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What is a plant asset?

A plant asset refers to a long-term tangible asset used to produce and sell products or services.

Which of the statements below is correct regarding the difference between a temporary account and a permanent account?

A temporary account will not appear on a post-closing trial balance.

Describe an unclassified balance sheet.

An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity.

When does the closing process take place?

At the end of an accounting period

The closing process takes place at the (end/beginning) of an accounting period, after the (adjusted/unadjusted) trial balance is prepared and (after/before) the financial statements are prepared.

Blank 1: end Blank 2: adjusted Blank 3: after

or the current year, a business has earned (but not recorded or received) $200 of interest from investments. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the interest ___________ , account.

Blank 1: interest receivable Blank 2: credit Blank 3: interest revenue

A post-closing trial balance is a list of _______________(permanent/temporary) accounts and their balances __________________ (after/before) all ____________________ (adjusting/closing) entries have been journalized and posted.

Blank 1: permanent Blank 2: after Blank 3: closing

Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of retained earnings by completing the following sentence. In order to prepare the statement of retained earnings, the balance of the ______________________ (Retained earnings / Cash) account balance as well as any debit balance in the _______________(Dividends / Supplies) account is transferred from the adjusted trial balance and is used along with the reported net income (loss) from the Income statement.

Blank 1: retained earnings Blank 2: dividends

Accrued ______________________ are earned in a period that are both unrecorded and not yet received in cash.

Blank 1: revenue or revenues

Closing means to transfer account balances from____________(asset/liability/permanent/temporary) accounts so that they will start with a _________________ (contra/larger/zero) balance at the beginning of the next period.

Blank 1: temporary Blank 2: zero

Choose the statement below that explains what "closing" means.

Closing means to bring an account balance to zero.

A company borrowed $4,000 from the bank at an interest rate of 9%. By the end of the accounting period, the loan had been outstanding for 30 days. Demonstrate the required adjusting entry by choosing the correct statement below.

Debit Interest expense for $30.

Chimney Sweeps provided chimney cleaning services to several clients during the month of February. Chimney's customers have not yet been billed. Chimney's customers owe $2,000 to Chimney. How will Chimney Sweeps record this transaction?

Debit accounts receivable and credit services revenue

Select the statement below that describes a post-closing trial balance.

It is a listing of all permanent accounts and their balances after closing.

A plant asset can be defined by which of the following statements? (Check all that apply.)

It is a tangible long-term asset. It is reported on the balance sheet. Its original cost (minus any salvage value) is expensed over its useful life. It has a life within the business greater than one year or the current operating cycle, whichever is longer.

Select all that apply Identify which of the accounts below would be classified as a current asset. (Check all that apply.)

Office supplies Cash Accounts receivable Prepaid rent

Select all that apply Select the statements below that describe the purpose of a post-closing trial balance. (Check all that apply.)

One purpose is to verify that total debits equal total credit for permanent accounts. One purpose is to verify that all temporary accounts have zero balances.

Select all that apply Which statements below are true regarding permanent and temporary accounts? (Check all that apply.)

Permanent accounts will appear on a post-closing trial balance. Permanent accounts are reported on the balance sheet. Retained Earnings is a permanent account, but Dividends is a temporary account. Temporary accounts have a balance for one period only. Temporary accounts are reported on the income statement.

Which of the accounts below would appear in the equity section of a classified balance sheet?

Retained Earnings

Which of the statements below explains the accounting cycle?

The accounting cycle is repeated each reporting period and refers to the steps taken in preparing financial statements.

Which of the statements below is (are) correct regarding the accounting cycle? (Check all that apply.)

The accounting cycle refers to steps followed by a company to prepare its financial statements. The accounting cycle contains 10 steps. The cycle contains steps for adjusting and closing accounts. The accounting cycle is a series of steps repeated each reporting period.

What is the difference between an adjusted trial balance and an unadjusted trial balance? (Check all that apply.)

The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. The adjusted trial balance generally has more accounts listed than the unadjusted trial balance. The adjusted trial balance is used to prepare financial statements.

Explain the difference between the unadjusted and the adjusted trial balance.

The adjusted trial balance is prepared after adjusting entries have been recorded and posted.

Which of the following describes accrued revenue? (Check all that apply)

They refer to revenues that are earned in a period, but have not been received and are unrecorded. They refer to earnings which have been earned but not yet billed. The adjustment causes an increase in an asset account and an increase in a revenue account. Accounts receivable is usually increased when accruing revenues.

All of the following are on an unclassified balance sheet: (Check all that apply).

Total liabilities Total assets

Identify which group of accounts may require adjustments at the end of the accounting period.

Unearned revenue; Supplies; Prepaid rent

Determine which of the following transactions may require adjustments. (Check all that apply.)

a 24-month insurance policy was prepaid Supplies were purchased at the beginning of the year, but not all were used. Equipment was purchased in the middle of the year. Six months of rent were paid in advance. An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month.

Current assets are:

cash and other resources that are expected to be sold, collected or used within one year

StoryBook Company provided services to several customers during the month of December. These services have not yet been paid by the customers. StoryBook should record the following adjusting entry at the end of December: (Select all that apply).

credit services revenue debit accounts receivable

A classified balance sheet can be described as a balance sheet that: (Check all that apply.)

lists current assets in the order of how quickly they can be converted to cash. organizes assets and liabilities into important subgroups. is more useful to decision makers.