Exam 4: Completing the Accounting Cycle

In the process of completing a work sheet,you determine that the Income Statement debit column totals $83,000,while the Income Statement credit column totals $65,000.To enter net income (or net loss)for the period into the work sheet would require an entry to

Listed below are a number of accounts.Use the table below to classify each account.Indicate whether it is a temporary or permanent account,whether it is included in the Income Statement or Balance sheet,and if it is closed at the end of the accounting period,and,if so,how it is closed.The first one is done as an example.

The Income Summary account is used:

After preparing and posting the closing entries to close revenues (and gains)and expenses (and losses),the income summary account has a debit balance of $33,000.The entry to close the income summary account will include:

When expenses exceed revenues,there is a net loss and the Income Summary account would have a credit balance.

The current ratio is used to help assess a company's ability to pay its debts in the near future.

Assets are often classified into current assets,long-term investments,plant assets,and intangible assets.

It is obvious that an error occurred in the preparation and/or posting of closing entries if:

Journalizing and posting closing entries is a required step in the accounting cycle.Explain why it is necessary to close the books at the end of an accounting period.

Reversing entries are linked to ____________________ and _____________ that were created by adjusting entries at the end of the prior accounting period.

Following are selected accounts and their balances for a company after the adjustments as of May 31,the end of its fiscal year.(All accounts have normal balances.) Prepare all the necessary closing entries for this company.

The purpose of reversing entries is to:

The aim of a post-closing trial balance is to verify that (1)total debits equal total credits for temporary accounts,and (2)all temporary accounts have zero balances.

After posting the entries to close all revenue accounts and all expense accounts,the Income Summary account of Waif Services has a $4,000 debit balance.This result implies that Waif Services earned a net income of $4,000.

Cash and office supplies are both classified as current assets.

In the table below,indicate with an "X" in the proper column whether the account is a temporary (nominal)account or a permanent (real)account.

Calculate the current ratio in each of the following separate cases.

Which of the following statements is true?

A current ratio of 2.1 suggests that a company has ____________ current assets to cover current liabilities.

An expense account is normally closed by debiting Income Summary and crediting the expense account.