Long Quiz FABM 2 (Accounting Cycle)

A worksheet is a mandatory form that must be prepared along with an income statement and balance sheet.

• True

• False

If total credits in the income statement columns of a worksheet exceed total debits, the enterprise has net income.

• True

• False

It is not necessary to prepare formal financial statements if a worksheet has been prepared because financial position and net income are shown on the worksheet.

• True

• False

Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year.

• True

• False

After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.

• True

• False

An incorrect debit to Accounts Receivable instead of the correct account Notes Receivable does not require a correcting entry because total assets will not be misstated.

• True

• False

Closing revenue and expense accounts to the Income Summary account is an optional bookkeeping procedure.

• True

• False

Closing entries are journalized after adjusting entries have been journalized.

• True

• False

A business entity has only one accounting cycle over its economic existence.

• True

• False

A liability is classified as a current liability if the company is to pay it within the forthcoming year.

• True

• False