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Exam 13: Financial Statements and Closing Procedures

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Question 1

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Which of the following groups of accounts will have zero balances after the closing process is completed?

A) Allowance for Doubtful Accounts and Uncollectible Accounts Expense
B) Purchases and Purchases Returns and Allowances
C) Merchandise Inventory and Sales
D) Depreciation Expense and Accumulated Depreciation-Equipment

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

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Question 2

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The current ratio is calculated by

A) dividing current assets by current liabilities.
B) dividing current liabilities by current assets.
C) dividing total assets by total current assets.
D) dividing current assets by total assets.

E) C) and D)
F) A) and D)

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Question 3

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The entry to reverse the adjusting entry for accrued payroll taxes expense includes

Match the accounting terms with the description by entering the proper number.

The beginning capital balance shown on a statement of owner's equity is $86,000. Net income for the period is $36,000. The owner withdrew $44,000 cash from the business and made no additional investments during the period. The owner's capital balance at the end of the period is

The entry to reverse the adjustment for accrued interest income consists of a debit to

The adjusting entry to record depreciation should be reversed at the start of a new fiscal period to make subsequent financial record keeping easier.

The inventory ____________________ represents the time period it takes from the purchase of the inventory until it is sold.

Brianna Graham is the owner of a dress shop. The firm had a net loss of $9,000 for the year. What accounts are debited and credited to transfer the net loss to the owner's capital account during the closing process?

Cost of Goods Sold is classified as a(n)

A firm had merchandise inventory of $30,000 on January 1, 2013, and had purchases of $45,000, freight in of $600, purchases returns and allowances of $2,300, and purchases discounts of $1,000 during 2013. The firm had merchandise inventory of $27,000 on December 31, 2013. 1. What net delivered cost of purchases was shown for the year ended December 31, 2013, on the classified income statement? 2. What was the cost of goods sold?

For the current fiscal year, Purchases were $245,000, Purchase Returns and Allowances were $8,600, Purchase Discounts were $2,200 and Freight In was $32,000. If the beginning merchandise inventory was $60,000 and the ending merchandise inventory was $75,000, the Cost of Goods Sold is:

At the end of the period, the balance of the Accounts Receivable account is closed to the Income Summary account.

The statement of owner's equity is prepared before the balance sheet so that the beginning owner's equity balance is available for the balance sheet.

The difference between net sales and the cost of goods sold is called the ____________________ on sales.

After the ____________________ entries are posted, the Sales account will have a zero balance.

Which of the following accounts will appear on the postclosing trial balance?

A. Check all of the following accounts that would be classified as a current asset. $\begin{array} { | l | l | } \hline \text { Store Equipment } & \\\hline \text { Cash } & \\\hline \text { Land } & \\\hline \text { Petty Cash } & \\\hline \text { Interest Receivable } & \\\hline \text { Accounts Receivable } & \\\hline \text { Building } & \\\hline \text { Merchandise Inventory } & \\\hline \text { Office Equipment } & \\\hline \text { Notes Receivable } & \\\hline\end{array}$ B. Check all of the following accounts that would be classified as a current liability.

The owner of a firm had capital of $85,000 on January 1, 2013, and made withdrawals of $33,000 during 2013. The business earned a net income of $45,000 for the year. 1. What amount of capital was shown as of December 31, 2013, on the statement of owner's equity? 2. How much was the increase or decrease in capital for the year?

The balance of the owner's drawing account is