Chapter 4 Adaptive Study Pre-Test

Based on the following information, determine the amount of equipment on the balance sheet. Total liabilities and owner's equity equals $44,750; total current assets equals $19,800; land equals $15,000; and accumulated depreciation—equipment equals $1,550. a.$11,500 b.$8,400 c.$3,250 d.None of these choices are correct.

$11,500

Which of the following steps is optional during the closing process? a.An end-of-period spreadsheet is prepared. b.Adjusting entries are journalized and posted to the ledger. c.A post-closing trial balance is prepared. d.An unadjusted trial balance is prepared.

An end-of-period spreadsheet is prepared.

The following are income and expense items on the adjusted trial balance of Barker Company: Fees Earned $18,791 Rent Expense 4,600 Wages Expense 5,678 Miscellaneous Expense 440 Which of the following will be included in the entry to close revenue and expenses? a.Credit to Owner Capital for $4,600 b.Debit to Owner Capital for $8,073 c.Debit to Owner Capital for $440 d.Credit to Owner Capital for $8,073

Credit to Owner Capital for $8,073

The following are income and expense items on the adjusted trial balance of NW Company: Fees Earned $18,944 Rent Expense 4,500 Wages Expense 5,678 Miscellaneous Expense 340 Which of the following will be included in the entry to close revenue and expenses? a.Credit to Owner Capital for $4,500 b.Debit to Owner Capital for $8,426 c.Debit to Owner Capital for $340 d.Credit to Owner Capital for $8,426

Credit to Owner Capital for $8,426

Which of the following are examples of subsections found on a classified balance sheet? a.Owner's Equity; Liabilities; Property, Plant, and Equipment b.Assets; Current Assets; Long-Term Liabilities c.Liabilities; Long-Term Liabilities; Owner's Equity d.Current Assets; Long-Term Liabilities; Property, Plant, and Equipment

Current Assets; Long-Term Liabilities; Property, Plant, and Equipment

Which of the following is not an actual step in the accounting cycle? a.Financial statements are prepared. b.Decisions are made after reviewing the financial statements. c.Transactions are analyzed and recorded in the journal. d.Closing entries are journalized and posted to the ledger.

Decisions are made after reviewing the financial statements.

Which of the following accounts will be closed with a debit? a.Miscellaneous Expense b.Notes Receivable c.Rent Revenue d.Cash

Rent Revenue

In which of the following steps of the accounting cycle will the owner capital account be used? a.Step 10: Preparing a post-closing trial balance b.Step 3: Preparing an unadjusted trial balance c.Step 9: Journalizing and posting closing entries d.Step 5: Preparing an optional end-of-period spreadsheet

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? a.The managers can evaluate the worst scenario of the business at its lowest point. b.The business has more time to analyze the results of operations and to prepare financial statements. c.There will be fewer accounts that need to be closed at that time. d.It will result in lower taxes.

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? a.The unadjusted and adjusted trial balances are optional reports. b.The post-closing trial balance is prepared to verify the equality of debits and credits. c.The unadjusted and adjusted trial balances are not part of the accounting cycle. d.The post-closing trial balance is the only one to include only real accounts.

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

Which of the following is true regarding the flow of information from the adjusted trial balance on the end-of-period spreadsheet? a.The revenue and expense account balances flow into the statement of owner's equity. b.The asset and liability account balances flow into the statement of owner's equity. c.The revenue and expense account balances flow into the income statement. d.The owner's equity and drawing account balances flow into the balance sheet.

The revenue and expense account balances flow into the income statement.

When pulling the owner's capital balance from the end-of-period spreadsheet into the statement of owner's equity, why is it also important to check the detail in the owner's capital account in the general ledger? a.There may have been additional losses incurred during the year reflected in the balance. b.There may have been additional investments made during the year reflected in the balance. c.There may have been additional revenue made during the year reflected in the balance. d.There may have been additional withdrawals made during the year reflected in the balance.

There may have been additional investments made during the year reflected in the balance.

The journal entry to record an owner withdrawal of funds for personal use includes a a.credit to the owner's capital account. b.debit to the owner's drawing account. c.credit to the owner's drawing account. d.debit to the owner's capital account.

debit to the owner's drawing account.

The fiscal year selected by a company a.is not characterized by any of these answer choices. b.will be different each year. c.should end during the busiest month of the company's operating cycle. d.must always be adjusted to the calendar year.

is not characterized by any of these answer choices.

The balance of the owner's drawing account on the adjusted trial balance of the end-of-period spreadsheet is reported on which of the following financial statements? a.the statement of owner's equity b.the balance sheet c.the income statement d.All of these financial statements are correct.

the statement of owner's equity