chapter 4 accy 201

After all of the account balances have been extended to the Income Statement columns of the end-of-period spreadsheet, the totals of the Debit and Credit columns are $20,832 and $32,606, respectively. What is the amount of the net income or net loss for the period?

$11,774 net income Net income (excess of revenues over expenses) = Total of Income Statement Credit column (revenues) - Total of Income Statement Debit column (expenses) = $32,606 - $20,832 = $11,774

Working capital is

.the excess of the current assets of a business over its current liabilities.

The numerator in the current ratio calculation is

Current Assets.

Which of the following are examples of subsections found on a classified balance sheet?

Current assets; long-term liabilities; property, plant, and equipment

The following are some of the steps in the accounting cycle. Which of the following reflects the steps in the correct order? A) Financial statements are prepared. B) An unadjusted trial balance is prepared. C) Closing entries are journalized and posted to the ledger. D) Journalized business transactions are posted to the ledger. E) A post-closing trial balance is prepared.

D, B, A, C, E

Which of the following is not an actual step in the accounting cycle?

Decisions of managers are made after reviewing the financial statements.

Which of the accounts below would be closed by posting a debit to the account?

Fees Earned

The annual accounting period (fiscal year) most commonly adopted by businesses is

January 1 to December 31.

Which of the following will increase retained earnings on the retained earnings statement?

Net income only

Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?

Prepaid Insurance

Which of the following accounts will not be closed at the end of the accounting cycle?

Real accounts

Which of the following accounts will be closed with a debit?

Rent Revenue

In which of the following steps of the accounting cycle will the clearing account be used?

Step 9: Journalizing and posting closing entries

Why is it favorable to select a fiscal year that ends when the operating cycle is at its lowest point?

The business has more time to analyze the results of operations and to prepare financial statements.

What is the major difference between the post-closing trial balance and the other two trial balances?

The post-closing trial balance is the only one to include only real accounts.

The balance of the dividends account on the adjusted trial balance of the end-of-period spreadsheet flows into which of the following financial statements?

The retained earnings statement

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

The sum of the credits exceeds the sum of the debits in the Income Statement columns on the end-of-period spreadsheet.

Of the following steps of the accounting cycle, which step should be completed first?

Transactions are posted to the ledger.

Which of the following accounts ordinarily appears in the post-closing trial balance?

Unearned Rent

The journal entry to record $6,000 cash received for $7,000 services performed would include

a credit to Fees Earned for $7,000.

Using an end-of-period spreadsheet, the flow of accounting information moves from the.

a.adjusted trial balance to the financial statements.

The balance sheet should be prepared

after the income statement and the retained earnings statement

Unearned Fees appear on the

balance sheet as a current liability

The listing of expenses on the income statement is ordered

by size, beginning with the largest item and putting miscellaneous expense as the last item.

The classified balance sheet will show which liability subsections?

current liabilities and long-term liabilities

The journal entry to record a payment of dividends includes a

debit to Dividends.

On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the end-of-period spreadsheet would

decrease a liability account

The post-closing trial balance differs from the adjusted trial balance in that it does not

include income statement accounts

Closing entries

must be journalized and posted

Which one of the steps below is not aided by the preparation of the end-of-period spreadsheet?

posting to the general ledger

The ability of a business to pay its debts is called

solvency.

An indication that the end-of-period spreadsheet columns are in balance and the spreadsheet is complete is

the double rule under each pair of columns

The purpose of the post-closing trial balance is

to verify that the ledger is in balance at the beginning of the next period.

Debts listed as current liabilities are those that

will be paid in less than one year

On the end-of-period spreadsheet, Accumulated Depreciation has a balance of $600 in the Unadjusted Trial Balance column and an adjustment of $200 in the Adjustments Credit column. What amount should appear for Accumulated Depreciation in the Adjusted Trial Balance column?

A credit of $800

Which of the following is true regarding the end-of-period spreadsheet?

Amounts are read across a row and added or subtracted to determine the amounts to insert in the Adjusted Trial Balance columns.

Of the following, which step is not a requirement during the accounting cycle?

An end-of-period spreadsheet is prepared.