Exam 4: Review of the Accounting Cycle

Financial statements are prepared using data from the unadjusted trial balance.

Nantucket Corporation has the following income statement accounts for the year ended December 31. Sales \ 750,000 Rent Expense \ 105,000 Salaries Expense 425,000 Utilities Expense 11,000 Dividend Revenue 4,500 Depreciation Expense 16,500 Interest Expense 9,500 Income Tax Expense 38,000 Gain on Sale of Equipment 6,000 Insurance Expense 23,000 Required: Prepare the necessary closing entries for December 31.

Presented is an adjusted trial balance for Steelman Accounting Services, Inc. for December 31 of the current year. Steelman Accounting Services, Inc Adjusted Trial Balance December 31 a. Prepare a single-step income statement. b. Prepare a statement of stockholders' equity. c. Prepare a classified balance sheet.

A simplified version of a ledger account is known as a ________.

Atlas Corporation sold a used machine for less than its carrying value. This transaction results in a(n) ________.

If a prepaid expense is recorded as an expense, and the adjusting entry is not made at the end of the period, assets on the balance sheet will be overstated.

Decreases in equity that result from peripheral transactions of an entity are referred to as ________.

Prepaid expenses may be initially recorded as assets or expenses.

Management InfoSys Incorporated had the following account balances at year end. Sales \ 950,000 Rent Expense \ 115,000 Salaries Expense 435,000 Utilities Expense 11,000 Dividend Revenue 5,500 Depreciation Expense 26,500 Interest Expense 9,500 Income Tax Expense 40,000 Gain on Sale of Equipment 6,000 Insurance Expense 22,000 Required: Prepare the closing entries at December 31.

Revenues and gains will increase retained earnings.

Accumulated other comprehensive income is included in retained earnings.

Murphy Corporation engaged in the following transactions during the month of January. Please analyze these transactions and indicate whether they cause an increase (+) or decrease (-) in the balance sheet and income statement accounts.

When an unearned revenue is initially recorded as a liability, the adjusting entry includes ________.

The post-closing trial balance proves the accuracy of the accounts.

Expense accounts are temporary accounts.

Which of the following accounts has a normal credit balance?

Prepaid expenses may be initially recorded as liabilities or revenues.

After transactions are recorded in the general journal, the next step in the accounting cycle is to ________.

The amounts on a company's unadjusted trial balance are taken from the general ledger.

ABC Corporation issued no-par common stock to its investors for $125,000. The journal entry to record this transaction includes a ________.