ACCT205 CHPT 3.2

What are current liabilities? (Check all that apply). A) Current liabilities are obligations due to be paid within one year. B) Current liabilities are obligations that are not due to be settled within one year or the operating cycle, whichever is longer. C) Current liabilities are usually settled by paying out current assets such as cash. D) Current liabilities are property, plant, and equipment that are tangible and depreciated. E) Current liabilities are reported in the order of those to be settled first.

A) Current liabilities are obligations due to be paid within one year. C) Current liabilities are usually settled by paying out current assets such as cash. E) Current liabilities are reported in the order of those to be settled first.

Which of the following statements are correct about completing a worksheet? (Check all that apply). A) If a loss occurs, it is added to the debit column of the balance sheet. B) The words "net income" or "net loss" should be written on a line in the income statement columns of a worksheet. C) If a net income occurs, it is added to the debit column of the income statement. D) If a net income occurs, it is added to the credit column of the balance sheet. E) Adding net income to the credit column of the balance sheet and owner's equity columns implies that it is to be added to Owner, Capital.

A) If a loss occurs, it is added to the debit column of the balance sheet. C) If a net income occurs, it is added to the debit column of the income statement. D) If a net income occurs, it is added to the credit column of the balance sheet. E) Adding net income to the credit column of the balance sheet and owner's equity columns implies that it is to be added to Owner, Capital.

Which statements below are true regarding permanent and temporary accounts? (Check all that apply). A) Permanent accounts are reported on the balance sheet. B) Permanent accounts will appear on a post-closing trial balance. C) Temporary accounts have a balance for only one period only. D) Owner, capital is a permanent account, but owner, withdrawals is a temporary account. E) Temporary accounts will appear on a post-closing trial balance. F) Most temporary accounts are reported on the income statement.

A) Permanent accounts are reported on the balance sheet. B) Permanent accounts will appear on a post-closing trial balance. C) Temporary accounts have a balance for only one period only. D) Owner, capital is a permanent account, but owner, withdrawals is a temporary account. F) Most temporary accounts are reported on the income statement.

Given that a company reported net income for the year, determine how a company would complete its worksheet for the period by choosing the correct statement below. A) The company would add the net income amount to the credit column of the balance sheet and owner's equity columns of a worksheet. B) The owner, capital account ending balance, reflected in the credit column of the balance sheet, would include the net income. C) The net income would be added to the credit column of the income statement columns.

A) The company would add the net income amount to the credit column of the balance sheet and owner's equity columns of a worksheet.

Select the statements below that to describe the purpose of a post-closing trial balance. (Check all that apply). A) The purpose is to verify that all temporary accounts have zero balances. B) One purpose is to verify that total debits equal total credit for permanent accounts. C) One purpose is to verify that total debits equal total credit for temporary accounts. D) One purpose is to verify that all permanent accounts have zero balances. E) One purpose is to confirm that if debits equal credits then no errors in journalizing and posting occurred during the period.

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

What is a worksheet? (Check all that apply). A) It is used by external discussion makers to report accounting information. B) A form of working papers used by accountants and can be helpful in preparing financial statements. C) When used to prepare financial statements, it is constructed at the end of a period. D) A completed worksheet will include a list of accounts, their balances and adjustments, and their sorting into financial statement columns. E) Its columns may include a trial balance and adjusted trial balance, as well as columns for the income statement and balance sheet.

B) A form of working papers used by accountants and can be helpful in preparing financial statements. C) When used to prepare financial statements, it is constructed at the end of a period. D) A completed worksheet will include a list of accounts, their balances and adjustments, and their sorting into financial statement columns. E) Its columns may include a trial balance and adjusted trial balance, as well as columns for the income statement and balance sheet.

Demonstrate your knowledge of preparing a post-closing trial balance by selecting the accounts below that would be included on it. (Check all that apply). A) Income summary account B) Asset accounts C) Expense accounts D) Revenue accounts E) Permanent accounts F) Temporary accounts G) Liability accounts

B) Asset accounts E) Permanent accounts G) Liability accounts

Which of the following accounts would be sorted from the adjusted trial balance of a worksheet to the balance sheet and owner's equity columns on a worksheet? A) Cash; Wages Expense; Land B) Cash; Accounts Payable; Owner, Withdrawals C) Accounts Receivable; Service Revenue; Prepaid Rent D) Land; Unearned Rent; Supplies Expense

B) Cash; Accounts Payable; Owner, Withdrawals

Review the following statements and select the ones that are correct regarding sorting accounts from the adjusted trial balance columns of a worksheet to the income statement and balance sheet columns in order to prepare for our last step of completing the worksheet. (Check all that apply). A) Owner, Withdrawals go to the income statement debit column. B) Expense accounts go to the income statement debit column. C) Owner, Withdrawals go to the balance sheet and statement of owner's equity debit column. D) Liabilities go to the balance sheet and statement of owner's equity credit column.

B) Expense accounts go to the income statement debit column. C) Owner, Withdrawals go to the balance sheet and statement of owner's equity debit column. D) Liabilities go to the balance sheet and statement of owner's equity credit column.

A classified balance sheet can be described as a balance sheet that; (Check all that apply). A) Contains subgroups for expenses and revenues. B) Lists current assets in order of how quickly they can be converted into cash. C) Is more useful to decision makers. D) Lists all assets according to the size of their balance with large dollar amounts listed first. E) Organizes assets and liabilities into important subgroups.

B) Lists current assets in order of how quickly they can be converted into cash. C) Is more useful to decision makers E) Organizes assets and liabilities into important subgroups.

Which of the lists below contain only permanent accounts? A) Deprecation Expense; Income Summary; Service Revenue B) Owner, Capital; Accounts Payable; Accumulated Deprecation C) Supplies; Income Summary; Owner, Capital D) Unearned Rent; Service Revenue; Accumulated Deprecation

B) Owner, Capital; Accounts Payable; Accumulated Deprecation

Review the following statements and select which is correct regarding a worksheet and formal financial statements. A) The totals of the balance sheet and owner's equity columns will be equal to revenues minus expenses for the period. B) The withdrawal's account balance will be used in preparing the statement of owner's equity. C) The withdrawal's account balance will be used to prepare the balance sheet. D) When the debit column of the income statement columns is greater than the credit column, the company will be reporting net income.

B) The withdrawal's account balance will be used in preparing the statement of owner's equity.

Explain your understanding of the closing process by choosing the correct statements below. (Check all that apply). A) The closing process is a helpful step in preparing financial statements. B) The closing process helps to determine a company's liquidity. C) The closing process helps to summarize a period's revenues and expenses. D) The closing process resets the balances in temporary accounts to zero.

C) The closing process helps to summarize a period's revenues and expenses. D) The closing process resets the balances in temporary accounts to zero.

Review and complete the following statement regarding the income summary account. The income summary account is ___________ (debited / credited) for the sum of all revenue accounts and is ____________ (debited / credited) for the sum of all expense accounts and its balance will be transferred to the ____________ (capital / cash) account.

1. Credited 2. Debited 3. Capital

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.

1. End 2. Adjusted 3. After

Define Trial Balance;

A list of accounts and their balances at a point in time.

The income summary account can be defined as which of the following? (Check all that apply). A) A temporary account. B) An account used during the closing process. C) An account that contains a credit for the sum of all revenues. D) An account whose balance equals net income or net loss. E) An account that contains a credit for the sum of all expenses. F) A permanent account.

A) A temporary account. B) An account used during the closing process. C) An account that contains a credit for the sum of all revenues. D) An account whose balance equals net income or net loss.

Identify the accounts below that would be classified as intangible assets on a classified balance sheet. (Check all that apply). A) Trademark B) Goodwill C) Copyrights D) Accounts receivable E) Patent F) Franchise G) Prepaid rent H) Land (held for future expansion) I) Investments (in stock of other companies)

A) Trademark B) Goodwill C) Copyrights E) Patent F) Franchise

Which of the statements below describe a permanent account? (Check all that apply). A) A permanent account has a trial balance for only one period. B) A permanent account is closed at the end of an accounting period. C) A permanent account's balance is carried forward to the next accounting period. D) A permanent account can be referred to as a "nominal" account. E) A permanent account is reported on the balance sheet.

C) A permanent account's balance is carried forward to the next accounting period. E) A permanent account is reported on the balance sheet.

Formal financial statements can be prepared from the columns of a worksheet. Which of the following statements below are true regarding this process? A) Revenues and expenses are reported on the income statement are taken from the adjustments columns. B) The credit column of the income statement represent the expenses reported on the income statement. C) The debit column of the income statement represent the expenses reported on the income statement. D) The credit column on the balance sheet and statement of owner's equity columns represents the assets reported on the balance sheet.

C) The debit column of the income statement represent the expenses reported on the income statement.

Select the statement below that describes a post-closing trial balance. A) It is a listing of all temporary accounts and their balances after closing. B) It is a financial statement that describes all revenues and expense accounts after closing. C) It is a listing of all permanent accounts and their balances immediately after the adjusting process. D) It is a listing of all permanent accounts and their balances after closing.

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

When is a reversing entry made?

It is made on the first day of a new accounting period.

Define Balance Sheet;

Reports a business's assets, liabilities, and equity on a specific date.

Define Income Statement;

Reports a business's revenues and expenses for a period of time.

Define Statement of Cash Flows;

Reports the inflows and outflows of cash during a period of time.

After an adjusted trial balance is prepared, what is the next step in completing the worksheet used in preparing financial statements?

Sort adjusted trial balance amounts to the financial statements columns.

List the items that would be included in a classified balance sheet; (6 Total).

1. Current Assets 2. Long-term Investments 3. Plant Assets 4. Intangible Assets 5. Current Liabilities 6. Long-term Liabilities

Review the following totals from a worksheet. Income Statement - Debit: $10,000 & Credit: $7,500. Balance Sheet - Debit: $41,000 & Credit: $43,500. Based on these totals, the company experienced a net ______________ (income / loss) of $________________.

1. Loss 2. $2,500.

The post-closing trial balance is a list of _____________ (permanent / temporary) accounts and their balances from the _____________ (journal / ledger) ____________ (after / before) all _______________ (adjusting / closing) entries have been journalized and posted.

1. Permanent 2. Ledger 3. After 4. Closing

Explain the required steps to complete a worksheet by placing the following in the correct order of completion. A) Enter unadjusted trial balance. B) Compute net income (or net loss) and add to (or subtract from) the balance sheet columns. C) Enter Adjustments. D) Sort (adjusted) trial balance amounts to financial statements. E) Total financial statement columns. F) Prepare adjusted trial balance.

1. Enter adjusted trial balance. 2. Enter adjustments. 3. Prepare adjusted trial balance. 4. Sort (adjusted) trial balance amounts to financial statements. 5. Total financial statement columns. 6. Compute net income (or net loss) and add to (or subtract from) the balance sheet columns.

Identify the accounts below that would be classified as current liabilities on a classified balance sheet. (Check all that apply). A) Accounts payable B) Mortgage payable C) Unearned rent D) Accounts receivable E) Taxes payable F) Notes payable (due in three months) G) Notes payable (due in three years)

A) Accounts payable C) Unearned rent E) Taxes payable F) Notes payable (due in three months)

In preparing a post-closing trial balance, which of the following statements are correct? (Check all that apply). A) All permanent accounts with a balance in the general ledger will be included. B) The capital account on the post-closing trial balance will include the net income or net loss for the period. C) All temporary accounts with a balance in the general ledger will be included. D) All revenues and all expenses will be included. E) The total of all debit balances will equal the total of all credit balances.

A) All permanent accounts with a balance in the general ledger will be included. B) The capital account on the post-closing trial balance will include the net income or net loss for the period. E) The total of all debit balances will equal the total of all credit balances.

In preparing a post-closing trial balance, which of the following statements are correct? (Check all that apply). A) The total of all debit balances will equal the total of all credit balances. B) All permanent accounts with a balance in the general ledger will be included. C) All temporary accounts with a balance in the general ledger will be included. D) All revenues and all expenses will be included. E) The capital account on the post-closing trial balance will include the net income or net loss for the period.

A) The total of all debit balances will equal the total of all credit balances. B) All permanent accounts with a balance in the general ledger will be included. E) The capital account on the post-closing trial balance will include the net income or net loss for the period.

Describe the general ledger after adjusting and closing entries have been posted. (Check all that apply). A) The Owner, Capital account will have a $0 balance after closing. B) The abbreviations "adj." and "clos." have been entered in the explanation columns of the ledger. C) The income summary account will show three closing entries. D) The Owner, Withdrawal account will have a $0 balance after closing. E) All expense accounts will show a $0 balance after closing. F) All asset accounts will show a $0 balance after closing.

B) The abbreviations "adj." and "clos." have been entered in the explanation columns of the ledger. C) The income summary account will show three closing entries. D) The Owner, Withdrawal account will have a $0 balance after closing. E) All expense accounts will show a $0 balance after closing.

Explain how to add adjusted accounts to a worksheet when they did not appear on the trial balance. (Check all that apply). A) Adjusted accounts on a worksheet which did not appear on a trial balance are omitted from the worksheet. B) The adjusted account can be squeezed in on one line of the trial balance. C) New accounts can be added in the new columns titled "adjusted accounts". D) New accounts can be added on blank lines following the totals line on the trial balance.

B) The adjusted account can be squeezed in on one line of the trial balance. D) New accounts can be added on blank lines following the totals line on the trial balance.

Which of the following statements correctly summarizes how to compute net loss or net income using a worksheet? A) The difference between the totals of the trial balance columns of the worksheet is net income or net loss. B) The difference between the totals of the adjusted trial balance debit and credit columns is net income or net loss. C) The difference between the totals of the debit and credit columns of the income statement columns is net income or net loss. D) The difference between the debit column of the balance sheet and the debit column of the income statement is net income or net loss.

C) The difference between the totals of the debit and credit columns of the income statement columns is net income or net loss.

Which of the following lists steps of the accounting cycle in the correct order (note that not all steps are listed)? A) Closing Journal Entries; Adjusted Trial Balance; Financial Statements B) Financial Statements; Adjusted Trial Balance; Closing Journal Entries C) Trial Balance; Adjusting Journal Entries; Post-Closing Trial Balance D) Adjusted Trial Balance; Post-Closing Trial Balance; Adjusting Journal Entries

C) Trial Balance; Adjusting Journal Entries; Post-Closing Trial Balance

Define Worksheet;

A useful tool in working with accounting information.