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Exam 4: Completing the Accounting Cycle

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Question 41

True/False

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The income summary account is closed to the retained earnings account.

A) True
B) False

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Question 42

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The balances of the equity accounts from the Adjusted Trial Balance of the end-of-period spreadsheet are extended to the Retained Earnings Statement columns.

A) True
B) False

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Question 43

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Identify which of the following accounts should be closed with a debit or a credit to Income Summary at the end of the fiscal year. If it is not closed to Income Summary, mark as n/a. 1. Utilities Payable 2. Utilities Expense 3. Supplies 4. Supplies Expense 5. Fees Earned 6. Unearned Fees 7. Accounts Receivable 8. Dividends 9. Retained Earnings 10. Accumulated Depreciation—Equipment 11. Depreciation Expense—Equipment 12. Equipment 13. Prepaid Insurance 14. Insurance Expense

What is the major difference between the unadjusted trial balance and the adjusted trial balance?

The following accounts appear in an adjusted trial balance of Blaine Auto Service Company.Indicate whether each account would be reported in the (a)current assets,(b)property,plant,and equipment,(c)current liabilities,(d)long-term liabilities,or (e)stockholders' equity section of the December 31 balance sheet of Blaine Auto Service Company. 1. Retained Earnings 2. Accumulated Depreciation 3. Unearned Revenues 4. Mortgage Payable 5. Equipment 6. Notes Payable (due in two years) 7. Cash 8. Accounts Receivable

The totals of the Adjusted Trial Balance columns on an end-of-period spreadsheet will always be the sum of the Trial Balance column totals and the Adjustments column totals.

On the end-of-period spreadsheet,the common stock and dividends account balances are extended to the Balance Sheet columns.

When accounts do not appear on the unadjusted trial balance but are needed to post adjustments,they are simply added to the account title column.

Which of the following is not an essential part of the accounting records?

Accrued expenses are ordinarily listed on the balance sheet as current assets.

A fiscal year for a business

Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as current assets.

You evaluate loan requests as part of your job at Eastwood National Bank.One loan request you received is from Surfer Dude Supplies,a small company.Richard Tracy,the CEO,is requesting $105,000 and brings you a trial balance (or statement of accounts)for his first year of operations ended December 31. ​ While you are willing to work with Richard,how would you explain to him that a complete set of financial statements from his accountant would be more useful for evaluating the loan request?

Which of these titles would appear in the Income Statement columns of the end-of-period spreadsheet?

The entry to close the appropriate insurance account at the end of the accounting period is

Assets,liabilities,and stockholders' equity accounts are real accounts and do not get closed at the end of the period.

Office Equipment is an example of a current asset account.

The last step of the accounting cycle is to prepare a post-closing trial balance.

Determine the net income (loss) for the period.

Prepaid expenses that benefit a relatively short period of time are listed on the balance sheet as current assets.