. After all adjustments have been made, but before the accounts have been closed, the following balances were taken from the ledger of Ramonas Designs:
Accounts Payable Accounts Receivable Accumulated Depreciation Cash Depreciation Expense Equipment Insurance Expense Miscellaneous Expense Prepaid Insurance
Rent Expense Salary Expense Salaries Payable Service Revenue Supplies Supplies Expense Capital Stock Retained Earnings Dividends
Service Revenue Income Summary Income Summary Depreciation Expense Insurance Expense Rent Expense Salary Expense Supplies Expense Miscellaneous Expense Income Summary Retained Earnings Retained Earnings Dividends
191,000 191,000 95,000 11,500 1,600 31,400 46,000 2,500 2,000 96,000 96,000 48,000 48,000
188. On the basis of the following information taken from the Adjusted Trial Balance columns of the work sheet for the month ended September 30, prepare the closing entries for Perez Roofing Company.
Cash Accounts Receivable Office Supplies Repair Parts Machinery Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Service Revenue Wages Expense Office Supplies Expense Repair Parts Expense Depreciation Expense
22,500.00 3,575.00 2,850.00 13,785.00 27,750.00 3,250.00 1,150.00 6,500.00 5,000.00 17,500.00 1,750.00 47,200.00 4,840.00 1,275.00 925.00 1,350.00 80,600.00
80,600.00
Sep.
30
47,200.00
30
Income 8,390.00 Summa ry Wages Expens e Office Supplie s Expens e Repair Parts Expens e Deprec iation Expens e
4,840.00 1,275.00
925.00
1,350.00
30
38,810.00
30
1,750.00
189. 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.
Cash Accounts Receivable Office Supplies Store Supplies Machinery Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Service Revenue Wages Expense Office Supplies Expense Store Supplies Expense Depreciation Expense
24,750.00 5,750.00 3,525.00 4,785.00 9,750.00 2,150.00 3,550.00 7,500.00 10,000.00 9,725.00 6,250.00 36,500.00 6,425.00 1,465.00 5,150.00 1, 575.00 69,425.00
__ __ ___ 69,425.00
March 31
36,500.00
31
Income 14,615.00 Summar y Wages Expense Office Supplies Expense Store Supplies Expense Deprecia tion Expense
31
21,885.00
31
6,250.00
190. The following adjusted trial balance is the result of the adjustments made at the end of the month of July for Ladonna Douglas Company. Utilize these adjusted values to prepare the closing entries for Ladonna Douglas Company.
Cash Accounts Receivable Office Supplies Store Supplies Machinery Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Service Revenue Wages Expense Rent Expense Advertising Expense Office Supplies Expense Store Supplies Expense Depreciation Expense
34,750.00 9,750.00 2,525.00 4,785.00 20,750.00 2,150.00 14,300.00 11,500.00 7,500.00 46,225.00 3,250.00 41,500.00 37,425.00 3,000.00 2,750.00 1,465.00 2,150.00 575.00 123,175.00
July 31
41,500.00
31
Income 47,365.00 Summary Wages Expense Rent Expense Advertising Expense Office Supplies Expense Store Supplies Expense Depreciatio n Expense
31
5,865.00
31
3,250.00
191. Marcus Enterprises began in 2011 when Damien Marcus invested $8,000 in exchange for capital stock. The following is the work sheet for the company at the end of the first year in business. Marcus Enterprises Work Sheet For the Year Ended December 31, 2011
Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)
Income Statement Balance Sheet Credit Debit Credit Debit 25,000 7,000 1,000 18,500 Credit
3,500 11,000 1,000 8,000 2,000 59,500 19,000 7,000 3,500 83,000 19,000 7,000 3,500 29,500 30,000 59,500 59,500 2,000
83,000
59,500 59,500
53,500 53,500
Prepare an income statement, retained earnings statement, and classified balance sheet for Marcus Enterprises for the year ended December 31, 2011.
Marcus Enterprises Income Statement For the Year Ended December 31, 2011
Fees earned Expenses: Wages expense Rent expense Depreciation expense Total expenses Net income $59,500 $19,000 7,000 3,500 29,500 $30,000
Marcus Enterprises Retained Earnings Statement For the Year Ended December 31, 2011 Retained earnings, January 1, 2011 Net income Less dividends Increase in retained earnings Retained earnings, December 31, 2011
$ $30,000 2,000
28,000 $ 28,000
Marcus Enterprises Balance Sheet December 31, 2011 Assets Current assets: Cash Accounts receivable Supplies Total current assets Property, plant, and equipment: Equipment Less accum. depreciation Total property, plant, and equipment Total assets
Liabilities Current liabilities: Accounts payable Wages payable Total liabilities Stockholders Equity Capital stock Retained earnings Total stockholders equity Total liabilities and stockholders equity
192. Marcus Enterprises began in 2011 when Damien Marcus invested $8,000 in exchange for capital stock. The following is the work sheet for the company at the end of the first year in business. Marcus Enterprises Work Sheet For the Year Ended December 31, 2011
Account Title Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)
Income Statement Balance Sheet Credit Debit Credit Debit 25,000 7,000 1,000 18,500 Credit
3,500 11,000 1,000 8,000 2,000 59,500 19,000 7,000 3,500 83,000 19,000 7,000 3,500 29,500 30,000 59,500 59,500 2,000
83,000
59,500 59,500
53,500 53,500
Prepare the required closing entries for Marcus Enterprises for the year ended December 31, 2011.
Dec. 31
Fees Earned Income Summary Income Summary Wages Expense Rent Expense Depreciation Expense Income Summary Retained Earnings Retained Earnings Dividends
59,500 59,500 29,500 19,000 7,000 3,500 30,000 30,000 2,000 2,000
31
31
31
193. The following is the adjusted trial balance for Sandeep Company.
Sandeep Company Adjusted Trial Balance December 31, 2011 Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals
18,130 3,300 2,750 30,400 12,200 2,700 1,000 10,000 21,200 4,870 36,600 12,450 4,900 3,475 2,150 1,275 83,700
83,700
Fees Earned Income Summary Income Summary Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Income Summary Retained Earnings Retained Earnings Dividends
36,600 36,600 24,250 12,450 4,900 3,475 2,150 1,275 12,350 12,350 4,870 4,870
Sandeep Company Post-Closing Trial Balance December 31, 2011 Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Capital Stock Retained Earnings Totals
18,130 3,300 2,750 30,400 12,200 2,700 1,000 10,000 28,680 54,580
54,580
194. Reconstruct the adjusting and closing entries from the following T accounts.
Prepaid Insurance
Unearned Revenues
Wages Payable
1,200 1,000
530 530
Income Summary
2,100 0
4,655 5,280 0
Wages Expense
Insurance Expense
Utilities Expense
180 180 0
Adjusting Entries:
1)
2)
3)
4)
Insuran 200 ce Expense Prepaid Insuran ce Account 1,500 s Receiva ble Fees Earned Unearne 435 d Revenu e Fees Earned Wages 530 Expense Wages Payable
200
1,500
435
530
Closing Entries: 1) Fees 9,935 Earned Income Summar y Income 4,655 Summar y Wages Expense Rent Expense Insuranc e Expense Utilities Expense Income 5,280 Summar y Retained Earnings Retained 2,100 Earnings Dividend s
9,935
2)
3)
5,280
4)
2,100
195. Reconstruct adjusting and closing entries for the month ended September 30, 2011 from the T accounts below.
Prepaid Insurance
Unearned Revenues
Wages Payable
1,350 1,220
385 385
Income Summary
2,400 0
6,090 580
Wages Expense
Insurance Expense
Utilities Expense
95 95 0
Adjusting Entries:
1)
2)
3)
4)
130
275
235
385
Closing Entries: 1) Fees 5,510 Earne d Inco me Sum mary Inco 6,090 me Sum mary Wage s Expe nse Rent Expe nse Insura nce Expe nse Utiliti es Expe nse Retai 580 ned Earni ngs Inco me Sum mary Retai 2,400 ned Earni ngs Divid ends
5,510
2)
3,985
1,880 130
95
3)
580
4)
2,400
196.
1) Bowen Company is completing its first year of operations on April 30, 2012. Reconstruct the entries for the year ended April 30, 2012 from the T accounts below. Record them as follows: A - L Journal Entries M- R Adjusting Journal Entries 2) Prepare the income statement, retained earnings statement, and classified balance sheet from the T accounts. Prepare the four closing entries (S - V). Prepare the postclosing trial balance.
3) 4)
Cash
Supplies
Prepaid Insurance
8,500
870 540
1,940 725
Equipment
Accounts Payable
Wages Payable
2,500
130
870
225
Capital Stock
Dividends 350
Rent Expense
Insurance Expense
Miscellaneo us Expense
Income Summary
725
50
1) Journal Entries:
a)
8,500
8,500 2,500
b)
2,500 400
c)
Cash
400
d)
e)
f)
g)
h)
i)
C 900 a s h Fees 900 Earned A1,250 c c o u n ts R e c e i v a b l e Fees 1,250 Earned S 870 u p p li e s Account 870 s Payable W 420 a g e s E x p e n s e Cash 420 P 1,940 r e p a i d I n s u r a n c e Cash 1,940 C 2,600 a s h
j)
k)
l)
Fees 2,600 Earned M50 is c e ll a n e o u s E x p e n s e Cash 50 D350 i v i d e n d s Cash 350 C 830 a s h Unearne 830 d Revenue
Adjusting Entries: m) n) Supplies Expense Supplies Account s Receiva ble Fees Earned o) Insuranc e Expense Prepaid Insurance p) Depreci ation Expense Accumulated Depreciation q) r) Wages Expense Wages Payable Unearne d Revenue s Fees Earned 490 225 225 130 130 725 725 385 540 540
385
490
2) Bowen Company Income Statement For the Year Ended April 30, 2012 Fees earned Expenses: Wages expense Rent expense Supplies expense Insurance expense Depreciation expense Miscellaneous expense Total expenses Net income
Bowen Company Retained Earnings Statement For the Year Ended April 30, 2012 Retained earnings, May 1, 2011 Net income Less dividends Increase in retained earnings Retained earnings, April 30, 2012
Bowen Company Balance Sheet April 30, 2012 Assets Current assets: Cash Accounts receivable Supplies Prepaid insurance Total current assets Property, plant, & equipment: Equipment Less: Accumulated depreciation Total property, plant, and equipment
Liabilities $7,170 1,635 330 1,215 $10,350 $2,500 130 2,370 Stockholders Equity Capital stock Retained earnings Total stockholders equity $12,720 Total liabilities and stockholders equity Current liabilities: Accounts payable Wages payable Unearned revenues Total liabilities $ 870 225 340 $ 1,435
Total assets
3) Closing Entries: s) t) Fees Earned Income Summary Income Summary Wages Expense Rent Expense Supplies Expense Insurance Expense Depreciation Expense Miscellaneous Expense u) v) Income Summary Retained Earnings Retained Earnings Dividends 350 350 3,135 3,135 2,490 645 400 540 725 130 50 5,625 5,625
4) Bowen Company Post-Closing Trial Balance For the Year Ended April 30, 2012 Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation Accounts Payable Wages Payable Unearned Revenues Capital Stock Retained Earnings Totals
7,170 1,635 330 1,215 2,500 130 870 225 340 8,500 2,785 12,850
12,850
197. The balances in the ledger of Good Landscape Services as of January 31, 2012 before adjustments are as follows:
Retained Earnings Dividends Service Revenue Salary Expense Rent Expense Miscellaneous Expense
Adjustment data are as follows: supplies on hand, January 31, $1,800; insurance expired for January, $1,100; depreciation on equipment for January, $2,500; salaries accrued, January 31, $1,650. (a) (b) (c) Prepare a ten-column work sheet for Good Landscape Services for January, 2010. On the basis of the work sheet in (a), present the following in good order: (1) income statement, (2) retained earnings statement (no additional investments were made during the month), and (3) classified balance sheet. On the basis of the work sheet in (a), journalize the closing entries as of January 31, 2012.
(a) Good Landscape Services ) Work Sheet For the Month Ended January 31, 2012 ) ) ) Trial Balance Adjustm ents Account Title Cash Supplies Prepaid Insurance Equipment Accumulated Depreciation Capital Stock Retained Earnings Dividends Service Revenue Salary Expense Rent Expense Miscellaneous Expense Debit 4,250 3,900 8,400 41,750 ..... ..... 3,425 ..... 24,300 6,000 1,500 93,525 ..... ..... ..... ..... Credit ..... ..... ..... ..... 9,950 6,850 13,525 ..... 63,200 ..... ..... ..... 93,525 ..... ..... ..... ..... Debit ..... ..... ..... ..... ..... ..... ..... ..... (d) 1,650 ..... ..... Credit ..... (a) 2,100 (b) 1,100 ..... (c) 2,500 ..... ..... ..... ..... ..... ..... ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Supplies Expense Insurance Expense Depreciation Expense Salaries Payable Net Income
( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( (
Adjusted Trial Balance Debit 4,250 1,800 7,300 41,750 ..... ..... 3,425 ..... 25,950 6,000 1,500 2,100 1,100 2,500 ........... 97,675 Credit ..... ..... ..... ..... 12,450 6,850 13,525 ..... 63,200 ..... ..... ..... ..... ..... ..... 1,650 97,675
Income Stateme nt Debit ..... ..... ..... ..... ..... ..... ..... ..... 25,950 6,000 1,500 2,100 1,100 2,500 ........... 39,150 24,050 63,200
Balance Sheet Credit ..... ..... ..... ..... ..... ..... ..... 63,200 ..... ..... ..... ..... ..... ..... ........... 63,200 ........... 63,200 Debit 4,250 1,800 7,300 41,750 ..... ..... 3,425 ..... ..... ..... ..... ..... ..... ..... ........... 58,525 ........... 58,525 Credit ..... ..... ..... ..... 12,450 6,850 13,525 ..... ..... ..... ..... ..... ..... ..... ..... 1,650 34,475 24,050 58,525
(b) (1) Good Landscape Services Income Statement For the Month Ended January 31, 2012 Service revenue Operating expenses: Salary expense Rent expense Supplies expense Insurance expense Depreciation expense Miscellaneous expense Total operating expenses Net income $63,200 $25,950 6,000 2,100 1,100 2,500 1,500 39,150 $24,050
(b) (2) Good Landscape Services Retained Earnings Statement For the Month Ended January 31, 2012 Retained earnings, January 1, 2012 Net income for the month Less dividends Increase in retained earnings Retained earnings, January 31, 2012 $13,525 $24,050 3,425 20,625 $34,150
(b) (3) Good Landscape Services Balance Sheet January 31, 2012 Assets Current assets: Cash Supplies Prepaid insurance Total current assets Property, plant, and equipment: Equipment Less accumulated depreciation Total property, plant, and equipment Total assets
Liabilities $ 4,250 1,800 7,300 $13,350 Current liabilities: Salaries payable Stockholders Equity Capital stock $ 6,850 Retained earnings 34,150 Total stockholders equity
$ 1,650
41,000
$42,650
(c) Jan. 31 31 Closing Entries Service Revenue Income Summary Income Summary Salary Expense Rent Expense Supplies Expense Insurance Expense Depreciation Expense Miscellaneous Expense Income Summary Retained Earnings Retained Earnings Dividends 63,200 63,200 39,150 25,950 6,000 2,100 1,100 2,500 1,500 24,050 24,050 3,425 3,425
31 31
198. Complete the following work sheet for Danilo Enterprises. Danilo Enterprises Work Sheet For the Year Ended December 31, 2011
Adjusted Trial Balance Income Statement B a l a n c e S h e e t
Account Title
Debit
Credit
D Credit e b i t
Debit
Credit
Cash Accounts Receivable Supplies Equipment Accum. Depr. - Equip. Accounts Payable Wages Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Depreciation Expense Totals
14,500 7,500 500 20,500 15,000 9,500 3,060 5,000 13,240 1,000 34,000 18,000 9,300 8,500 79,800
79,800
Danilo Enterprises Work Sheet For the Year Ended December 31, 2011 Adjusted Trial Balance Income Statement B a l a n c e S h e e t Credit D Credit e b i t
Account Title
Debit
Debit
Credit
Cash Accounts Receivable Supplies Equipment Accum. Depr - Equip. Accounts Payable Wages Payable Capital Stock Retained Earnings Dividends Fees Earned Wages Expense
14,500 7,500 500 20,500 15,000 9,500 3,060 5,000 13,240 1,000 34,000 18,000 34,000 1 8 , 0 0 0 9 , 3 0 0 8 , 5 0 0 334,000 5 , 8 0 0 1,800 335,800 5 , 8 0 0
14,500 7,500 500 20,500 15,000 9,500 3,060 5,000 13,240 1,000
Rent Expense
9,300
Depreciation Expense
8,500
Totals
79,800
79,800
44,000
45,800
Net Loss
1,800 45,800
45,800