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Exam 4: Completing the Accounting Cycle

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Question 1

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Revenues, expenses, withdrawals, and Income Summary are called _________________ accounts because they are closed at the end of each accounting period.

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Question 2

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The ______________ refers to the steps in preparing financial statements for users.

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Question 3

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Bentley records adjusting entries at its December 31 year end. At December 31, employees had earned $12,000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $30,000 will be paid. Prepare the journal on January 3 to record payment assuming the correct adjusting and reversing entries were made on December 31 and January 1.

A trial balance prepared after the closing entries have been journalized and posted is the:

How is the current ratio calculated? How is it used to evaluate a company?

A classified balance sheet organizes assets and liabilities into important subgroups that provide more information to decision makers.

A work sheet is a tool to help organize information needed in adjusting the accounts and preparing the financial statements.

At the beginning of the year, a company's balance sheet reported the following balances: Total Assets = $125,000; Total Liabilities = $75,000; and Owner's Capital = $50,000. During the year, the company reported revenues of $46,000 and expenses of $30,000. In addition, owner's withdrawals for the year totaled $20,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of the year would be:

The following information is available for Crandall Company before closing the accounts. After all of the closing entries are made, what will be the balance in the Crandall, Capital account?

Which of the following errors would cause the Balance Sheet and Statement of Owner's Equity columns of a work sheet to be out of balance?

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

Since it is an important financial statement, the trial balance must be prepared according to specified accounting procedures.

In the process of completing a work sheet, you determine that the Income Statement debit column totals $83,000, while the Income Statement credit column totals $65,000. To enter net income (or net loss) for the period into the work sheet would require an entry to

The following adjusted trial balance is for Clara Co. at year-end December 31. The credit balance in Clara, Capital at the beginning of the year, January 1, was $320,000. The owner, Sara Clara, invested an additional $100,000 during the current year. The land held for future expansion was also purchased during the current year. Required: Prepare a classified balance sheet. (Note: A $21,000 installment on the long-term note payable is due within one year.)

The unadjusted trial balance of Bade Cleaning Service is entered on the partial work sheet below. Complete the work sheet using the following information: (a) Salaries earned by employees that are unpaid and unrecorded, $4,000. (b) An inventory of supplies showed $3,000 of unused supplies still on hand. (c) Depreciation on automobiles, $30,000. (d) Services paid in advance by customers of $12,000 have now been provided to customers. (e) Advertising for November and December in the amount of $8,000 remains unpaid and unrecorded.

On a work sheet, a loss is indicated if the total of the Income Statement Debit column exceeds the total of the Income Statement Credit column.

Use the following partial work sheet from Matthews Lanes to prepare its income statement, statement of owner's equity and a classified balance sheet (Assume the owner did not make any investments in the business this year.)

The unadjusted trial balance of E. Pace, Consultant is entered on the partial work sheet below. Complete the work sheet using the following information: (a) Salaries earned by employees that are unpaid and unrecorded, $500. (b) An inventory of supplies showed $800 of unused supplies still on hand. (c) Depreciation on equipment, $1,300.

What is the purpose of closing entries? Describe the closing process.

All necessary numbers to prepare the balance sheet can be found in the balance sheet columns of the work sheet including ending owner's capital.