1
The typical accounting worksheet has five sets of columns with each set having a debit column on the left and a credit column on the right. In moving from left to right across the worksheet, which of the following lists describes the proper order for four of these sets of columns?
A)
Adjustments, Adjusted Trial Balance, Unadjusted Trial Balance, and Income Statement.
B)
Adjustments, Adjusted Trial Balance, Income Statement, and Balance Sheet.
C)
Adjusted Trial Balance, Adjustments, Income Statement, and Balance Sheet.
D)
Adjustments, Adjusted Trial Balance, Balance Sheet, and Income Statement.
E)
Unadjusted Trial Balance, Adjustments, Income Statement, and Adjusted Trial Balance.
2
A company accountant has started to prepare a ten-column worksheet as shown in the chapter. She calculates the amount of an adjustment and is about to enter it in the Adjustments column but cannot locate the name of the account on the worksheet. What should she do?
A)
Go back to the general ledger. Open an account with the proper name. Enter the adjustment into the newly created account and then enter the adjustment on the worksheet.
B)
If there is no proper account name on the worksheet, she cannot enter the adjustment on the worksheet.
C)
Go back to the Chart of Accounts and add a new account to it. Enter the adjustment into the general journal and then transfer it to the worksheet without having posted it to the general ledger.
D)
Write the name of the account on the first blank line in the worksheet. Enter the adjustment on this line in the Adjustments column and continue with the worksheet. There is no need to go back to the general journal or the general ledger at this time.
E)
None of these is the proper procedure.
3
Braxton Company is a sole proprietorship. Its owner is preparing the accounting worksheet for the 2009 calendar year. The worksheet is the normal 10-column worksheet studied in the chapter. There is a $20,000 adjusted balance in the Owner's Drawings account and the account has its normal or expected balance. What happens to this balance on the worksheet?
A)
The adjusted balance is extended into the debit column of the Income Statement set of columns.
B)
The adjusted balance is extended into the credit side of the Income Statement set of columns.
C)
The adjusted balance is extended into the debit side of the Balance Sheet set of columns.
D)
The adjusted balance is extended into the credit side of the Balance Sheet set of columns.
E)
None of the above.
4
A company's bookkeeper has prepared a worksheet for the 2009 calendar year. He has made all of the adjustments and finished the Adjusted Trial Balance set of columns. He has extended each of the adjusted account balances from the Adjusted Trial Balance columns over into either the Income Statement or the Balance Sheet set of columns as appropriate. He has added up the Income
Statement debit and credit columns and he has added up the Balance Sheet debit and credit columns and has entered the four totals on the appropriate part of the worksheet. He has not made any mistakes up to this point. What can we say about the worksheet at this point in time?
A)
If the company has Net Income for the period, the total debits in the Income Statement columns will equal the total credits in the Income Statement columns at this point in time.
B)
If the company has Net Income for the period, the Income Statement debit column subtotal will be greater than the Income Statement credit column subtotal.
C)
If the company has Net Income for the period, the Income Statement credit column subtotal will be greater than the Income Statement debit column subtotal.
D)
If the company has a Net Income for the period, the Balance Sheet debit column subtotal will be less than the Balance Sheet credit column subtotal.
E)
None of the above.
5
Which of the following sets of accounts are both considered to be temporary accounts which must be closed at the end of the accounting period?
A)
Cash and Service Revenue.
B)
Depreciation Expense and Interest Revenue.
C)
Owner's Drawings and Accounts Payable.
D)
Cash and Notes Payable.
E)
Owner's Equity and Owner's Drawings.
6
As described in the textbook, in what order should the temporary accounts be closed?
A)
(1) expenses, (2) revenues, (3) income summary, and (4) owner's drawings.
B)
(1) owner's drawings, (2) expenses, (3) revenues, and (4) income summary.
C)
(1) revenues, (2) expenses, (3) owner's drawings, and (4) income summary.
D)
(1) revenues, (2) expenses, (3) income summary, and (4) owner's drawings.
E)
None of the above.
7
Which of the following accounts is a temporary account?
A)
Notes Payable.
B)
Unearned Revenue.
C)
Capital, Lola Delong.
D)
Lola Delong, Withdrawals.
E)
Land.
8
A classified balance sheet categorizes assets and liabilities. Which of the following is a typical categorization?
A)
Current assets, current liabilities, noncurrent assets, noncurrent liabilities.
B)
Noncurrent assets, current assets, current liabilities, noncurrent liabilities.
C)
Intangible assets, current assets, current liabilities, noncurrent liabilities.
D)
Current assets, noncurrent assets, current liabilities, noncurrent liabilities.
E)
None of the above.
9
Which of the following is listed on the post-closing trial balance for a sole proprietorship?
A)
Income Summary.
B)
Sales Revenue.
C)
Accumulated Depreciation.
D)
Depreciation Expense.
E)
Salaries Expense.
10
What are the main purposes of the post-closing trial balance?
A)
To make sure all transactions have been correctly recorded in the general journal.
B)
To verify that all the temporary or nominal accounts have zero balances.
C)
To verify that only real accounts continue to have a balance in them and that the sum of all the debit balances in the real accounts is equal to the sum of all the credit balances in the real accounts.
D)
B and C.
E)
All of the above.
11
The subtotals of the Income Statement debit and credit columns of the work sheet are $17,300 and $29,800, respectively. If the subtotal of the Balance Sheet Debit column is $12,800, what should be the subtotal of the Balance Sheet Credit column?
A)
$15,300.
B)
$10,300.
C)
$300.
D)
$2,500.
E)
A total other than the choices shown.
12
Which of the following statements about the accounting cycle is false?
A)
Posting is done after transactions have been analyzed.
B)
Preparing the post-closing trial balance is done after the temporary account have been closed.
C)
Adjusting the accounts is done prior to preparing the adjusted trial balance.
D)
Journalizing the transactions is performed before preparing the unadjusted trial balance.
E)
Financial statements are prepared before preparing the adjusted trial balance.
13
Current assets total $120,000, plant and equipment assets $24,000, current liabilities $48,000, and long-term liabilities $12,000. What is the current ratio of the business?
A)
1.0:1.
B)
2.0:1.
C)
2.5:1.
D)
3.0:1.
E)
None of the above.
14
Current assets total $240,000 and current liabilities total $120,000. The company pays off an accounts payable of $30,000 with cash. How the does the current ratio change after the transaction?
A)
It does not change.
B)
It changes from 2.00:1 to 1.80:1.
C)
It changes from 2.00:1 to 2.25:1.
D)
It changes from 2.00:1 to 2.33:1.
E)
It changes from 2.00:1 to 3.00:1.
15
Optional entries that transfer the balances in balance sheet accounts which arose as a result of certain adjusting entries to income statement accounts is the definition for which term below?
A)
Adjusting entries.
B)
Reversing entries.
C)
Closing entries.
D)
Declarations of cash dividends.
E)
Payment of cash dividends.
Where is net income recorded on the work sheet?
Net income appears in the Balance Sheet credit column and in the Income Statement debit column.
Why is the net income added to the credit side of the balance sheet column Why is the net loss added to the debit side of the balance sheet column?
The net income is transferred to the credit column of the balance sheet because it represents and increase in capital. (An increase in capital is recorded on the credit side of the owner's equity account.)
Is net income a debit or credit on income statement?
If revenues (credits) exceed expenses (debits) then net income is positive and a credit balance. If expenses exceed revenues, then net income is negative (or a net loss) and has a debit balance.
How is net income shown on the balance sheet?
On the balance sheet, net income appears in the retained earnings line item. Net income affects how much equity a business reports on the balance sheet.