Question 1

The trial balance is used to prepare the post-closing trial balance.

Accepted Answer

A) True 
 B)False

Question 2

When closing income statement accounts having credit balances, which of the following accounts will also be closed?

Accepted Answer

A)  Sales Returns and Allowances 
B)  Purchases Discount 
C)  Accounts Receivable 
D)  Unearned Revenue 
A)  Sales Returns and Allowances 
B)  Purchases Discount 
C)  Accounts Receivable 
D)  Unearned Revenue

Question 3

Net Sales are:

Accepted Answer

A)  Gross Sales + Sales Discounts + Sales Returns and Allowances. 
B)  Gross Sales - Sales Discounts - Sales Returns and Allowances. 
C)  Revenue - Sales Discounts + Sales Returns and Allowances. 
D)  Gross Sales + Sales Discounts - Sales Returns and Allowances. 
A)  Gross Sales + Sales Discounts + Sales Returns and Allowances. 
B)  Gross Sales - Sales Discounts - Sales Returns and Allowances. 
C)  Revenue - Sales Discounts + Sales Returns and Allowances. 
D)  Gross Sales + Sales Discounts - Sales Returns and Allowances.

Question 4

To determine how much merchandise was returned from a company's customers, the company should review the:

Accepted Answer

A)  Purchases Returns and Allowances Account. 
B)  Merchandise Inventory Account. 
C)  Sales Returns and Allowances Account. 
D)  Freight-in. 
A)  Purchases Returns and Allowances Account. 
B)  Merchandise Inventory Account. 
C)  Sales Returns and Allowances Account. 
D)  Freight-in.

Question 5

Not all adjusting entries can be reversed.

Accepted Answer

A) True 
 B)False

Question 6

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement on which the account balance is reported, and in Column 4 the account's nature (permanent/temporary).
-

Accepted Answer

The answer of For each of the following, identify in...

Question 7

An item that can be converted into cash or used up during the normal operating cycle is:

Accepted Answer

A)  a current asset. 
B)  Revenue. 
C)  a current liability. 
D)  an expense. 
A)  a current asset. 
B)  Revenue. 
C)  a current liability. 
D)  an expense.

Question 8

The formal income statement can be prepared from the balance sheet columns of the worksheet.

Accepted Answer

A) True 
 B)False

Question 9

The reversing entry for Salaries is:

Accepted Answer

A)  debit Salaries Expense; credit Salaries Payable. 
B)  debit Salaries Payable; credit Capital. 
C)  debit Salaries Payable; credit Salaries Expense. 
D)  debit Salaries Expense; credit Accounts Payable. 
A)  debit Salaries Expense; credit Salaries Payable. 
B)  debit Salaries Payable; credit Capital. 
C)  debit Salaries Payable; credit Salaries Expense. 
D)  debit Salaries Expense; credit Accounts Payable.

Question 10

Merchandise purchased for resale under the perpetual inventory method is added to:

Accepted Answer

A)  Merchandise Inventory. 
B)  Sales. 
C)  Purchases. 
D)  Supplies Expense. 
A)  Merchandise Inventory. 
B)  Sales. 
C)  Purchases. 
D)  Supplies Expense.

Question 11

Income Summary, before closing to Capital, contains a debit balance of $190 and a credit balance of $270. What is the entry to close Income Summary to Capital?

Accepted Answer

A)  Debit Income Summary $190; credit Capital $270 
B)  Debit Income Summary $80 credit Capital $190 
C)  Debit Capital $80; credit Income Summary $80 
D)  Debit Income Summary $80; credit Capital $80 
A)  Debit Income Summary $190; credit Capital $270 
B)  Debit Income Summary $80 credit Capital $190 
C)  Debit Capital $80; credit Income Summary $80 
D)  Debit Income Summary $80; credit Capital $80

Question 12

Reversing entries are done when assets or liabilities are increasing and have no previous balance.

Accepted Answer

A) True 
 B)False

Question 13

Discuss the purpose of a detailed income statement. Briefly describe the major kinds of business activities covered on a detailed income statement.

Accepted Answer

A detailed income statement provides inf

Question 14

The entry to record the adjustment for depreciation on equipment would be a debit to Depreciation Expense-Equipment and a credit to Equipment.

Accepted Answer

A) True 
 B)False

Question 15

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement on which the account balance is reported, and in Column 4 the account's nature (permanent/temporary).
-

Accepted Answer

The answer of For each of the following, identify in...

Question 16

Reversing entries occur at the beginning of the accounting period and:

Accepted Answer

A)  help to reduce potential errors. 
B)  simplify the bookkeeping associated with accruals from the prior period. 
C)  reverse the adjusting entries. 
D)  All of the above are correct. 
A)  help to reduce potential errors. 
B)  simplify the bookkeeping associated with accruals from the prior period. 
C)  reverse the adjusting entries. 
D)  All of the above are correct.

Question 17

The entry to close the Freight-in account will include which of the following?

Accepted Answer

A)  Debit to Purchases 
B)  Credit to Income Summary 
C)  Debit to Income Summary 
D)  Debit to Freight-Out 
A)  Debit to Purchases 
B)  Credit to Income Summary 
C)  Debit to Income Summary 
D)  Debit to Freight-Out

Question 18

How is Income Summary closed if the company had a net loss?

Accepted Answer

A)  Credit Income Summary; debit Capital 
B)  Debit Income Summary; credit Capital 
C)  Debit Capital; credit Revenue 
D)  Debit Withdrawals; credit Capital 
A)  Credit Income Summary; debit Capital 
B)  Debit Income Summary; credit Capital 
C)  Debit Capital; credit Revenue 
D)  Debit Withdrawals; credit Capital

Question 19

Administration expenses are found in the Operating Expense section of the income statement.

Accepted Answer

A) True 
 B)False

Question 20

The average time it takes to buy and sell merchandise and collect Accounts Receivable is the sales cycle for a business.

Accepted Answer

A) True 
 B)False

Exam 12: Completion of the Accounting Cycle for a Merchandise Company

The trial balance is used to prepare the post-closing trial balance.

When closing income statement accounts having credit balances, which of the following accounts will also be closed?

Net Sales are:

To determine how much merchandise was returned from a company's customers, the company should review the:

Not all adjusting entries can be reversed.

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement on which the account balance is reported, and in Column 4 the account's nature (permanent/temporary). -

An item that can be converted into cash or used up during the normal operating cycle is:

The formal income statement can be prepared from the balance sheet columns of the worksheet.

The reversing entry for Salaries is:

Merchandise purchased for resale under the perpetual inventory method is added to:

Income Summary, before closing to Capital, contains a debit balance of $190 and a credit balance of $270. What is the entry to close Income Summary to Capital?

Reversing entries are done when assets or liabilities are increasing and have no previous balance.

Discuss the purpose of a detailed income statement. Briefly describe the major kinds of business activities covered on a detailed income statement.

The entry to record the adjustment for depreciation on equipment would be a debit to Depreciation Expense-Equipment and a credit to Equipment.

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement on which the account balance is reported, and in Column 4 the account's nature (permanent/temporary). -

Reversing entries occur at the beginning of the accounting period and:

The entry to close the Freight-in account will include which of the following?

How is Income Summary closed if the company had a net loss?

Administration expenses are found in the Operating Expense section of the income statement.

The average time it takes to buy and sell merchandise and collect Accounts Receivable is the sales cycle for a business.

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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