Accounting 26 ed by Carl Warren J - Test Bank

Accounting 26e Carl Warren James M Reeve Jonathan Duchac 1. Cross-referencing is useful in assuring that the debits and credits are in balance. a. True b. False ANSWER: False DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 2. 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. a. True b. False ANSWER: True DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 3. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements. a. True b. False ANSWER: True DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   4. There is really no benefit in preparing financial statements in any particular order. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 5. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the dollar amount. a. True b. False ANSWER: True DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 6. The usual presentation of the statement of owner's equity is (1) Beginning capital, (2) Net income or loss, (3) Drawing, (4) Owner's contributions, (5) Ending capital. a. True b. False ANSWER: False DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   7. The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 8. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets. a. True b. False ANSWER: False DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.ACBSP.APC.15 - Current Assets Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 9. Prepaid Insurance is an example of a current asset. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.15 - Current Assets Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   10. Land is an example of a plant asset. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.13 - Long-term Assets Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 11. Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.16 - Current Liabilities Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 12. The amount of the net income for a period appears on both the income statement and the balance sheet for that period. a. True b. False ANSWER: False DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   13. Accrued taxes payable are generally reported on the balance sheet as a current liability. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.ACBSP.APC.16 - Current Liabilities Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 14. Office Equipment is an example of a current asset account. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP ACCT.ACBSP.APC.15 - Current Assets Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 15. Capital and drawing are reported in the owner's equity section of the balance sheet. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   16. Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current assets. a. True b. False ANSWER: True DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.ACBSP.APC.15 - Current Assets Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 17. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as current assets. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.ACBSP.APC.15 - Current Assets Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 18. Accrued expenses are ordinarily listed on the balance sheet as current assets. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.ACBSP.APC.15 - Current Assets Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   19. Accrued revenues are ordinarily listed on the balance sheet as current liabilities. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.ACBSP.APC.16 - Current Liabilities Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 20. The income statement is prepared from the adjusted trial balance or the income statement columns on the work sheet. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT. WARD - 04-APP ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 21. After analyzing transactions, the next step would be to post the transactions in the ledger. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   22. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short time before they expire. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 23. Accumulated Depreciation is a permanent account. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 24. The drawing account is a temporary account. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.06 - Recording Transactions ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   25. The balance sheet accounts are referred to as real or permanent accounts. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 26. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting period. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 27. The income summary account is closed to the owner's capital account. a. True b. False ANSWER: True DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 28. The accumulated depreciation account is closed to the income summary account. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 29. The drawing account is closed to the income summary account. a. True b. False ANSWER: False DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 30. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 31. Entries required to close the balances of the temporary accounts at the end of the period are called final entries. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   32. Journalizing and posting closing entries must be completed before financial statements can be prepared. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 33. During the closing process, some balance sheet accounts are closed and end the period with a zero balance. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 34. Closing entries are entered directly on to the work sheet. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   35. The post-closing trial balance will generally have fewer accounts than the trial balance. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 36. A post-closing trial balance contains only asset and liability accounts. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 37. A post-closing trial balance should be prepared before the financial statements are prepared. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   38. Assets, liabilities, and owner’s capital are real accounts and do not get closed at the end of the period. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 39. The income summary account is also known as the clearing account. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 40. All income statement accounts will be closed at the end of the period. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   41. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 42. Balance sheet accounts are not considered real accounts. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 43. Real accounts are not permanent accounts. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   44. It is not necessary to post the closing entries to the general ledger. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 45. The closing process is sometimes referred to as closing the books. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 46. Once an account has been closed for the period, inserting a line in the balance columns zeros out the account, making it ready for the following period. a. True b. False ANSWER: True DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 47. The last step of the accounting cycle is to prepare a post-closing trial balance. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 48. The most important output of the accounting cycle is the financial statements. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 49. The accounting cycle begins with preparing an unadjusted trial balance. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 50. Financial statements should be prepared before the closing entries are journalized and posted. a. True b. False ANSWER: True DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 51. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 52. Any twelve-month accounting period adopted by a company is known as its fiscal year. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.BB.01 - Industry ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 53. A fiscal year that ends when business activities have reached their lowest point is called the natural business year. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.BB.01 - Industry ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 54. All companies must use a calendar year as their fiscal year. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.BB.01 - Industry ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   55. The majority of businesses end their fiscal year on December 31. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.BB.01 - Industry ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 56. 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. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 57. The work sheet is not considered a part of the formal accounting records. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   58. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 59. The trial balance may be listed on the work sheet instead of being prepared separately. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 60. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial Balance column totals and the Adjustments column totals. a. True b. False ANSWER: False DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   61. A work sheet heading is dated for a period of time. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 62. On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 63. After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet, the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net Loss. a. True b. False ANSWER: True DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   64. After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column total for the Balance Sheet pair of columns. a. True b. False ANSWER: True DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 65. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the Balance Sheet columns. a. True b. False ANSWER: False DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 66. Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit column. a. True b. False ANSWER: True DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   67. If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000, respectively, after all account balances have been extended, the amount of the net loss is $2,000. a. True b. False ANSWER: False DIFFICULTY: Moderate Bloom’s: Applying LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 68. The balance in the capital account on the worksheet will equal the amount presented in the balance sheet. a. True b. False ANSWER: False DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 69. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post them to the ledger. a. True b. False ANSWER: False DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   70. The chart of accounts, the journal, and the ledger are essential parts of the accounting system. a. True b. False ANSWER: True DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 71. What is the major difference between the unadjusted trial balance and the adjusted trial balance? a. The adjusted trial balance will show the net income (loss) as an additional account. b. Unlike the adjusted trial balance, the unadjusted trial balance will continue with the end-of-period processing even if it is not in balance. c. The adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts. d. The adjusted trial balance will be used to record the adjustments for the period. ANSWER: c DIFFICULTY: Challenging Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 72. Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to a. verify that the debits and credits are in balance b. verify that the net income correctly flows into the statement of owner’s equity from the income statement c. verify that the net income (loss) is correct for the period d. verify the correct flow of accounts into the financial statements ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   73. When preparing the statement of owner's equity, the beginning capital balance can always be found a. in the Income Statement columns of the work sheet b. in the statement of cash flows c. in the general ledger d. in the Balance Sheet columns of the work sheet ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 74. Accumulated Depreciation appears on the a. balance sheet in the current assets section b. balance sheet in the property, plant, and equipment section c. balance sheet in the long-term liabilities section d. income statement as an operating expense ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 75. Notes receivable due in 390 days appear on the a. balance sheet in the current assets section b. balance sheet in the noncurrent assets section c. balance sheet in the current liabilities section d. income statement as an expense ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   76. Unearned Fees appear on the a. balance sheet in the current assets section b. balance sheet as a current liability c. balance sheet in the owner's equity section d. income statement as revenue ANSWER: b DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 77. Which one of the fixed asset accounts listed below will not have a related contra asset account? a. Office Equipment b. Land c. Delivery Equipment d. Building ANSWER: b DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 78. Prepaid insurance is reported on the balance sheet as a a. current asset b. fixed asset c. current liability d. long-term liability ANSWER: a DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.ACBSP.APC.15 - Current Assets Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   79. The income statement is prepared from a. the adjusted trial balance b. the Income Statement columns of the end-of-period spreadsheet c. either the Adjusted Trial Balance or the Income Statement columns of the end-of-period spreadsheet d. both the Adjusted Trial Balance and the Income Statement columns of the end-of-period spreadsheet ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 80. The first item appearing on the statement of retained earnings is a. net income b. the ending balance of retained earnings c. owner withdrawals d. the beginning balance of retained earnings ANSWER: d DIFFICULTY: Challenging Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 - Recording Transactions ACCT.ACBSP.APC.10 - Internal Control ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 81. The statement of owner’s equity should be prepared a. before the income statement and after the balance sheet b. before the income statement and balance sheet c. after the income statement and balance sheet d. after the income statement and before the balance sheet ANSWER: d DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   82. The income statement should be prepared a. before the statement of owner’s equity and balance sheet b. after the statement of owner’s equity and before the balance sheet c. after the statement of owner’s equity and balance sheet d. after the balance sheet and before the statement of owner’s equity ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic Use the adjusted trial balance for Stockton Company below to answer the questions that follow. Stockton Company Adjusted Trial Balance For the Year Ended December 31 Cash 6,530 Accounts Receivable 2,100 Prepaid Expenses 700 Equipment 13,700 Accumulated Depreciation 1,100 Accounts Payable 1,900 Notes Payable 4,300 Bob Steely, Capital 12,940 Bob Steely, Withdrawals 790 Fees Earned 9,250 Wages Expense 2,500 Rent Expense 1,960 Utilities Expense 775 Depreciation Expense 250 Miscellaneous Expense 185 Totals 29,490 29,490   83. Determine the net income (loss) for the period. a. net income $9,250 b. net loss $790 c. net loss $5,670 d. net income $3,580 ANSWER: d DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 84. Determine the owner’s equity ending balance. a. $12,150 b. $15,730 c. $6,480 d. $21,400 ANSWER: b DIFFICULTY: Challenging Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 85. Determine total assets. a. $8,630 b. $23,030 c. $21,930 d. $9,330 ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   86. Determine the current assets. a. $23,030 b. $9,330 c. $21,930 d. $8,630 ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 87. Determine the total liabilities for the period. a. $1,900 b. $6,200 c. $4,300 d. $20,240 ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 88. The balance sheet should be prepared a. before the income statement and the statement of owner’s equity b. before the income statement and after the statement of owner’s equity c. after the income statement and the statement of owner’s equity d. after the income statement and before the statement of owner’s equity ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   89. The statement of owner’s equity begins with the beginning balance followed by a. adding net income less withdrawals b. adding net income plus investments c. adding investments less withdrawals d. adding investments plus net income less withdrawals ANSWER: d DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 90. The income statement will present a. revenues less expenses (ordered largest to smallest amount) with miscellaneous expense listed last b. revenues less expenses (ordered smallest to largest amounts) with miscellaneous expense listed last c. revenues less expenses (ordered in alphabetical order) d. revenues less expenses (order is not important) ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 91. The classified balance sheet will show which asset subsections? a. current assets and other equity b. current assets and property, plant, and equipment c. current liabilities and short-term assets d. other revenues and property, plant and equipment ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   92. The classified balance sheet will show which liability subsections? a. current liabilities and long-term liabilities b. current liabilities and other liabilities c. other liabilities and long-term liabilities d. present liabilities and tomorrow’s liabilities ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 93. Debts listed as current liabilities are those that a. will be paid in less than one year b. are due to be paid in 5 to 10 years c. are due to be paid in more than one year d. are owed to the owner and will never be paid ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.ACBSP.APC.16 - Current Liabilities Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 94. Owner’s equity is a. added to assets and the two are equal to liabilities b. added to liabilities and the two are equal to assets c. subtracted from liabilities and the net amount is equal to assets d. equal to the total of assets and liabilities ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   95. Balance sheet accounts a. represent amounts accumulated during a specific period of time b. are called real accounts c. have zero balances after the closing entries have been posted d. are not affected by adjustments ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 96. On which financial statement will Income Summary be shown? a. statement of owner’s equity b. balance sheet c. income statement d. no financial statement ANSWER: d DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 97. Which of the following is not true about closing entries? a. There are four closing entries that update the owner’s equity account. b. After the second closing entry, the income summary account is equal to the net income or loss for the period. c. All real accounts are closed at the end of the period. d. By closing nominal accounts at the end of the period to zero, it is possible to isolate next period’s information correctly. ANSWER: c DIFFICULTY: Challenging Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   98. The income summary account is also called a. the imprest account b. the clearing account c. the adjustments account d. the zero-out account ANSWER: b DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 99. After posting the second closing entry to the income summary account, the balance will be equal to a. zero b. owner’s equity c. revenues for the period d. the net income or net loss for the period ANSWER: d DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 100. What is the first account that should be listed in the post-closing trial balance? a. Income Summary b. Owner, Capital c. Cash d. Fees Earned ANSWER: c DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   101. Which of the following account groups are nominal accounts? a. Cash, Dividends, Wages Payable b. Prepaid Insurance, Equipment, Fees Earned c. Common Stock, Dividends, Income Summary d. Rent Revenue, Fees Earned, Miscellaneous Expense ANSWER: d DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 102. There are four closing entries. The first one is to close revenues, the second one is to close expenses, the third one is to close , and the last one is to close the . a. Income Summary, drawing account b. Income Summary, capital account c. Income Summary, assets d. drawing account; Income Summary ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 103. Closing entries a. need not be journalized if adjusting entries are prepared b. need not be posted if the financial statements are prepared from the work sheet c. are not needed if adjusting entries are prepared d. must be journalized and posted ANSWER: d DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   104. Closing entries are dated in the journal as of a. the date they are actually journalized, although they are generally prepared after the end of the accounting period b. the last day of the accounting period, although they are actually journalized after the end of the accounting period c. the first day of the accounting period, although they are actually journalized well after the beginning of the accounting period d. the first day of the subsequent accounting period ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 105. Which of the accounts below would be closed by posting a debit to the account? a. Unearned Revenue b. Fees Earned c. Josh Morton, Drawing d. Miscellaneous Expense ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 106. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? a. Service Revenue b. Equipment c. Prepaid Insurance d. Unearned Rent ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   107. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? a. Utilities Expense b. Fees Earned c. Prepaid Insurance d. Insurance Expense ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 108. Which of the following accounts will be closed to the capital account at the end of the fiscal year? a. Rent Expense b. Fees Earned c. Income Summary d. Depreciation Expense ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 109. The entry to close the appropriate insurance account at the end of the accounting period is a. debit Income Summary; credit Prepaid Insurance b. debit Prepaid Insurance; credit Income Summary c. debit Insurance Expense; credit Income Summary d. debit Income Summary; credit Insurance Expense ANSWER: d DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   110. Which of the following accounts ordinarily appears in the post-closing trial balance? a. Fees Earned b. Supplies Expense c. Zane White, Drawing d. Unearned Rent ANSWER: d DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 111. The post-closing trial balance differs from the adjusted trial balance in that it does not a. take into account closing entries b. take into account adjusting entries c. include balance sheet accounts d. include income statement accounts ANSWER: d DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   112. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet: Accumulated Depreciation $ 3,200 Fees Earned 17,400 Depreciation Expense 1,300 Insurance Expense 400 Prepaid Insurance 4,800 Supplies 900 Supplies Expense 3,800 Net income for the period is a. $5,500 b. $11,900 c. $17,400 d. $8,700 ANSWER: b DIFFICULTY: Challenging Bloom’s: Applying LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   113. A summary of selected ledger accounts appear below for Alberto’s Plumbing Services for the current calendar year-end. Alberto, Capital 12/31 8,500 1/1 6,500 12/31 15,000 Alberto, Drawing 6/30 3,500 12/31 8,500 11/30 5,000 Income Summary 12/31 18,500 12/31 33,500 12/31 15,000 Net income for the period is a. $13,000 b. $33,500 c. $15,000 d. $18,500 ANSWER: c DIFFICULTY: Moderate Bloom’s: Applying LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.09 - Financial Statements ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 114. Diane's Designs purchased a one-year liability insurance policy on March 1 of this year for $8,400 and recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense during the adjusting process at the end of Diane’s first month of operations on March 31? a. $8,400 b. $840 c. $700 d. $7,700 ANSWER: c DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.07 - Adjusting Entries ACCT.ACBSP.APC.15 - Current Assets Reporting ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   115. The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts during the year-end closing process would be: a. Dec. 31 Fees Earned 750 Rent Revenue Income Summary 175 925 b. Dec. 31 Income Summary Fees Earned 925 750 Rent Revenue 175 c. Dec. 31 Revenues Income Summary 925 925 d. Dec. 31 Income Summary Revenues 925 925 ANSWER: a DIFFICULTY: Moderate Bloom’s: Applying LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   116. Evan Roberts owns a business, Shores Sports that rents canoes and kayaks. Below is the adjusted trial balance at December 31. Debit Credit Cash 1,500 Accounts Receivable 2,000 Interest Receivable 100 Prepaid Insurance 1,600 Notes Receivable (long-term) 2,800 Equipment 15,000 Accumulated Depreciation 3,000 Accounts Payable 2,400 Accrued Expenses Payable 3,920 Income Taxes Payable 2,700 Unearned Rent Fees 500 Evan Roberts, Capital 7,700 Evan Roberts, Drawing 2,000 Rent Rees Earned 37,000 Furniture Rental Revenue 1,200 Interest Revenue 100 Wages Expense 19,000 Depreciation Expense 1,800 Utilities Expense 320 Insurance Expense 700 Maintenance Expense 9,000 Income Tax Expense 2,700 58,520 58,520 The entry required to close the revenue accounts at the end of the period includes a a. debit to Income Summary for $37,000 b. credit to Income Summary for $38,300 c. debit to Income Summary for $38,200 d. credit to Income Summary for $37,000 ANSWER: b DIFFICULTY: Moderate Bloom’s: Applying LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   117. Evan Roberts owns a business, Shore Sports, that rents canoes and kayaks. Below is the adjusted trial balance at December 31. Debit Credit Cash 1,500 Accounts Receivable 2,000 Interest Receivable 100 Prepaid Insurance 1,600 Notes Receivable (long-term) 2,800 Equipment 15,000 Accumulated Depreciation 3,000 Accounts Payable 2,400 Accrued Expenses Payable 3,920 Income Taxes Payable 2,700 Unearned Rent Fees 500 Evan Roberts, Capital 7,700 Evan Roberts, Drawing 2,000 Rent Fees Earned 37,000 Furniture Rental Revenue 1,200 Interest Revenue 100 Wages Expense 19,000 Depreciation Expense 1,800 Utilities Expense 320 Insurance Expense 700 Maintenance Expense 9,000 Income Tax Expense 2,700 Totals 58,520 58,520 The entry required to close the expense accounts at the end of the period includes a: a. a debit to Income Summary for $35,520 b. a credit to Income Summary for $35,520 c. a debit to Income Summary for $33,520 d. a credit to Income Summary for $33,520 ANSWER: c DIFFICULTY: Moderate Bloom’s: Applying LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   Use the following end-of-period spreadsheet below to answer the questions that follow. Finley Company End-of-Period Spreadsheet For the Year Ended December 31 Adjusted Trial Balance Income Statement Balance Sheet Account Title Debit Credit Debit Credit Debit Credit Cash 48,000 48,000 Accounts Receivable 18,000 18,000 Supplies 6,000 6,000 Equipment 57,000 57,000 Accumulated Depreciation 18,000 18,000 Accounts Payable 25,000 25,000 Wages Payable 6,000 6,000 C. Finley, Capital 33,000 33,000 C. Finley, Drawing 3,000 3,000 Fees Earned 155,000 155,000 Wages Expense 63,000 63,000 Rent Expense 27,000 27,000 Depreciation Expense 15,000 15,000 Totals 237,000 237,000 105,000 155,000 132,000 82,000 Net Income (Loss) 50,000 50,000 155,000 155,000 132,000 132,000 118. The journal entry to close revenues would be: a. debit Income Summary, $155,000; credit Fees Earned, $155,000 b. debit C. Finley, Capital, $155,000; credit Fees Earned, $155,000 c. debit Fees Earned, $155,000; credit Income Summary, $155,000 d. credit Fees Earned, $155,000; credit C. Finley, Capital, $155,000 ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 119. The entry to close expenses would be: a. Wages Expense 63,000 Rent Expense 27,000 Depreciation Expense 15,000 Income Summary 105,000 b. Expenses 105,000 Income Summary 105,000 c. Wages Expense 63,000 Rent Expense 27,000 Depreciation Expense 15,000 C. Finley, Drawing 105,000 d. Income Summary 105,000 Wages Expense 63,000 Rent Expense 27,000 Depreciation Expense 15,000 ANSWER: d DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 120. The entry to close income summary would be a. debit C. Finley, Capital, $50,000; credit Income Summary, $50,000 b. debit Income Summary, $155,000; credit C. Finley, Capital, $155,000 c. debit Income Summary, $50,000; credit C. Finley, Capital, $50,000 d. debit C. Finley, Capital, $9,000; credit Income Summary, $9,000 ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   121. The entry to close C. Finley, Drawing would be a. debit C. Finley, Capital, $3,000; credit C. Finley, Drawing, $3,000 b. debit C. Finley, Capital, $12,000; credit C. Finley, Drawing, $12,000 c. debit C. Finley, Drawing, $3,000; credit C. Finley, Capital, $3,000 d. debit C. Finley, Drawing, $12,000; credit C. Finley, Capital, $12,000 ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 122. The ending balance in C. Finley, Capital is a. $33,000 b. $80,000 c. $30,000 d. $83,000 ANSWER: b DIFFICULTY: Moderate Bloom’s: Applying LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 123. Which of the following has steps of the accounting cycle in proper sequence (some steps may be missing)? a. analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial statements, journalize closing entries, analyze adjustment data and prepare adjusting entries b. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger c. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, and prepare a post-closing trial balance d. prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 124. In the accounting cycle, the last step is a. preparing the financial statements b. journalizing and posting the adjusting entries c. preparing a post-closing trial balance d. journalizing and posting the closing entries ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 125. Of the following steps of the accounting cycle, which step should be completed first? a. Closing entries are journalized and posted to the ledger. b. Transactions are posted to the ledger. c. Adjusting entries are journalized and posted to the ledger. d. Financial statements are prepared. ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 126. Of the following steps of the accounting cycle, which step should be completed last? a. An adjusted trial balance is prepared. b. Transactions are posted to the ledger. c. An unadjusted trial balance is prepared. d. Adjusting entries are journalized and posted to the ledger. ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   127. The accounting cycle requires three trial balances be done. In what order should they be prepared? a. post-closing, unadjusted, adjusted b. unadjusted, post-closing, adjusted c. unadjusted, adjusted, post-closing d. post-closing, adjusted, unadjusted ANSWER: c DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 128. During the end-of-period processing, which of the following best describes the logical order of steps? a. preparation of adjustments, adjusted trial balance, financial statements b. preparation of income statement, adjusted trial balance, balance sheet c. preparation of adjusted trial balance, cross­referencing, journalizing d. preparation of adjustments, adjusted trial balance, posting ANSWER: a DIFFICULTY: Challenging Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 129. A fiscal year for a business a. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month b. is determined by the federal government c. always begins on January 1 and ends on December 31 of the same year d. should end at the height of the business's annual operating cycle ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.BB.01 - Industry ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   130. The natural business year is a a. fiscal year that ends when business activities are at their lowest point b. calendar year that ends when business activities are at their lowest point c. fiscal year that ends when business activities are at their highest point d. calendar year that ends when business activities are at their highest point ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16. ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.BB.01 - Industry ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 131. The end-of-period spreadsheet a. is an integral part of the accounting cycle b. eliminates the need to rewrite the financial statements c. is a working paper that is required d. is used to summarize account balances and adjustments for the financial statements ANSWER: d DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 132. Which one of the steps below is not aided by the preparation of the end-of-period spreadsheet? a. preparing the adjusted trial balance b. posting to the general ledger c. preparing the financial statements d. preparing the closing entries ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   133. An end-of-period spreadsheet includes columns for a. adjusting entries b. closing entries c. reversing entries d. adjusting and closing entries ANSWER: a DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 134. When the end-of-period spreadsheet is complete, the adjustment columns should have a. total credits greater than total debits if a net income was earned b. total debits greater than total credits if a net loss was incurred c. total debits greater than total credits if a net income was earned d. total debits are equal to total credits ANSWER: d DIFFICULTY: Easy Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 135. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on the end-of-period spreadsheet a. is the amount of net income or loss b. indicates there is an error on the work sheet c. is the amount of retained earnings d. is the difference between revenue and expenses ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic   136. Net income appears on the end-of-period spreadsheet in the a. debit column of the Balance Sheet columns b. debit column of the Adjustments columns c. debit column of the Income Statement columns d. credit column of the Income Statement columns ANSWER: c DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 137. A net loss appears on the end-of-period spreadsheet in the a. debit column of the Balance Sheet columns b. credit column of the Balance Sheet columns c. debit column of the Income Statement columns d. credit column of the Adjustments columns ANSWER: a DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 138. After net income is entered on the end-of-period spreadsheet, the Balance Sheet Debit and Credit columns must a. be the same amount as the total amount of the Income Statement Debit and Credit columns b. equal each other c. be the same amount as the total amount in the Adjusted Trial Balance Debit and Credit columns d. not be equal to each other and need not be the same total amounts as any other pair of columns on the work sheet ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 139. Which of the statements below indicates that a company earned a net income for the period? a. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the end-of-period spreadsheet b. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the end-of-period spreadsheet c. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the end-of-period spreadsheet d. Cash inflows exceed cash outflows ANSWER: b DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 140. Which of the items below would appear in the Income Statement columns of the end-of-period spreadsheet? a. Cash b. Prepaid Insurance c. Unearned Revenue d. Net Loss ANSWER: d DIFFICULTY: Moderate Bloom’s: Remembering LEARNING OBJECTIVES: ACCT.WARD.16.04-APP - 04-APP ACCREDITING STANDARDS: ACCT.ACBSP.APC.05 - Accounting Cycle ACCT.ACBSP.APC.08 - Closing Entries ACCT.AICPA.FN.03 - Measurement BUSPROG: Analytic 141. Which of the accounts below would not appear in the balance sheet columns of the end-of-period spreadsheet? a. Terry Ja