WorksheetsBAT Chapter 4 Review
Total questions: 20
Worksheet time: 12mins
When a loss has occurred, the journal entry to close the Income Summary account is:
debit Income Summary; credit Capital
debit Capital; credit Income Summary
debit Income Summary; credit Drawings
debit Drawings; credit Income Summary
After the closing entries have been posted, the balance in the owner's capital account should equal:
the profit or loss reported on the income statement
the opening capital balance reported on the statement of owner's equity
the ending capital balance reported on the statement of owner's equity and balance sheet
the opening capital balance plus any investments made by the owner during the period
Which accounts will appear in the post-closing trial balance?
assets, liabilities, and owner's capital
revenues, expenses, owner's drawings, and owner's capital
assets, liabilities, revenues, and expenses
all accounts
The proper order of the following steps in the accounting cycle is:
prepare unadjusted trial balance, journalize transactions, post to ledger accounts, journalize and post adjusting entries
journalize transactions, prepare unadjusted trial balance, post to ledger accounts, journalize and post adjusting entries
journalize transactions, post to ledger accounts, prepare unadjusted trial balance, jouranlize and post adjusting entries
prepare unadjusted trial balance, journalize and post adjusting entries, journalize transactions, post to ledger accounts
Which of the following is an optional step in the accounting cycle?
journalizing closing entries
journalizing adjusting entries
posting closing entries
none of the above
When Zander Company purchased supplies worth $500, it incorrectly recorded a credit to Supplies for $5000 and a debit to Cash for $5000. Before correcting this error:
Cash is overstated and Supplies is overstated
Cash is understated and Supplies is overstated
Cash is understated and Supplies is overstated
Cash is overstated and Supplies is understated
Cash of $550 is received at the time a service is provided. The transaction is journalized and posted as a debit to Accounts Receivable of $550 and a credit to Service Revenue of $550. The correcting entry is:
DR Accounts Receivable 550
CR Service Revenue 550
DR Service Revenue 550
CR Accounts Receivable 550
DR Cash 550
CR Service Revenue 550
DR Cash 550
CR Accounts Receivable 550
Which of the following statements about classifying assets is correct?
Supplies are not current assets and should be included as part of property, plant, and equipment on the balance sheet
Current assets normally are cash and other assets that will be converted to cash, sold, or used up within one year from the balance sheet date
Some companies use a period shorter than one year to classify assets as current because they have an operating cycle that is shorter than one year
Prepaid expenses are considered non-current assets because they are intangible assets
Non-current liabilities:
are obligations that are expected to be paid before one year from the balance sheet date
cannot be called long-term liabilities
are sometimes listed on the balance sheet before current liabilities, if the company is following International Financial Reporting Standards
include accounts payable, salaries payable, and interest payable
A company reports current assets of $10,000 and current liabilities of $8000. Its current ratio is:
$2000
80%
1.25:1
unknown without information about the amount of cash, short-term investments, and receivables, which is needed to calculate the ratio
Closing entries are made:
in order to terminate the business as an operating entity
so that all assets, liabilities, and owner's capital accounts will have zero balances when the next accounting period starts
in order to transfer profit (or loss) and owner's drawings to the capital account
so that financial statements can be prepared
The owner's capital account is:
a permanent account
closed to the owner's drawings account at the end of the accounting period
closed to the Income Summary account at the end of the accounting period
a temporary account
Closing entries are journalized and posted:
before the financial statements are prepared
after the financial statements are prepared
when the business is closing its doors
at the end of each interim accounting period
When is a post-closing trial balance prepared?
when reversing entries are required
after adjusting entries but before closing entries
after both adjusting and closing entries have been posted
after the balance sheet has been prepared
A post-closing trial balance will show:
only real account balances
only nominal account balances
zero balances for all accounts
the amount of profit (or loss) for the period
The final step in the accounting cycle is to prepare:
closing entries
financial statements
a post-closing trial balance
adjusting entries
If errors occur in the recording process, they:
should be corrected as adjustments at the end of the period
should be corrected as soon as they're discovered
should be corrected when preparing annual financial statements
cannot be corrected until the next accounting period
Queenstown Marina noticed an error in their financial statements after the financials statements had been submitted to their bank. The company is applying for a new loan to install a new wharf. The controller of Queenstown should:
wait until the bank has approved the loan to notify them of the mistake
inform Queenstown's management and let them tell the bank
inform Queenstown's management and inform the bank, and provide corrected financial statements
the controller doesn't have to do anything
An intangible asset:
derives its value from the rights and privileges it provides the owner
is a liability because it has no physical substance
is never amortized because it has an indefinite life
cannot be classified on the balance sheet because it lacks physical substance
The relationship between current assets and current liabilities is important in evaluating a company's:
profitability
liquidity
market value
turnover
