2205-ACG2021 learnsmart

Match the Item on the left wlth the definition on the rtght.
V’ Your answer is correct!
~ Income statement
~ Balance sheet
~ Worksheet
~ Trial balance
~ Statement ofcash flows
‘i* ,;
“””‘ ~ Reports a business’s revenues and expenses for a period
oftime.
1rt1 ~ Reports a business’s assets, llabilltles and equity on a
specific date.
“””‘ ~ A useful tool in working wlth accounting Information.
“””‘ ~ A llst of accounts and their balances at a point In time.
“””‘ ~ Reports the Inflows and outflows of cash during a period
oftime.
Select the statement below that explains how to use the Income Summary account.
~ Your answer ls correct!
The Income Summary account Is used during the closing process to facilitate the closing
of all permanent accounts.
The Income Summary account is credited duringthe adjusting process, as it is a contra
asset account
The Income Summary account is debited for the sum of all revenue accounts during the
closing process.
The Income Summary account Is used during the closing process to facilitate the closing
of revenue and expense accounts.
A comoanv had the followln!!: selected balances:
Account Debit Credit
Service Revenue $8,000
Rental Revenue $2,000
wages Expense $500
Utilities Expense $100
The third closingjournal entry, after closlng revenues and expenses, would Include which ofthe
followlng?
V” Your answer is correct!
Debit Income Summary $10,000; and credit Owner’s capital $10,000.
Debit Income Summary $600; and credit Expenses $600.
Q Debit Income Summary $9,400; and credit Owner’s Capital $9,400.
Credit Income Summary $9,400; and debit Owner’s Capital $9,400.
The correct answer Is shown
Closing means to transfer account balances from temporary (asset/liability/permanent/temporary)
accounts so that they will start with a zero (contra/larger/zero) balance at the beginning ofthe next
period.
<ti’ Your answer is correct! M Read aboutthis
Which of the following accounts would be sorted from the Adjusted Trial Balance of a work sheet to
the Balance Sheet &Statement of Owner’s Equitycolumns on a work sheet?
~ Your answer is correct!
Land; Unearned rent; Supplies expense
Cash; Wages expense; Land
£1 Cash; Accounts payable; Owner, Withdrawals
Accounts receivable; Service revenue; Prepaid rent
M Read about1hls
The Income Summary account can be defined as which of the following? (Check all that apply.)
~ Your answer is correct! • Readaboutlhls
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An account that contains a credit for the sum of all expenses
Describe your understanding of the closing process by identlfying the correct steps below. (Check all
that apply.)
~ Your answer is correct! • Readaboutthis
Close the Capital account
Which of the following defines long-term liabilities?
~ Your answer is correct! • Readaboutlhls
Long-term liabilities are obligations due to be paid within one year.
Long-term liabilities are costs incurred within an accounting period that have uncertain
benefits.
Long-term liabilities are debts of a business that are not due to be settled within one
year.
Long-term liabilities are reported before current liabilities on a classified balance sheet
The correct answer Is shown
Review the following totals from a work sheet Based on these totals, the company experienced {a) net
{income/loss)loss of $$2,500.
Income Statement Balance Sheet
Debit Credit Debit Credit
$10,000 $7,500 $41,000 $43,500
“1/ Your answer is correct! M Read aboutthis
Which of the lists below contains only permanent accounts?
~ Your answer is correct!
Depreciation Expense; Income Summary; Service revenue
Unearned rent; Service revenue; Accumulated Depreciation
• Read aboutlhls
A classified balance sheet has several categories for assets and llabllitles including: (Check all that
apply.)
Y’Your answer Is correct!
W Long tenn investments.
kl Currentassets.
Noncurrent equity.
kl Plant assets.
Operating expenses.
kl Noncurrent llabllltles.
Tangible current assets.
The correct answer Is shown
The journal entry to close all of a company’s expense accounts would include a credit (debit/credit) to
each of the expense accounts and a corresponding debit(debit/credit) to the Income
summary(statement;summary) account.
Y’ Your answer is correct! M Read aboutthis
Which of the following lists contains only temporary accounts?
../Your answer is correct!
Supplies; Wages Expense; Owner, Capital
Owner, Capital; Income Summary; Owner, Withdrawals
Supplies, Land, Unearned Rent
• Read about11\is
Select the statement(s) below which correctly describe howto use the work sheet in the adjustment
process. (Check all that apply.)
-./ Your answer is correct! • Reedaboutthis
Journalizlng and posting adjusting entries is required after adjustments are entered in a
worksheet
Awork sheet is ajournal.
Journallz.ing and posting adjusting entries are not mandatory when a work sheet is
involved.
The correct answer Is shown
Complete the following statement.
The purpose of the closing process is to reset temporary (temporary/permanent) account balances to
zero and to transfer the changes in all of these accounts to the Owner, capital
(CapitaVSummary/Withdrawal) account
..,/ Your answer is correct! M Read aboutthis
Explain the required steps to complete a work sheet by placingthe following in the correct order of
completion. (Put the first step at the top.)
‘ii’ Your answer Is correct! l!!J Reed about!tis
v 1 Enter unadjusted trial balance.
v 2 Enter adjustments.
v 3 Prepare adjusted trial balance.
v 4 Sort (adjusted) trial balance amounts to financial statements.
v 5 Total financial statement columns.
v 6 Compute net income or net loss and add to the Balance Sheet columns.
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Which of the following is correct regarding a work sheet?
~ Your answer is correct! • Readaboutthis
Each set of column totals must balance on the Trial Balance columns, Adjustments
columns and the Adjusted Trial Balance columns.
The adjusted trial balance column totals will be off by the net income amount.
Any accounts that don’t exist on the trial balance will be omitted from the adjusted trial
balance as well.
If a company reports net income, then this amount will be added to the Adjustments
column.
Current assets are:
../Your answer is correct! L!J Read about1hls
property, plant and equipment that are tangible and depreciated
c• cash and other resources that are expected to be sold, collected or used Within one year I
equipment and other assets that have a life greaterthan one year
difficultto convert to cash or other monetary assets
The correct answer Is shown
The closing process takes place at the end (end/beginning) of an accounting period, after the
adjusted(adjusted/unadjusted) trial balance is prepared and after (after/before) the financial statements
are prepared.
~ Your answer is correct! • Read aboutthis
Which of the statements below is correct regarding the difference between a temporary account and
a permanent account?
../Your answer is correct! • Reedaboutthis
Temporary account balances will be carried to the next accounting period.
Permanent account balances will be transferred to the Owner, Capital account.
Apermanent account will not appear on a post-closing trial balance.
)
The following categories are on a classified balance sheet. listthem in the order that they would
appear.
V Your answer Is correct!
v 1 Current assets
v 2 Long-term investments
v 3 Plant assets
v 4 Intangible assets
v 5 Current liabilities
v 6 Long-term liabilities
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How can you add adjusted accounts to a work sheet when they did not appear on the trial balance?
~ Your answer is correct!
New accounts are added to the New Accounts columns of a work sheet
New accounts would be foot-noted at the bottom ofthe work sheet.
New accounts are never added to a work sheet
• Read aboutthis
Which of the following statements is (are) correct about completing a work sheet? (Check all that
apply.)
~ Your answer is correct! l!!J Read aboutthis
The words “net income• or •net loss” should be written on a line in the Income Statement
columns ofthe worksheet.
Adding net income to the Credit column of the Balance Sheet & Owner’s Equity columns
implies that It is to be added to Owner, Capital.
If a net income occurs, it is added to the Debit column of the Income Statement.
fl If a net income occurs, itis added to the Credit column ofthe Balance Sheet.
Journalizing and posting adjusting entries from the work sheet is aided by which of the following?
~ Your answer is correct!
Color-coded numbers
Footing totals
• Reed about11119
Acomoanv had the followlnii selected balances:
Account Debit Credit
Service Revenue $4,000
Rental Revenue $2,000
Wages Expense $500
Utilities Expense $100
Owner’s Withdrawals $80
Demonstrate the lastclosingjournal entry to close the Withdrawals account by selectingthe correct
answer below.
¥’ Your answerIs correctl
Debit Income Summary $80; Credit Owner’s Withdrawals $80
U Debit Owner’s Capital $80; Credit Owner’s Withdrawals $80
Debit Owner’s Withdrawals $80; Credit Owner’s Capital $80
Debit Owner’s Withdrawals $80; Credit Income Summary $80
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l!!!J Rood •boutthl&
The correct answer Is shown
The adjusted (adj usted/unadjusted) trial balance is prepared by combining the adjustments in the
Adjustments columns with the balances for each account listed on the unadjusted (adj usted/unadjusted)
trial balance.
~ Your answer is correct! l!J Reedaboutthis
Some of the steps In the accounting cycle are listed below. Place them In the correct order of use.

..,. 3 Prepare the adjusted trial balance.
..,. 4 Prepare the f inancial statements.
..,. 5 Journalize and post closing entries.
..,. 6 Prepare post-closing trial balance.

The steps in the closing process are listed on the right Match them to the correct order in which they
would be performed (on the left).
‘../ Your answer is correct! • Read aboutthis
‘../ Step#1 o-:i ‘../ Identify accounts to be closed.
‘../ Step#2 c…:i ‘../ Journalize and post closing entries.
L../ Step #_s_____ c-:i ‘../ Prepare a post closing trial balance.
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Review the following statements and select which is correct regarding a work sheet and formal
financial statements.
~ Your answer Is correct! l!!!J Read obo\lt11115
The Withdrawal’s account balance w111 be used in preparing the statement of owner’s
equity.
The totals ofthe Balance Sheet & Owners Equity columns will be equal to revenues
minus expenses for the period.
When the Debit column ofthe Income statement columns is greater tJian tJie Credit
column, the company will be reporting a net income.
The Withdrawal’s account balance w111 be used to prepare tJie balance sheet
The correct answer Is shown
Current items can be described as those expected to come due within one year (month/year) and are
listed in the order of how quickly (quickly/slowly) they could be converted to or paid in cash.
~ Your answer is correct! M Readaboutthis
Which of the statements below is (are) correct regarding the accounting cycle? (Check all that apply.)
V” Your answer Is correct! l!!!J Reed abouttllis
The accounting cycle refers to steps followed by a company to prepare its financial
statements.
The accounting cycle takes place anytime the general ledger accounts need adjusting.
Q The accounting cycle is a series of steps repeated each reporting period.
The accounting cycle refers to the steps that occur within a company to approve
expenses for payment.
A comoanv had the followim! selected balances:
Account Debit Credit
Service Revenue $4,000
Rental Revenue $2,000
Wages Expense $500
Utilities Expense $100
Owner, Withdrawals $80
The first closing journal entry would include which of the following?
~ Your answer is correct!
A debit to Income Summary for $6,000.
A credit to Income Summary for $5,400.
A debitto Income Summary for $80.
W Acreditto Income Summary for $6,000.
~ Reed ellOOtthis
Demonstrate your knowledge of preparing a post-closing trial balance by selecting the accounts
below that would be included on it. (Check all that apply.)
V’Your answer is correct!
Income Summary account
Temporary accounts
fl Liabilityaccounts
Ci Permanent accounts
Revenue accounts
Q Asset accounts
Expense accounts
l!!!J – aboutthl8
What are the benefits of using a work sheet? (Check all that apply.)
~ Your answer is correct! • Readaboutthis
A document which can be easily used by external users
A formal financial statement
Select the statement below that describes a post-closingtrial balance.
~ Your answer is correct! M Readaboutthis
It is a listing ofall temporary accounts and their balances after closing.
£! It is a listing ofall permanent accounts and their balances after closing.
It is a listing of all permanent accounts and their balances immediately afterthe adjusting
process.
It is a financial statement that describes all revenue and expense accounts after closing,
The correct answer Is shown
Accounting (with/without) without reversing entries for accrued salaries will require a debitto salaries
expense, a debit to a salaries payable and a credit to cash for the first payment of salaries in the next
period.
V Your answer is correct! • Read aboutthis
Identify the accounts below that would be classified as a long..tenn investment. (Check all that apply.)
V’ Your answer Is correct!
A Investments in bonds
Equipment
Q Land held for future expansion
Accounts receivable
W Notes receivable due in 2 years
Franchise
Notes receivable due in 3 months
Cash
+,a:,:;;
l!!!l Read about11111
Identify which of the accounts below would be classified as a plant asset account (Check all that
apply.)
<./ Your answer Is correct!
Q Land currently being used
Q suilding
Cash
Q Equipment
Patent
Supplies
Notes receivable due in two years
0 Machinery
Identify the accounts below that would be classlfted as Intangible assets on a classlfied balance
sheet (Check all that apply.)
.,.,Your answer iscorrect!
Prepaid rent
Accounts recelvable
Review the statements below regarding the closing process under U.S. GAAP and IFRS. Which is
correct?
‘../ Your answer is correct!
Both U.S. GAAP and IFRS require permanent accounts to be closed.
Under IFRS, the Income Summary account does not exist
• Read aboutlhls
Under IFRS, revenue and expense accounts are only closed at the end of the year.
Describe an unclassified balance sheet
V’ Your answer ls correct!
An unclassified balance sheet Is one whose Items are broadly grouped into assets,
liabilities, and equity.
An unclassified balance sheet organizes assets and liabilities into important subgroups.
An unclassified balance sheet Is one where assets are separated into operating assets
and non-operating assets.
An unclassified balance sheet lists all operating expenses separate from itS
non-operating expenses.
UsinP: the financial information of ABC Co. below, compute Its current ratio for the period.
$ in millions 2011
Current assets $520
Current liabilities $128
Long-term liabilities $250
~ Your answer is correct!
1.38
2.08
.246
• Read aboutthis
Choose the formula below that is used to calculate the current ratio of a business.
~ Your answer is correct! • Reedaboutthis
Current assets divided by plant assets
Current liabilities divided by long-term liabillities
£1 Current assets divided by current liabilities
Current liabilities divided by current assets
Determine which ofthe statements below are correct regardingthe current ratio. (Check all that
apply.)
Y” Your answer Is correct!
The current ratio Is useful In aging past due accounts of customers.
Acurrent ratio of less than 1.0 would Indicate that a company would have a problem
paying off shortterm debt.
The current ratio helps a supplier determlne whether It wants to extend creditto a
customer.
Acurrent ratio of less than 1.0 would Indicate thata business’s debtcan be easily paid
off with current assets.
The current ratio can affect Interest rates charged by creditors when lending money to a
business.
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Which of the following statements correctly describes what a work sheet is? (Check all that apply.)
../Your answer is correct! L!J Read about1hls
Awork sheet is a financial statement.
Which of the accounts below would appear in the equity section of a classified balance sheet?
~ Your answer is correct! • Reed about11119
Income Summary
Service Revenue
Select the statement below that describes howto Indicate an account has an abnormal balance.
~ Your answer is correct!
Use green ink to print the abnormal balance.
Double underline the abnormal balance.
£1 Circle the abnormal balance.
• Reed aboutthis
Usingthe financial information ofABC Co. below, evaluate the company’s current ratio. Select all
answers which annlv.
$ in millions 2013
Current assets $620
Current liabilities $430
Current ratio 1.44
Industry current ratio 1.28
<ol’ Your answer Is correct!
Since the company’s current ratio is greaterthan 1.0, it indicates future challenges in
covering liabilities.
The company’s ability to pay short-term obligations is not in doubt since its current ratio i
greater than 1.0
The company’s ratio is above the industry’s ratio, so this company is able to cover its debt
better than others in this industry.
MAI .A
The entries to close the revenue and expense accounts for Jefferson Companyare shown below. The
nextclosl02 entrv In the closin2 orocess would Include: {Check all that apply.)
Account Debit Credit
Service Fees 20,00(
Income Summary 20,000
(Close revenue accounts.)
Income Summary 22,90(

\/YouranswerIs correct!
ff Acredit to Income Summaryfor $2,900.
Credit to Net Income $20,000.
Debit to Service Fees for $20,000.
Adebitto Income Summary for $2,900.
N Adebit to the capital account for $2,900.
Debit to NetIncome for $2,900.
Acredit to the Cspltal account for $2,900.
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l!!!J ___..
Identify which of the following steps in the accounting cycle is optional.
~ Your answer is correct!
Adjustingjournal entries
Adjusted trial balance
• Read aboutthis
Review the statements below and select the one which is correct regarding the effect that reversing
entries have on financial statements.
~ Your answer is correct!
Net income will be higher, but total assets will be lower.
Assets and revenues will be lower when reversing entries are used.
Expenses and liabillties will be higher when reversing entries are used.
M Readebout1h19
Review the statements below and selectthe items that are correct regarding the operating cycle for a
business. (Check all that apply.)
V Your answer Is correct! l!!J Rood aboutthis
Most operating cycles are greaterthan one year.
The operating cycle is the time span from when cash is used to acquire goods and
services until cash is received from the sale of goods or services.
Most companies use a one-month period or operating cycle, in deciding which assets and
liabilities are current.
Most companies use a one-year period or operating cycle, in decidingwhich assets and
liabilities are current.
Q Most operating cycles are less than one year.
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Selectthe statements below that are correct regarding reporting assets and liabilities under U.S.
GAAP vs. IFRS. (Check all that apply.)
V Your answer is correct! l!!!J Read about tllla
Q The definition of a llabilitY is similar under U.S. GAAP and IFRS.
After acquisition, IFRS defines fair value of an asset as exchange value-either
replacement cost or selling price.
Under IFRS, a liability is only included on the balance sheet in the yearthe obligation is
dueto be paid.
Q Under both IFRS and U.S. GMP, an asset will be initially recorded at its historical cost.
Under both IFRS and U.S. GMP, there exist two categories of liabilities-current and
long-term.
Describe the general ledger after adjusting and closing entries have been posted. (Check all that
apply.)
~ Your answer Is correct! l!!J Reed aboutthll
All asset accounts will show a $0 balance after closing.
The Owner, Capital account will have a $0 balance after closing.
The Owner, Withdrawal account will have a $0 balance after closing.
The Income Summary account will show three closing entries.
The abbreviations “adj.” and “clos.” have been entered in the explanation columns of the
ledger.
Recall the column headings of a work sheet used to prepare financial statements. Which of the
following items would be seen on such a worksheet. (Check all that apply.)
~ Your answer Is correct! l!!!J Read obo\lt11115
if+ Adjustment columns
statement of Cash Flows columns
fi Balance Sheetcolumns
fl Adjusted Trial Balance columns
fl Income Statementcolumns
if+ Unadjusted Trial Balance columns
Select the statements below that describe the purpose of a post-closing trial balance. (Check all that
apply.)
~ Your answer Is correct! L!J Reed aboutthls
Ci One purpose is to verify that total debits equal total credit for permanent accounts.
One purpose is to verify that total debits equal total credits for all temporary accounts.
One purpose is to confirm that if debits equal credits then no errors in journalizing and
positing occurred during the period.
One purpose is to verify that all permanent accounts have zero balances.
Ci One purpose is to verify that all temporary accounts have zero balances.
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When is a reversing entry made?
~ Your answer is correct! • Reed about11119
It is made immediately after posting adjusting entries and prior to preparing financial
statements.
It is made on the last day of an accounting period before preparingthe post-closingtrial
balance.
It is made prior to closing temporary accounts.
£! It is made on the first day of a new accounting period.
On December 31, AB Consulting recorded two days’ wages of $100 in an adjusting entry which
included a debitto Wages Expense and a credit to Wages Payable. On January 1, the accountant
prepared a reversing entry which included which ofthe following?
V’ Your answer is correct!
Debit Wages Expense $100; Credit Wages Payable $100.
Debit Wages Expense $100; credit Cash $100.
£1 Debit Wages Payable; credit Wages expense $100.
Debit Wages Payable $100; credit cash $100.
M Read about1hls
A reversing entry can be described as a(n): (Check all that apply.)
~ Your answer ls correct!
f 1 entry whose purpose is to simplify a company’s record keeping.
fl optional entry.
fl entry that is the exact opposite ofan accrual adjustingentry.
entry that reduces expenses reported on the income statement
entry that is recorded In response to an adjusting entry made In the previous reporting
period.
required entry done at the end of an accounting period.
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