Question 1

The balance in Income Summary:

Accepted Answer

A)  Should equal retained earnings. 
B)  Will always be equal to the increase in retained earnings. 
C)  Will equal net income less dividends. 
D)  Will equal net income or net loss. 
A)  Should equal retained earnings. 
B)  Will always be equal to the increase in retained earnings. 
C)  Will equal net income less dividends. 
D)  Will equal net income or net loss.

Question 2

Which of the following journal entries is required to close the Income Summary account of a profitable company?

Accepted Answer

A)  Debit Income Summary, credit Retained earnings. 
B)  Credit Income Summary, debit Retained earnings. 
C)  Debit Income Summary, credit Capital Stock. 
D)  Credit Income Summary, debit Capital Stock. 
A)  Debit Income Summary, credit Retained earnings. 
B)  Credit Income Summary, debit Retained earnings. 
C)  Debit Income Summary, credit Capital Stock. 
D)  Credit Income Summary, debit Capital Stock.

Question 3

Given the following information for the Maple Tree Co. for the year ended December 31, 2009, prepare a Statement of Retained Earnings.

Accepted Answer

The Statement of Ret

Question 4

Refer to the information above. Income Summary will have what balance before it is closed?

Accepted Answer

A)  Zero. 
B)  $11,750. 
C)  $7,250. 
D)  $11,000. 
A)  Zero. 
B)  $11,750. 
C)  $7,250. 
D)  $11,000.

Question 5

Of the following, which is not an alternative title for the income statement?

Accepted Answer

A)  Earnings statement. 
B)  Statement of Operations. 
C)  Profit and Loss Statement. 
D)  Statement of Financial Position. 
A)  Earnings statement. 
B)  Statement of Operations. 
C)  Profit and Loss Statement. 
D)  Statement of Financial Position.

Question 6

Under the Sarbanes-Oxley Act, CFOs and high-ranking corporate officers are now:

Accepted Answer

A)  Personally responsible for the integrity of annual reports. 
B)  Subject of fines of up to $5 million for knowingly making false statements. 
C)  Facing prison sentences of up to 20 years for knowingly making false statements. 
D)  All of the above. 
A)  Personally responsible for the integrity of annual reports. 
B)  Subject of fines of up to $5 million for knowingly making false statements. 
C)  Facing prison sentences of up to 20 years for knowingly making false statements. 
D)  All of the above.

Question 7

Completion of worksheet--missing data
Certain data are given on the worksheet below, and certain missing data are indicated by the blank boxes. Sufficient information is included to fill in the missing data. Each account has a debit or credit balance characteristically normal for that kind of account. Note that the dollar amounts have been reduced to figures of not more than three digits to simplify the arithmetic.
Insert the figures necessary to complete the worksheet in the blanks indicated by an underline. The boxes cover both debit and credit columns; be sure to insert the missing figures in the correct column of the box. If no figure should appear in a column within a box, indicate this by placing a "0" in one or more columns of the box (see sample box opposite Cash).

Accepted Answer

The answer of Completion of worksheet--missing data
Certain data are given...

Question 8

The following information is available: What is the net income percentage? (round to the nearest number)

Accepted Answer

A)  5%. 
B)  15%. 
C)  20%. 
D)  25%. 
A)  5%. 
B)  15%. 
C)  20%. 
D)  25%.

Question 9

At year-end, all equity accounts must be closed.

Accepted Answer

A) True 
 B)False

Question 10

Dividends declared:

Accepted Answer

A)  Reduce retained earnings. 
B)  Increase retained earnings. 
C)  Reduce net income. 
D)  Increase net income. 
A)  Reduce retained earnings. 
B)  Increase retained earnings. 
C)  Reduce net income. 
D)  Increase net income.

Question 11

The normal order in which the financial statements are prepared is:

Accepted Answer

A)  Balance sheet, income statement, statement of retained earnings. 
B)  Income statement, statement of retained earnings, balance sheet. 
C)  Income tax return, income statement, balance sheet. 
D)  Income statement, statement of cash flows, balance sheet. 
A)  Balance sheet, income statement, statement of retained earnings. 
B)  Income statement, statement of retained earnings, balance sheet. 
C)  Income tax return, income statement, balance sheet. 
D)  Income statement, statement of cash flows, balance sheet.

Question 12

An annual report filed with the Securities and Exchange Commission must include a section called "Management's Predictions of Future Earnings."

Accepted Answer

A) True 
 B)False

Question 13

The income summary account appears, as stated, on the statement of retained earnings.

Accepted Answer

A) True 
 B)False

Question 14

Publicly owned companies are typically managed by their stockholders.

Accepted Answer

A) True 
 B)False

Question 15

Adequate disclosure
(a) Briefly explain what is meant by the principle of adequate disclosure.
(b) How does professional judgment enter into the application of the principle of adequate disclosure?
(c) List 5 types of information that a publicly-held corporation generally would be required to provide according to the concept of adequate disclosure.

Accepted Answer

(a) The principle of adequate disclosure

Question 16

Which of the following account titles would not be debited in the process of preparing closing entries for Andrew's Auto Shop?

Accepted Answer

A)  Income Summary. 
B)  Fees Earned. 
C)  Dividends. 
D)  Retained Earnings. 
A)  Income Summary. 
B)  Fees Earned. 
C)  Dividends. 
D)  Retained Earnings.

Question 17

Which account appears on the After-Closing Trial Balance?

Accepted Answer

A)  Service Revenue. 
B)  Unearned Revenue. 
C)  Dividends. 
D)  Retained Earnings, Beginning of Year. 
A)  Service Revenue. 
B)  Unearned Revenue. 
C)  Dividends. 
D)  Retained Earnings, Beginning of Year.

Question 18

If current assets are $180,000 and current liabilities are $130,000, working capital will be:

Accepted Answer

A)  72%. 
B)  $50,000. 
C)  1.4. 
D)  $310,000. 
A)  72%. 
B)  $50,000. 
C)  1.4. 
D)  $310,000.

Question 19

Prepare the closing entries.

Accepted Answer

The answer of Prepare the closing entries.
  ...

Question 20

The worksheet:

Accepted Answer

A)  Is one of the basic financial statements. 
B)  Is prepared throughout the year. 
C)  Is not a formal step in the accounting cycle. 
D)  Starts with the first column being the adjusted trial balance. 
A)  Is one of the basic financial statements. 
B)  Is prepared throughout the year. 
C)  Is not a formal step in the accounting cycle. 
D)  Starts with the first column being the adjusted trial balance.

Exam 5: The Accounting Cycle: Reporting Financial Results

The balance in Income Summary:

Which of the following journal entries is required to close the Income Summary account of a profitable company?

Given the following information for the Maple Tree Co. for the year ended December 31, 2009, prepare a Statement of Retained Earnings.

Refer to the information above. Income Summary will have what balance before it is closed?

Of the following, which is not an alternative title for the income statement?

Under the Sarbanes-Oxley Act, CFOs and high-ranking corporate officers are now:

The following information is available: What is the net income percentage? (round to the nearest number)

At year-end, all equity accounts must be closed.

Dividends declared:

The normal order in which the financial statements are prepared is:

An annual report filed with the Securities and Exchange Commission must include a section called "Management's Predictions of Future Earnings."

The income summary account appears, as stated, on the statement of retained earnings.

Publicly owned companies are typically managed by their stockholders.

Which of the following account titles would not be debited in the process of preparing closing entries for Andrew's Auto Shop?

Which account appears on the After-Closing Trial Balance?

If current assets are $180,000 and current liabilities are $130,000, working capital will be:

Prepare the closing entries.

The worksheet:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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