Chapter 4 Homework

A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired rent of $200. This adjusting entry results in: A. $200 decrease in net income. B. $200 increase in net income. C. $200 difference between the debit and credit columns of the Unadjusted Trial Balance. D. $200 of prepaid insurance. E. An error in the financial statements.

A. $200 decrease in net income.

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750. The Adjustments columns show a credit of $425 for supplies used during the period. The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is: A. $325 debit. B. $325 credit. C. $425 debit. D. $750 debit. E. $425 credit.

A. $325 debit.

When closing entries are made: A. All ledger accounts are closed to start the new accounting period. B. All temporary accounts are closed but permanent accounts are not closed. C. All asset accounts are closed but liability accounts are not closed. D. All permanent accounts are closed but temporary accounts are not closed. E. All balance sheet accounts are closed.

B. All temporary accounts are closed but permanent accounts are not closed.

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owner's capital account for the events of the period just finished are referred to as: A. Adjusting entries. B. Closing entries C. Final entries. D. Work sheet entries. E. Updating entries.

B. Closing entries

K. Canopy, the proprietor of Canopy Services, withdrew $5,700 from the business during the current year. The entry to close the withdrawals account at the end of the year is: A. Debit K Canopy, Withdrawals $5,700; credit Cash, $5,700 B. Debit K. Canopy, Capital $5,700; credit K. Canopy, Withdrawals $5,700 C. Debit K. Canopy, Withdrawals $5,700; credit K. Canopy, Capital $5,700 D. Debit K. Canopy, Capital $5,700, credit Salary Expense $5,700 E. Debit Income Summary $5,700; credit K. Canopy, Capital $5,700

B. Debit K. Canopy, Capital $5,700; credit K. Canopy, Withdrawals $5,700

Which of the following accounts is a temporary account: A. Accounts receivable. B. J. Jones, capital. C. Accounts payable. D. Cash. E. Salaries expense.

B. J. Jones, capital.

The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments columns contain entries for the following: 1. Office supplies used during the period, $1,200. 2. Expiration of prepaid rent, $700. 3. Accrued salaries expense, $500. 4. Depreciation expense, $800. 5. Accrued service fees receivable, $400. 6. The Adjusted Trial Balance columns total is: A. $80,400. B. $84,000. C. $85,700. D. $85,900. E. $87,600.

C. $85,700.

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The ending owner's capital balance after closing is: A. $185,000 B. $63,300 C. $81,300 D. $360,300 E. $378,300

D. $360,300

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The Net Income for the year is: A. $185,000 B. $63,300 C. $81,300 D. $360,300 E. $378,300

D. $360,300 (EDIT WRONG)

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is: A. Debit T. Westmont, Capital $297,000; credit Income Summary $297,000 B. Debit T. Westmont, Capital $63,300; credit Income Summary $63,300 C. Debit Income Summary $63,300; credit T. Westmont, Capital $63,300 D. Debit Income Summary $81,300, credit T. Westmont, Capital $81,300 E. Debit T. Westmont, Capital $81,300; credit Income Summary $81,300

D. Debit Income Summary $81,300, credit T. Westmont, Capital $81,300