Question 1

Refer to the information above. Net income for the period equals:

Accepted Answer

A)  $20,960. 
B)  $16,640. 
C)  $21,920. 
D)  $23,360. 
A)  $20,960. 
B)  $16,640. 
C)  $21,920. 
D)  $23,360.

Question 2

In regard to disclosures that are required to be contained in annual reports, the FASB has no well-defined list of items that must be included.

Accepted Answer

A) True 
 B)False

Question 3

The section of the annual report titled "Management Discussion and Analysis" is:

Accepted Answer

A)  Required by the SEC. 
B)  Not required but may be included by management. 
C)  Required by GAAP. 
D)  Reported to the SEC but not included in the annual report. 
A)  Required by the SEC. 
B)  Not required but may be included by management. 
C)  Required by GAAP. 
D)  Reported to the SEC but not included in the annual report.

Question 4

The account, Accumulated Depreciation, is considered a permanent account.

Accepted Answer

A) True 
 B)False

Question 5

The following information is available: What is the return on equity? (round to the nearest number)

Accepted Answer

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

Question 6

The amount of net income (or loss) will appear on the debit side of the Income Statement columns in a worksheet if:

Accepted Answer

A)  Revenue exceeds total expenses for the period. 
B)  The trial balance is out of balance. 
C)  Dividends are more than the income or loss for the period. 
D)  There is a net loss for the period. 
A)  Revenue exceeds total expenses for the period. 
B)  The trial balance is out of balance. 
C)  Dividends are more than the income or loss for the period. 
D)  There is a net loss for the period.

Question 7

Which of the following financial statements is generally prepared first?

Accepted Answer

A)  Income statement. 
B)  Balance sheet. 
C)  Statement of retained earnings. 
D)  Statement of cash flows. 
A)  Income statement. 
B)  Balance sheet. 
C)  Statement of retained earnings. 
D)  Statement of cash flows.

Question 8

Interim financial statements usually report on a period of time greater than one year.

Accepted Answer

A) True 
 B)False

Question 9

For a publicly held company, indicate which of the following activities are likely to occur at or shortly after year-end. (More than one answer may be correct.)

Accepted Answer

A)  Preparing of income tax returns. 
B)  Adjusting and closing the accounts. 
C)  Drafting disclosures that accompany financial statements. 
D)  An audit of the financial statements by a firm of CPAs. 
A)  Preparing of income tax returns. 
B)  Adjusting and closing the accounts. 
C)  Drafting disclosures that accompany financial statements. 
D)  An audit of the financial statements by a firm of CPAs.

Question 10

Materiality
(a) Identify several factors considered by an accountant in deciding whether an item is "material."
(b) Does the concept of materiality complicate or simplify the process of making adjusting entries? Give an illustration to support your answer.

Accepted Answer

The answer of Materiality
(a) Identify several factors considered by an...

Question 11

The current ratio equals current assets plus current liabilities.

Accepted Answer

A) True 
 B)False

Question 12

During the closing process:

Accepted Answer

A)  All income statement accounts are credited to income summary. 
B)  All income statement accounts are debited to income summary. 
C)  All revenue accounts are credited and expense accounts are debited. 
D)  All revenue accounts are debited and expense accounts are credited. 
A)  All income statement accounts are credited to income summary. 
B)  All income statement accounts are debited to income summary. 
C)  All revenue accounts are credited and expense accounts are debited. 
D)  All revenue accounts are debited and expense accounts are credited.

Question 13

Refer to the information above. After closing the accounts, Retained earnings at December 31 equals:

Accepted Answer

A)  $11,000. 
B)  $7,250. 
C)  Zero. 
D)  $22,250. 
A)  $11,000. 
B)  $7,250. 
C)  Zero. 
D)  $22,250.

Question 14

Refer to the information above. The entry to close the Service fees earned account will:

Accepted Answer

A)  Produce a zero balance in that account when posted. 
B)  Include a debit to Income Summary. 
C)  Include a credit to Service Fees Earned. 
D)  Include a debit to Capital Stock. 
A)  Produce a zero balance in that account when posted. 
B)  Include a debit to Income Summary. 
C)  Include a credit to Service Fees Earned. 
D)  Include a debit to Capital Stock.

Question 15

Refer to the information above. The entry to close Salaries expense account will:

Accepted Answer

A)  Produce a zero balance in that account when posted. 
B)  Include a credit to Income Summary. 
C)  Include a debit to Salaries Expense. 
D)  Include a credit to Capital Stock. 
A)  Produce a zero balance in that account when posted. 
B)  Include a credit to Income Summary. 
C)  Include a debit to Salaries Expense. 
D)  Include a credit to Capital Stock.

Question 16

Adjustments and closing process--basic entries
Selected ledger accounts used by Goldstone Advertising, Inc., are listed along with identifying numbers. Following this list of account numbers and titles is a series of transactions. For each transaction, you are to indicate the proper accounts to be debited and credited.
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline 1 & \text { Cash } & 22 & \text { Accounts Payable } & 41 & \text { Fees Earned } \
\hline 2 . & \text { Accounts Receivable } & 23 & \text { Income Taxes Payable } & 51 & \text { Salaries Expense } \
\hline 3 & \text { Office Supplies } & 24 & \text { Unearned Fees } & 52 & \text { Office Supplies Expense } \
\hline 4 & \text { Unexpired Insurance } & 30 & \text { Capital Stock } & 53 & \text { Rent Expense } \
\hline 5 & \text { Office Equipment } & 31 & \text { Retained Earnings } & 54 & \text { Insurance Expense } \
\hline 6 & \text { Accumulated Depr. } & 32 & \text { Dividends } & 55 & \text { Depreciation Expense: } \
\hline & \text { Office Equip } & 35 & \text { Income Summary } & & \text { Office Equip. } \
\hline 21 & \text { Dividends Payable } & & & 56 & \text { Income Taxes Expense } \
\hline & & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of Adjustments and closing process--basic entries
Selected ledger accounts...

Question 17

Which of the following amounts appears in both the Income Statement debit column and the Balance Sheet credit column of a worksheet?

Accepted Answer

A)  Net income. 
B)  Net loss. 
C)  Dividends. 
D)  Retained earnings. 
A)  Net income. 
B)  Net loss. 
C)  Dividends. 
D)  Retained earnings.

Question 18

Adjustments and closing process-basic entries
Selected ledger accounts used by Speedy Truck Rentals, Inc., are listed along with identifying numbers. Following this list of account numbers and titles is a series of transactions. For each transaction, you are to indicate the proper accounts to be debited and credited.
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline 1 & \text { Cash } & 22 & \text { Notes Payable } & 41 & \text { Truck Rental Revenue } \
\hline 2 . & \text { Accounts Receivable } & 23 & \text { Dividends Payable } & 51 & \text { Advertising Expense } \
\hline 3 & \text { Office Supplies } & 24 & \text { Income Taxes Pay. } & 52 & \text { Office Supplies Expense } \
\hline 4 & \text { Unexpired Insurance } & 25 & \text { Unearned Revenue } & 53 & \text { Rent Expense } \
\hline 5 & \text { Trucks } & 31 & \text { Capital Stock } & 54 & \text { Insurance Expense } \
\hline 6 & \text { Accumulated Depr. } & 32 & \text { Retained Earnings } & 55 & \text { Depreciation Expense: } \
\hline & \text { Trucks } & 33 & \text { Dividends } & & \text { Trucks } \
\hline 21 & \text { Accounts Payable } & 35 & \text { Income Summary } & 56 & \text { Income Taxes Expense } \
\hline & & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of Adjustments and closing process-basic entries
Selected ledger accounts...

Question 19

Interim financial statements:

Accepted Answer

A)  Cover a period less than one year. 
B)  Cover only periods of a quarter of a year. 
C)  Cover periods greater than a year. 
D)  Cannot cover a period of one month or less. 
A)  Cover a period less than one year. 
B)  Cover only periods of a quarter of a year. 
C)  Cover periods greater than a year. 
D)  Cannot cover a period of one month or less.

Question 20

Refer to the information above. The total debits in the After Closing-Trial Balance will equal:

Accepted Answer

A)  $23,360. 
B)  $28,640. 
C)  $22,400. 
D)  $6,720. 
A)  $23,360. 
B)  $28,640. 
C)  $22,400. 
D)  $6,720.

Exam 5: The Accounting Cycle: Reporting Financial Results

Refer to the information above. Net income for the period equals:

In regard to disclosures that are required to be contained in annual reports, the FASB has no well-defined list of items that must be included.

The section of the annual report titled "Management Discussion and Analysis" is:

The account, Accumulated Depreciation, is considered a permanent account.

The following information is available: What is the return on equity? (round to the nearest number)

The amount of net income (or loss) will appear on the debit side of the Income Statement columns in a worksheet if:

Which of the following financial statements is generally prepared first?

Interim financial statements usually report on a period of time greater than one year.

For a publicly held company, indicate which of the following activities are likely to occur at or shortly after year-end. (More than one answer may be correct.)

Materiality (a) Identify several factors considered by an accountant in deciding whether an item is "material." (b) Does the concept of materiality complicate or simplify the process of making adjusting entries? Give an illustration to support your answer.

The current ratio equals current assets plus current liabilities.

During the closing process:

Refer to the information above. After closing the accounts, Retained earnings at December 31 equals:

Refer to the information above. The entry to close the Service fees earned account will:

Refer to the information above. The entry to close Salaries expense account will:

Which of the following amounts appears in both the Income Statement debit column and the Balance Sheet credit column of a worksheet?

Interim financial statements:

Refer to the information above. The total debits in the After Closing-Trial Balance will equal:

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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