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Exam 4: Completing the Accounting Cycle

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Question 21

Multiple Choice

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The fiscal year selected by companies

A) is the same as the calendar year
B) begins with the first day of the month and ends on the last day of the twelfth month
C) must always begin on January 1
D) will change each year

E) A) and B)
F) A) and C)

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Question 22

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Any twelve-month accounting period adopted by a company is known as its fiscal year.

A) True
B) False

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Question 23

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After all adjustments have been made, but before the accounts have been closed, the following balances were taken from the ledger of Ramona's Designs: Journalize the entries to close the appropriate accounts.

The following accounts were taken from the Adjusted Trial Balance columns of the work sheet: Net income for the period is

Which one of the fixed asset accounts listed below will not have a related contra asset account?

After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $38,755 and $32,735, respectively. What is the amount of net income or net loss for the period?

The balances of the capital accounts from the Adjusted Trial Balance of the work sheet are extended to the Statement of Owner's Equity columns.

Select whether each of the following would be reported in the financial statements as a(n) (a) current asset, (b) current liability, (c) revenue, or (d) expense:

Morgan Olsen owns and operates Crystal Pool Service Company. On January 1, 2014, Morgan Olsen, Capital had a balance of $252,000. During the year Morgan invested an additional $32,000 and withdrew $52,400. For the year ended December 31, 2014 Crystal Pool Service Company reported a net income of $73,200. Prepare a Statement of Owner's Equity for the year ended December 31, 2014.

List and describe the purpose of the four closing entries. 1. Close revenues to income summary. 2. Close expenses to income summary. 3. Close income summary to capital account. 4. Close drawing account to capital account.

After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns show debits of $37,686 and the credits of $41,101. This indicates that

The following are all the steps in the accounting cycle. List them in the order in which they should be done. - Closing entries are journalized and posted to the ledger. - An unadjusted trial balance is prepared. - An optional end-of-period spreadsheet (work sheet) is prepared. - A post-closing trial balance is prepared. - Adjusting entries are journalized and posted to the ledger. - Transactions are analyzed and recorded in the journal. - Adjustment data are assembled and analyzed. - Financial statements are prepared. - An adjusted trial balance is prepared. - Transactions are posted to the ledger.

A post-closing trial balance should be prepared before the financial statements are prepared.

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

Prepare an income statement and a statement of owner's equity, for the month ended August 31, 2014, from the following T-Accounts of Marley Company.

On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the work sheet would

All companies must use a calendar year as their fiscal year.

The income summary account is closed to the owner's capital account.

Which of the following accounts will be closed to the Capital account at the end of the fiscal year?

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