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Exam 4: Completing the Accounting Cycle

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Question 41

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Balance sheet accounts are considered to be

A) temporary owner's equity accounts.
B) permanent accounts.
C) capital accounts.
D) nominal accounts.

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Question 42

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Current liabilities are obligations that the company is to pay within the coming year.

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Question 43

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Both correcting entries and adjusting entries always affect at least one balance sheet account and one income statement account.

After all closing entries have been journalized and posted the final step in the accounting cycle is to prepare a ______________ trial balance.

Under IFRS

The income statement for the month of June 2016 of Snap Shot Inc. contains the following information: $\begin{array}{lr}\text { Revenues } &&\$7,300 \\\text { Expenses: } & \\\text { Salaries and Wages Expense } & \$ 3,000 \\\text { Rent Expense } & 1,300 \\\text { Advertising Expense } & 700 \\\text { Supplies Expense } & 200 \\\text { Insurance Expense } & 100 \\\quad \text { Total expenses } &&5,300 \\\text { Net income } &&\$2,000\end{array}$ The entry to close the revenue account includes a

The ______________ of a company is the average time that it takes to purchase inventory sell it on account and then collect cash from customers.

Intangible assets are

The owner's drawings account is closed to the Income Summary account in order to properly determine net income (or loss) for the period.

If errors occur in the recording process they

The following items are taken from the financial statements of the Freight Service for the year ending December 31 2016: $\begin{array}{lr}\text { Accounts payable } & 19,000 \\\text { Accounts receivable } & 13,000 \\\text { Accumulated depreciation - equipment } & 26,000 \\\text { Advertising expense } & 21,200 \\\text { Cash } & 15,000 \\\text { Owner's capital }(1 / 1 / 16) & 104,000 \\\text { Owner's drawings } & 11,000 \\\text { Depreciation expense } & 12,000 \\\text { Equipment } & 210,000 \\\text { Insurance expense } & 3,800\\\text { Note payable, due } 6 / 30 / 17 & 72,000 \\\text { Prepaid insurance (12-month policy) } & 7,200 \\\text { Rent expense } & 16,000 \\\text { Salaries and wages expense } & 32,000 \\\text { Service revenue } & 135,000 \\\text { Supplies } & 5,000 \\\text { Supplies expense } & 6,000 \\\text { Copyright } & 7,500\end{array}$ The sub-classifications for assets on the company's classified balance sheet would include all of the following except

At April 1 2016 Spiderland Company reported a balance of $20000 in the Owner's Capital account. Spiderland Company earned revenues of $50000 and incurred expenses of $32000 during April 2016. The company had owner drawings of $10000 during the month. (a) Prepare the entries to close Income Summary and the Owner's Drawings acccount at April 30 2016. (b) What is the balance in Owner's Capital on the April 30 2016 post-closing trial balance?

The adjustments columns of the worksheet for Mandy Company are shown below. Instructions (a) Prepare the adjusting entries. (b) Assuming the adjusted trial balance amount for each account is normal indicate the financial statement column to which each balance should be extended.

At the end of an accounting period all revenue and expense accounts are closed to a temporary account called ______________.

The following items are taken from the financial statements of the Freight Service for the year ending December 31 2016: $\begin{array}{lr}\text { Accounts payable } & 19,000 \\\text { Accounts receivable } & 13,000 \\\text { Accumulated depreciation-equipment } & 26,000 \\\text { Advertising expense } & 21,200 \\\text { Cash } & 15,000 \\\text { Owner's capital }(1 / 1 / 16) & 104,000 \\\text { Owner's drawings } & 11,000 \\\text { Depreciation expense } & 12,000 \\\text { Equipment } & 210,000\\\text { Insurance expense } & 3,800 \\\text { Note payable, due } 6 / 30 / 17 & 72,000 \\\text { Prepaid insurance (12-month policy) } & 7,200 \\\text { Rent expense } & 16,000 \\\text { Salaries and wages expense } & 32,000 \\\text { Service revenue } & 135,000 \\\text { Supplies } & 5,000 \\\text { Supplies expense } & 6,000\end{array}$ What is the book value of the equipment at December 31 2016?

Which one of the following is an optional step in the accounting cycle of a business enterprise?

The relationship between current assets and current liabilities is important in evaluating a company's

The use of reversing entries

An error has occurred in the closing entry process if

The income statement and balance sheet columns of Beer and Nuts Company's worksheet reflect the following totals: The net income (or loss) for the period is