Exam 4: Completing the Accounting Cycle

Journalizing and posting closing entries must be completed before financial statements can be prepared.

You evaluate loan requests as part of your job at Eastwood National Bank.One loan request you received is from Surfer Dude Supplies,a small company.Richard Tracy,the CEO,is requesting $105,000 and brings you a trial balance or statement of accounts for his first year of operations ended December 31. While you are willing to work with Richard,how would you explain to him that a complete set of financial statements from his accountant would be more useful for evaluating the loan request?

Which of the accounts below would not appear in the balance sheet columns of the end-of-period spreadsheet?

Which of the statements below indicates that a company earned a net income for the period?

The income summary account is closed to the retained earnings account.

The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements.

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { Stockton Company }$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { Adjusted Trial Balance }$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { December } 31$ Cash 7,530 Accounts Receivable 2,100 Prepaid Expenses 700 Equipment 13,700 Accumulated Depreciation 1,100 Accounts Payable 1,900 Notes Payable 4,300 Common Stock 1,000 Retained Earnings 12,940 Dividends 790 Fees Earned 9,250 Wages Expense 2,500 Rent Expense 1,960 Utilities Expense 775 Depreciation Expense 250 Miscellaneous Expense 185 Totals 30,490 30,490 -Determine the current assets.

Describe a classified balance sheet.

After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet,the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net Loss.

The income statement should be prepared

If end-of-period spreadsheets are not considered part of the formal accounting records,then why are they used?

During the current year,Austin Enterprise shareholders invested $8,000 in the business.Based on the following end-of-year spreadsheet,prepare an income statement for Austin Enterprises for the year ended December 31.

The usual presentation of the retained earnings statement is 1 Beginning balance,2 Net income or loss,3 Dividends,4 Stockholders' contributions,5 Ending balance.

The end-of-period spreadsheet work sheet for the current year for Jamal Company shows Balance Sheet columns with a debit total of $630,430 and a credit total of $614,210.This is before the amount for net income or net loss has been included.In preparing the income statement from the end-of-period spreadsheet,what is the amount of net income or net loss?

The accumulated depreciation account is closed to the income summary account.

The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work sheet.Indicate whether each balance should be extended to a the Income Statement columns or b the Balance Sheet columns.

Real accounts are not permanent accounts.

Shores Sports rents canoes and kayaks.Below is the adjusted trial balance at December 31. Debit Credit Cash 1,500 Accounts Receivable 2,000 Interest Receivable 100 Prepaid Insurance 1,600 Notes Receivable Long-Term 2,800 Equipment 15,000 Accumulated Depreciation 3,000 Accounts Payable 2,400 Accrued Expenses Payable 3,920 Income Taxes Payable 2,700 Unearned Rent Fees 500 Common Stock 7,700 Dividends 2,000 Rent Fees Earned 37,000 Furniture Rental Revenue 1,200 Interest Revenue 100 Wages Expense 19,000 Depreciation Expense 1,800 Utilities Expense 320 nsurance Expense 700 Maintenance Expense 9,000 ncome Tax Expense Totals The entry required to close the expense accounts at the end of the period includes a:

The post-closing trial balance will generally have fewer accounts than the trial balance.

The first item appearing on the statement of retained earnings is