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Exam 4: Completing the Accounting Cycle

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Question 51

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Which of the following entries will be necessary to close the Insurance Expense account at the end of the year?

A) debit Insurance Expense and credit Income Summary
B) debit Insurance Expense and credit Common Stock
C) debit Retained Earnings and credit Insurance Expense
D) debit Income Summary and credit Insurance Expense

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

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Question 52

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Which of the following is NOT a balance sheet account?

A) Unearned Revenue
B) Prepaid Rent
C) Accumulated Depreciation - Building
D) Dividends

E) A) and B)
F) None of the above

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Question 53

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Generally Accepted Accounting Principles (GAAP) require every organization to prepare reversing entries.

Assets and liabilities are presented in a different order on a balance sheet prepared following IFRS than on a balance sheet prepared following U.S. GAAP.

Which of the following steps must be completed before preparing the adjusted trial balance?

The Supplies Expense account is a temporary account.

The steps of the accounting cycle are followed throughout the accounting period.

The time span during which cash is paid for goods and services, which are then sold to customers from whom the business collects cash, is called the ________.

GAAP requires publicly traded companies to prepare a post-closing trial balance and publish it in their annual report.

Why are temporary accounts not included in the post-closing trial balance?

Answer the following questions regarding the current ratio: $\begin{array}{|l|l|}\hline \text { Current Ratio Question } & \text { Answer } \\\hline \text { What does the current ratio } & \\\text { measure? } & \\\hline \text { How is the current ratio } \\\text { calculated? }\\\hline \text { When analyzing the current }\\ \text {ratio, what is the rule of }\\ \text {tlaunb?}\\\hline\end{array}$

In which of the columns of the worksheet would Net Income be found?

In an accounting cycle, which of the following steps takes place only at the end of the accounting period?

In a balance sheet, assets are classified as either current or long term, depending on their liquidity.

Which of the following is the most liquid asset?

List the order in which the balance sheet, statement of retained earnings, and income statement are prepared. Briefly discuss why this order is necessary.

Which of the following statements is an accurate interpretation of the current ratio?

Prepaid Rent is always classified as a long-term asset.

A list of the accounts and their balances at the end of the period, after journalizing and posting the closing entries, is called ________.

The balances of select accounts of Sandra, Inc. as of December 31, 2018 are given below: $\begin{array} { | l | r | r | } \hline & { \text { Debit } } & \text { Credit } \\\hline \text { Building } & \$ 130,000 & \\\hline \text { Cash } & 5,000 & \\\hline \text { Office Supplies } & 800 & \\\hline \text { Furniture } & 5,000 & \\\hline \text { Prepaid Insurance } & 450 & \\\hline \text { Accumulated Depreciation-Furniture } & & \$ 1,000 \\\hline \text { Land } & 32,000 & \\\hline \text { Accumulated Depreciation-Building } & & 4,600 \\\hline \text { Accounts Receivable } & 2,300 & \\\hline\end{array}$ The insurance has been prepaid until June 30, 2019. Determine the amount of total current assets reported on the balance sheet at December 31, 2018.