Question 1

If Income Summary has a net credit balance, it signifies:

Accepted Answer

A)  A net loss. 
B)  Net income. 
C)  A reduction of net worth. 
D)  Dividends have been declared. 
A)  A net loss. 
B)  Net income. 
C)  A reduction of net worth. 
D)  Dividends have been declared.

Question 2

Which account will not appear on an after-closing trial balance?

Accepted Answer

A)  Dividends. 
B)  Prepaid Expenses. 
C)  Unearned Revenue. 
D)  Retained Earnings, at the end of the period. 
A)  Dividends. 
B)  Prepaid Expenses. 
C)  Unearned Revenue. 
D)  Retained Earnings, at the end of the period.

Question 3

The accountant for Sheldrake Consulting prepared the following "Adjusted" Trial Balance at December 31, 2011, after one year of operations:
Prepare closing entries for Sheldrake Consulting.

Accepted Answer

The answer of The accountant for Sheldrake Consulting prepared the...

Question 4

The closing entry for an expense account would consist of a:

Accepted Answer

A)  Debit to Income Summary and a credit to the expense account. 
B)  Debit to the expense account and a credit to Income Summary. 
C)  Credit to Retained Earnings and a debit to the expense account. 
D)  Credit to Revenue and a debit to the expense account. 
A)  Debit to Income Summary and a credit to the expense account. 
B)  Debit to the expense account and a credit to Income Summary. 
C)  Credit to Retained Earnings and a debit to the expense account. 
D)  Credit to Revenue and a debit to the expense account.

Question 5

What types of information must be disclosed in the financial statements?

Accepted Answer

A)  The comprehensive list issued by the FASB. 
B)  Only information that is determined by management. 
C)  Non-financial information that is not included in the basic financial statements. 
D)  Ratio analysis. 
A)  The comprehensive list issued by the FASB. 
B)  Only information that is determined by management. 
C)  Non-financial information that is not included in the basic financial statements. 
D)  Ratio analysis.

Question 6

If current assets are $90,000 and current liabilities are $70,000, the current ratio will be:

Accepted Answer

A)  77%. 
B)  $20,000. 
C)  1.3. 
D)  $160,000. 
A)  77%. 
B)  $20,000. 
C)  1.3. 
D)  $160,000.

Question 7

The return on equity ratio equals net income divided by common stock.

Accepted Answer

A) True 
 B)False

Question 8

The dividends account should be:

Accepted Answer

A)  Closed to income summary. 
B)  Closed to retained earnings. 
C)  Closed only if there is a profit. 
D)  Not closed at all. 
A)  Closed to income summary. 
B)  Closed to retained earnings. 
C)  Closed only if there is a profit. 
D)  Not closed at all.

Question 9

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

Accepted Answer

A)  $11,600. 
B)  $22,000. 
C)  $22,500. 
D)  $36,750. 
A)  $11,600. 
B)  $22,000. 
C)  $22,500. 
D)  $36,750.

Question 10

If monthly financial statements are desired by management:

Accepted Answer

A)  Journalizing and posting adjusting entries must be done each month. 
B)  Journalizing and posting closing entries must be done each month. 
C)  Monthly financial statements can be prepared from worksheets; adjustments and closing entries need not be entered in the accounting records. 
D)  Adjusting and closing entries must be entered in the accounting records before preparation of interim financial statements. 
A)  Journalizing and posting adjusting entries must be done each month. 
B)  Journalizing and posting closing entries must be done each month. 
C)  Monthly financial statements can be prepared from worksheets; adjustments and closing entries need not be entered in the accounting records. 
D)  Adjusting and closing entries must be entered in the accounting records before preparation of interim financial statements.

Question 11

If a business closes its accounts only at year-end:

Accepted Answer

A)  Financial statements are prepared only at year-end. 
B)  Adjusting entries are made only at year-end. 
C)  Revenue and expense accounts reflect year-to-date amounts throughout the year. 
D)  Monthly and quarterly financial statements cannot be prepared. 
A)  Financial statements are prepared only at year-end. 
B)  Adjusting entries are made only at year-end. 
C)  Revenue and expense accounts reflect year-to-date amounts throughout the year. 
D)  Monthly and quarterly financial statements cannot be prepared.

Question 12

Which of the following accounts will be closed to Income Summary?

Accepted Answer

A)  Prepaid Expenses. 
B)  Unearned Revenue. 
C)  Dividends. 
D)  Earned Revenue. 
A)  Prepaid Expenses. 
B)  Unearned Revenue. 
C)  Dividends. 
D)  Earned Revenue.

Question 13

Financial statements are usually prepared before the closing entries are made.

Accepted Answer

A) True 
 B)False

Question 14

Which accounts are closed to Income Summary?

Accepted Answer

A)  All accounts. 
B)  Revenue and expenses. 
C)  Revenue, expenses, and dividends. 
D)  All accounts that are not nominal. 
A)  All accounts. 
B)  Revenue and expenses. 
C)  Revenue, expenses, and dividends. 
D)  All accounts that are not nominal.

Question 15

IFRS 1 requires that management and auditors should depart from compliance with GAAP if it is necessary to achieve a fair presentation when reporting financial results.

Accepted Answer

A) True 
 B)False

Question 16

The accountant for Successful Consulting prepared the following "Adjusted" Trial Balance at December 31, 20 __ after one year of operations:
 
Prepare an After-Closing Trial Balance.

Accepted Answer

The answer of The accountant for Successful Consulting prepared the...

Question 17

When closing the accounts at the end of the period, which of the following is closed directly into the Retained Earnings account?

Accepted Answer

A)  Depreciation Expense. 
B)  Accumulated Depreciation. 
C)  Revenue and liability accounts. 
D)  The Income Summary account. 
A)  Depreciation Expense. 
B)  Accumulated Depreciation. 
C)  Revenue and liability accounts. 
D)  The Income Summary account.

Question 18

When a worksheet is used:

Accepted Answer

A)  Adjusting entries are not prepared, since adjustments are shown on the worksheet. 
B)  Revenue and expense accounts do not have to be closed to the Income Summary account, because the income statement is prepared from the worksheet and net income is already computed. 
C)  Financial statements may be prepared before recording adjusting and closing entries in the accounting records. 
D)  The Income Statement column and Balance Sheet column of the worksheet eliminate the need to prepare formal financial statements for a business. 
A)  Adjusting entries are not prepared, since adjustments are shown on the worksheet. 
B)  Revenue and expense accounts do not have to be closed to the Income Summary account, because the income statement is prepared from the worksheet and net income is already computed. 
C)  Financial statements may be prepared before recording adjusting and closing entries in the accounting records. 
D)  The Income Statement column and Balance Sheet column of the worksheet eliminate the need to prepare formal financial statements for a business.

Question 19

Dividends will have what effect upon retained earnings?

Accepted Answer

A)  Increase. 
B)  Decrease. 
C)  No effect. 
D)  Depends upon if there is income or loss. 
A)  Increase. 
B)  Decrease. 
C)  No effect. 
D)  Depends upon if there is income or loss.

Question 20

Which of the following accounts would never be reported in the income statement as an expense?

Accepted Answer

A)  Depreciation expense. 
B)  Income taxes expense. 
C)  Interest expense. 
D)  Dividends expense. 
A)  Depreciation expense. 
B)  Income taxes expense. 
C)  Interest expense. 
D)  Dividends expense.

Exam 5: The Accounting Cycle: Reporting Financial Results

If Income Summary has a net credit balance, it signifies:

Which account will not appear on an after-closing trial balance?

The accountant for Sheldrake Consulting prepared the following "Adjusted" Trial Balance at December 31, 2011, after one year of operations: Prepare closing entries for Sheldrake Consulting.

The closing entry for an expense account would consist of a:

What types of information must be disclosed in the financial statements?

If current assets are $90,000 and current liabilities are $70,000, the current ratio will be:

The return on equity ratio equals net income divided by common stock.

The dividends account should be:

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

If monthly financial statements are desired by management:

If a business closes its accounts only at year-end:

Which of the following accounts will be closed to Income Summary?

Financial statements are usually prepared before the closing entries are made.

Which accounts are closed to Income Summary?

IFRS 1 requires that management and auditors should depart from compliance with GAAP if it is necessary to achieve a fair presentation when reporting financial results.

The accountant for Successful Consulting prepared the following "Adjusted" Trial Balance at December 31, 20 __ after one year of operations: Prepare an After-Closing Trial Balance.

When closing the accounts at the end of the period, which of the following is closed directly into the Retained Earnings account?

When a worksheet is used:

Dividends will have what effect upon retained earnings?

Which of the following accounts would never be reported in the income statement as an expense?

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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