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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

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Completing the Accounting Cycle


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the worksheet helps accountants with all of the following except
The worksheet helps accountants with all of the following except:
  • Post to the accounts
  • Prepare financial statements
  • Close the accounts
  • Make adjusting entries
slide3
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
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
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

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
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
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
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
Which of the following accounts would not be closed?
  • Utilities Expense
  • Accumulated Depreciation
  • Service Revenue
  • Withdrawals
slide11
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
Which of the following is a permanent account?
  • Fees earned
  • Unearned revenue
  • Depreciation expense
  • Income summary
slide13
Answer: 2

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

slide14

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
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
Which account would not appear in the postclosing trial balance?
  • Cash
  • Prepaid Insurance
  • Fees earned
  • E. Morgan, Capital
slide17
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
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
slide20

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

slide21
Answer: $800

Current assets:

Cash $100

Prepaid rent 400

Inventory 300

$800

slide22

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

slide23
Answer: $1,200

Current assets:

Land $600

Building 800

Less Accumulated depreciation (200) 600

$1,200

slide24

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
Answer: $15,000

Current liabilities:

Accounts payable $3,000

Currently maturing portionof long-term note 12,000

$15,000

a 2 1 current ratio indicates that
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
Answer: 1

The current ratio is current assets ÷ current liabilities.

a high debt ratio is
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
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.