Accounting Study Guide for Exam 2

Closing the temporary accounts at the end of each accounting period does not do which of the following?

• Transfer the effects of temporary accounts to the owner's capital account on the balance sheet.

• Prepares the withdrawals account for use in the next period.

• Brings the revenue and expense accounts to zero balances.

• Brings the asset and liability accounts to zero balances.

• Causes owner's capital to reflect increases from revenues and decreases from expenses and withdrawals.

Which of the following is the usual final step in the accounting cycle?

• Journalizing transactions.

• Preparing an adjusted trial balance.

• Preparing a post-closing trial balance.

• Preparing the financial statements.

• Preparing a work sheet.

A classified balance sheet differs from an unclassified balance sheet in that:

• An unclassified balance sheet does not report equity.

• A classified balance sheet randomly groups items into the broad categories of asset, liability, and equity.

• A classified balance sheet classifies assets and liabilities as current (short-term) and noncurrent (long-term).

• A classified balance sheet will include more accounts than an unclassified balance sheet for the same company on the same date.

• A classified balance sheet is not usually provided to outside parties.

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $625. The Adjustments columns show a credit of $350 for supplies used during the period. The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:

• $275 debit.

• $275 credit.

• $350 debit.

• $625 debit.

• $625 credit.

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $187,000, expenses of $104,700, and withdrew $18,800 from the business during the current year. The owner’s capital account before closing had a balance of $299,000. The ending owner’s capital balance after closing is:

• $187,000

• $63,500

• $82,300

• $362,500

• $381,300

A company had revenues of $55,500 and expenses of $44,000 for the accounting period. The owner withdrew $6,100 in cash during the same period. Which of the following entries could not be a closing entry?

• Debit Income Summary $11,500; credit Owner's, Capital $11,500.

• Debit Income Summary $55,500; credit Revenues $55,500.

• Debit Revenues $55,500; credit Income Summary $55,500.

• Debit Income Summary $44,000, credit Expenses $44,000.

• Debit Owner's, Capital $6,100 credit Owner's, Withdrawals $6,100.

The F. Mercury, Capital account has a credit balance of $42,000 before closing entries are made. Services revenue for the period is $60,200, wages expense is $42,300, and withdrawals are $11,000. What is the correct closing entry for the expense accounts?

• Debit Income Summary $42,300; credit Wages expense $42,300.

• Debit Wages expense $42,000; credit F. Mercury, Capital $42,000.

• Debit F. Mercury, Withdrawals accounts $42,300; credit Wages expense $42,300.

• Debit Wages expense $42,300; credit Income Summary $42,300.

• Debit Income Summary $42,300; credit F. Mercury Capitial $42,300.

A post-closing trial balance reports:

• All permanent ledger accounts with balances.

• All temporary ledger accounts with balances.

• All temporary and permanent ledger accounts with balances.

• Only revenue and expense accounts.

• Only asset accounts.

Use the information in the adjusted trial balance presented below to calculate total current liabilities for Taron Company:

• $200,600

• $61,400

• $28,000

• $35,400

• $40,700

Cost of goods sold:

• Is another term for merchandise sales.

• Is the term used for the expense of buying and preparing merchandise for sale.

• Is another term for revenue.

• Is also called gross margin.

• Is a term only used by service firms.