Question Details

ACCT/510 ACCT510 ACCT 510 CHAPTER 4 MULTIPLE CHOICE QUESTIONS PART 4

CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE





38. Preparing a worksheet involves
a. two steps.
b. three steps.
c. four steps.
d. five steps.


39. The adjustments entered in the adjustments columns of a worksheet are
a. not journalized.
b. posted to the ledger but not journalized.
c. not journalized until after the financial statements are prepared.
d. journalized before the worksheet is completed.


40. The information for preparing a trial balance on a worksheet is obtained from
a. financial statements.
b. general ledger accounts.
c. general journal entries.
d. business documents.


41. After the adjusting entries are journalized and posted to the accounts in the general
ledger, the balance of each account should agree with the balance shown on the
a. adjusted trial balance.
b. post-closing trial balance.
c. the general journal.
d. adjustments columns of the worksheet.


Completing the Accounting Cycle 4 - 7

42. If the total debit column exceeds the total credit column of the income statement columns
on a worksheet, then the company has
a. earned net income for the period.
b. an error because debits do not equal credits.
c. suffered a net loss for the period.
d. to make an adjusting entry.



43. A worksheet is a multiple column form that facilitates the
a. identification of events.
b. measurement process.
c. preparation of financial statements.
d. analysis process.


44. Which of the following companies would be least likely to use a worksheet to facilitate the
adjustment process?
a. Large company with numerous accounts
b. Small company with numerous accounts
c. All companies, since worksheets are required under generally accepted accounting
principles
d. Small company with few accounts


45. A worksheet can be thought of as a(n)
a. permanent accounting record.
b. optional device used by accountants.
c. part of the general ledger.
d. part of the journal.


46. The account, Supplies, will appear in the following debit columns of the worksheet.
a. Trial balance
b. Adjusted trial balance
c. Balance sheet
d. All of these


47. When constructing a worksheet, accounts are often needed that are not listed in the trial
balance already entered on the worksheet from the ledger. Where should these additional
accounts be shown on the worksheet?
a. They should be inserted in alphabetical order into the trial balance accounts already
given.
b. They should be inserted in chart of account order into the trial balance already given.
c. They should be inserted on the lines immediately below the trial balance totals.
d. They should not be inserted on the trial balance until the next accounting period.


48. When using a worksheet, adjusting entries are journalized
a. after the worksheet is completed and before financial statements are prepared.
b. before the adjustments are entered on to the worksheet.
c. after the worksheet is completed and after financial statements have been prepared.
d. before the adjusted trial balance is extended to the proper financial statement
columns.


4 - 8 Test Bank for Accounting Principles, Eighth Edition


49. Assuming that there is a net loss for the period, debits equal credits in all but which
section of the worksheet?
a. Income statement columns
b. Adjustments columns
c. Trial balance columns
d. Adjusted trial balance columns


50. Adjusting entries are prepared from
a. source documents.
b. the adjustments columns of the worksheet.
c. the general ledger.
d. last year's worksheet.


51. The net income (or loss) for the period
a. is found by computing the difference between the income statement credit column and
the balance sheet credit column on the worksheet.
b. cannot be found on the worksheet.
c. is found by computing the difference between the income statement columns of the
worksheet.
d. is found by computing the difference between the trial balance totals and the adjusted
trial balance totals.


52. The worksheet does not show
a. net income or loss for the period.
b. revenue and expense account balances.
c. the ending balance in the owner's capital account.
d. the trial balance before adjustments.


53. If the total debits exceed total credits in the balance sheet columns of the worksheet,
owner's equity
a. will increase because net income has occurred.
b. will decrease because a net loss has occurred.
c. is in error because a mistake has occurred.
d. will not be affected.
Use the following information for questions 54-55.
The income statement and balance sheet columns of Pine Company's worksheet reflects the
following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000


54. The net income (or loss) for the period is
a. $48,000 income.
b. $10,000 income.
c. $10,000 loss.
d. not determinable.
Completing the Accounting Cycle 4 - 9


55. To enter the net income (or loss) for the period into the above worksheet requires an entry
to the
a. income statement debit column and the balance sheet credit column.
b. income statement credit column and the balance sheet debit column.
c. income statement debit column and the income statement credit column.
d. balance sheet debit column and the balance sheet credit column.


56. Closing entries are necessary for
a. permanent accounts only.
b. temporary accounts only.
c. both permanent and temporary accounts.
d. permanent or real accounts only.


57. Each of the following accounts is closed to Income Summary except
a. Expenses.
b. Owner's Drawing.
c. Revenues.
d. All of these are closed to Income Summary.


58. Closing entries are made
a. in order to terminate the business as an operating entity.
b. so that all assets, liabilities, and owner's capital accounts will have zero balances
when the next accounting period starts.
c. in order to transfer net income (or loss) and owner's drawing to the owner's capital
account.
d. so that financial statements can be prepared.


59. Closing entries are
a. an optional step in the accounting cycle.
b. posted to the ledger accounts from the worksheet.
c. made to close permanent or real accounts.
d. journalized in the general journal.


60. The income summary account
a. is a permanent account.
b. appears on the balance sheet.
c. appears on the income statement.
d. is a temporary account.