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Exam 4: Completing the Accounting Cycle

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Question 1

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Which of the following is classified as a current asset?

A) Office supplies.
B) Patent.
C) Office equipment.
D) Land.
E) Unearned revenue.

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Question 2

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If a company plans to continue business into the future, closing entries are not required.

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Question 3

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Statements that show the financial statements as if proposed transactions had already occurred are called:

Which of the following statements is incorrect?

The assets section of a classified balance sheet usually includes the subgroups:

Flagg records adjusting entries at its December 31 year end. At December 31, employees had earned $12,000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $30,000 will be paid. Prepare the journal on January 3 to record payment assuming the adjusting and reversing entries were made on December 31 and January 1.

Flagg records adjusting entries at its December 31 year end. At December 31, employees had earned $12,000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $30,000 will be paid. Prepare the January 1 journal entry to reverse the effect of the December 31 salary expense accrual.

A benefit of using a work sheet is that it aids in the preparation of the financial statements.

Current liabilities are cash and other resources that are expected to be sold, collected or used within one year or the company's operating cycle whichever is longer.

Permanent accounts include all of the following except:

Closing entries result in the owner's capital account being transferred into net income or net loss for the period ending.

The usual order for the asset subgroups of a classified balance sheet is:

At the beginning of the year, a company's balance sheet reported the following balances: Total Assets = $225,000; Total Liabilities = $125,000; and Owner's Capital = $100,000. During the year, the company reported revenues of $46,000 and expenses of $30,000. In addition, owner's withdrawals for the year totaled $20,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of the year would be:

The F. Mercury, Capital account has a credit balance of $37,000 before closing entries are made. Total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $9,000. What is the correct closing entry for the revenue accounts? A)Debit Revenue accounts $55,200; credit Income Summary $55,200. B)Debit Revenue accounts $55,200; credit F. Mercury, Capital $37,000. C)Debit Revenue accounts $37,000; credit F. Mercury, Capital $37,000. D)Debit Income Summary $55,200; credit Revenue accounts $55,200. E)Debit Income Summary $37,000; credit F. Mercury Capital $37,000.

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owner's capital account for the events of the period just finished are referred to as:

Normally closing entries are first entered in the general journal and then posted to the work sheet.

Palmer Company is at the end of its annual accounting period. The accountant has journalized and posted all external transactions and all adjusting entries, has prepared an adjusted trial balance, and completed the financial statements. The next step in the accounting cycle is:

When there is a net loss, the Income Summary account would have a credit balance.

What is the purpose of closing entries? Describe the closing process.

Long-term investments can include land held for future expansion.