Financial Accounting Exam 2
Multiple step income statement can answer following questions except:
Current Ratio
Accounts payable is a temporary account.
False
Accrued salaries payable is a temporary account.
False
Accumulated depreciation is a temporary account.
False
An important purpose of closing entries is to set permanent account balances to zero in order to begin the next period.
False
As you prepare a cash flow statement, you found that your accounts receivable increased compared to previous year. Therefore, you added this difference to the net income to calculate the net cash provided by operating activities.
False
Balance sheet has temporary accounts.
False
The major purpose of closing entries is to set permanent account balances to zero in order to begin the next accounting period.
False
After closing entries, all temporary accounts are merged into one permanent account, and this account will be listed in the balance sheet. The name of this account is
Retained Earnings
If the total debit column exceeds the total credit column of the income statement columns on a work sheet, then the company has
Suffered Net Loss
The dividends, revenue, and expense accounts are temporary accounts.
True
The major purpose of cash flow statement is to provide information about cash receipts and cash payment during an accounting period.
True
To close a revenue account, you need to debit revenue and credit income summary.
True
The final step in the accounting cycle is to prepare
a post-closing trial balance
In preparing closing entries
each expense account will be credited
An error has occurred in the closing entry process if
the balance sheet accounts have zero balances
A temporary account, Income Summary, is used in closing revenue and expense accounts.
True
As you prepare a cash flow statement, you found that your accounts payable increased compared to previous year. Therefore, you added this difference to the net income to calculate the net cash provided by operating activities.
True
Depreciation expense is a temporary account.
True
In general, the most important section of cash flow statement is the section for operating activities.
True
Income statements is composed of temporary accounts.
True
Closing entries are journalized and posted
after the financial statements are prepared
The proper sequence for the accounting cycle is
analyze, journalize, post, adjust, prepare statements, close