Completing the accounting cycle l.jpg
This presentation is the property of its rightful owner.
Sponsored Links
1 / 30

Completing the Accounting Cycle PowerPoint PPT Presentation

Completing the Accounting Cycle Chapter 4 The worksheet helps accountants with all of the following except: Post to the accounts Prepare financial statements Close the accounts Make adjusting entries Answer: 1

Download Presentation

Completing the Accounting Cycle

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Completing the accounting cycle l.jpg

Completing the Accounting Cycle

Chapter 4


The worksheet helps accountants with all of the following except l.jpg

The worksheet helps accountants with all of the following except:

  • Post to the accounts

  • Prepare financial statements

  • Close the accounts

  • Make adjusting entries


Slide3 l.jpg

Answer: 1

The worksheet is a tool that helps accountants organize the end-of-year activities – preparing adjusting and closing entries and the financial statements.


Slide4 l.jpg

On the work sheet, in the balance sheet columns, if the total credits are $600 and total debits are $200, then

  • An error has been made

  • Net loss is $400

  • Total assets are $400

  • Net income is $400


Slide5 l.jpg

Answer: 2

The difference between the debit and credit columns is the amount of net income or loss, which is used to balance the columns. In this case, $400 is needed in the debit column to balance them. A debit indicates that capital is decreasing.


Slide6 l.jpg

Granite Company had revenues of $600 and expenses of $200 during the year. The owner’s beginning capital balance was $1,000, and the owner made no additional investments during the year. What is the balance in the capital account on Granite Company’s worksheet?


Slide7 l.jpg

Answer: $1,000

The capital balance on the worksheet is the amount in the account before closing entries. If the beginning balance was $1,000 and there were no additional investments, $1,000 would appear in the worksheet.


The purpose of closing entries is to l.jpg

The purpose of closing entries is to

  • Get the accounts ready for the next period

  • Verify that the balances in the accounts are correct

  • Ensure that debits equal credits

  • Bring the accounts up to date so that financial statements can be prepared


Slide9 l.jpg

Answer: 1

Closing entries zero out the temporary accounts and transfers their balances to the owner’s capital account. The temporary accounts are now ready to begin measuring activity for the next accounting period.


Which of the following accounts would not be closed l.jpg

Which of the following accounts would not be closed?

  • Utilities Expense

  • Accumulated Depreciation

  • Service Revenue

  • Withdrawals


Slide11 l.jpg

Answer: 2

Accumulated depreciation is a permanent account and is reported on the balance sheet. Permanent account balances carry forward into the next period.


Which of the following is a permanent account l.jpg

Which of the following is a permanent account?

  • Fees earned

  • Unearned revenue

  • Depreciation expense

  • Income summary


Slide13 l.jpg

Answer: 2

Unearned revenue is a liability. It’s balance carries forward into the next accounting period.


Slide14 l.jpg

Revenues for an accounting period are $900 and expenses are $500. The balance in the income summary account before closing it to capital would be

  • $500 debit

  • $900 credit

  • $400 credit

  • $400 debit


Slide15 l.jpg

Answer: 3

Revenues are closed by debiting revenues and crediting income summary. Expenses are closed by debiting income summary and crediting expenses.

Income Summary

900

500

400 Bal


Which account would not appear in the postclosing trial balance l.jpg

Which account would not appear in the postclosing trial balance?

  • Cash

  • Prepaid Insurance

  • Fees earned

  • E. Morgan, Capital


Slide17 l.jpg

Answer: 3

Fees earned is a temporary account and would have been closed before the postclosing trial balance was prepared.


In what order are assets listed on a classified balance sheet l.jpg

In what order are assets listed on a classified balance sheet?

  • In the order of their liquidity

  • Alphabetically

  • In ascending dollar amounts

  • In descending dollars amounts


Slide19 l.jpg

Answer: 1


Slide20 l.jpg

Mica Company has the following assets:Land$600Building800 Inventory300 Accumulated depreciation, Building200 Prepaid rent400 Cash100 How much are total current assets?


Slide21 l.jpg

Answer: $800

Current assets:

Cash$100

Prepaid rent400

Inventory300

$800


Slide22 l.jpg

Mica Company has the following assets:Land…………………………….$600Building…………………………800 Inventory………………………..300 Accumulated depreciation, building………………………….200 Prepaid rent…………………….400 Cash…………………………….100 How much are total plant assets?


Slide23 l.jpg

Answer: $1,200

Current assets:

Land$600

Building800

Less Accumulated depreciation(200)600

$1,200


Slide24 l.jpg

At the end of the accounting period, Quartz Company has a note payable of $82,000. Quartz Company pays $1,000 per month on the principal amount of the note. The company also has $3,000 in accounts payable.How much are total current liabilities?


Slide25 l.jpg

Answer: $15,000

Current liabilities:

Accounts payable$3,000

Currently maturing portionof long-term note12,000

$15,000


A 2 1 current ratio indicates that l.jpg

A 2:1 current ratio indicates that

  • Current assets are two times greater than current liabilities

  • Total assets are two times greater than total liabilities

  • Current liabilities are two times greater than current assets

  • Total liabilities are two times greater than total assets


Slide27 l.jpg

Answer: 1

The current ratio is current assets ÷ current liabilities.


A high debt ratio is l.jpg

A high debt ratio is

  • Safer than a low debt ratio

  • Riskier than a low debt ratio

  • Indicates high profitability

  • Indicates that total assets are considerably higher than total liabilities


Slide29 l.jpg

Answer: 2

  • The debt ratio is computed by dividing total liabilities by total assets. The debt ratio indicates the proportion of a company’s assets that are financed with debt. A low debt ratio is safer than a high debt ratio.


  • Login