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Exam 4: Completing the Accounting Cycle

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Question 61

True/False

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When there is a net loss, the Income Summary account would have a credit balance.

A) True
B) False

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Question 62

Multiple Choice

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Temporary accounts include all of the following except:

A) Prepaid rent.
B) Consulting revenue.
C) Rent expense.
D) Income Summary.
E) Withdrawals.

F) D) and E)
G) B) and C)

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Question 63

Multiple Choice

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Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. -The Net Income for the year is:

Intangible assets are long-term resources that benefit business operations that usually lack physical form and have uncertain benefits.

Cash and office supplies are both classified as current assets.

A post-closing trial balance reports:

Mandalay Company frequently has accrued expenses at the end of its fiscal year that should be recorded for proper financial statement presentation. Mandalay pays on a weekly basis and has $50,000 of accrued salaries incurred but not paid for June 30, its fiscal year-end. This consists of one day's accrued salaries for the week. The company will pay its employees $250,000 on July 4; the one day of accrued salaries and the remaining four days for July salaries. Record the following entries: (a) Accrual of the salaries on June 30. (b) Payment of the salaries on July 4, assuming that Mandalay does not prepare reversing entries. (c) Assuming that Mandalay prepares reversing entries, reverse the adjusting entry made on June 30. (d) Assuming that Mandalay prepares reversing entries, payment of the salaries on July 4.

Compute Darling Company's current ratio using the following information: $\begin{array} { | l | l | l | l | } \hline \text { Accounts receivable } & \$ 20,000 & \text { Long-term notes payable } & \$ 80,000 \\\hline \text { Salaries payable } & 5,000 & \text { Building } & 170,000 \\\hline \text { Prepaid Rent } & 7,000 & \text { Accounts payable } & 15,000 \\\hline \text { Cash } & 12,000 & \text { Land } & 75,000 \\\hline\end{array}$

The assets section of a classified balance sheet usually includes the subgroups:

Flo's Flowers' current ratio is 1.3. The industry average for the current ratio is 1.2. This indicates that Flo's can cover its short term liabilities with its short term assets.

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Revenues, expenses, and withdrawals accounts, which are closed at the end of each accounting period are:

a) Prepare a classified balance sheet for Martin Air Freight based on the adjusted trial balance shown below. b) Prepare the required closing entries. * $2,000 of the long-term note payable is due during the next year.

A company's December 31 work sheet for the current period appears below. Based on the information provided, what is net income for the current period?

Reversing entries:

An unclassified balance sheet provides more information to users than a classified balance sheet.

__________ are long-term resources used to produce or sell products and services; they generally lack physical form and their benefits are highly uncertain.

It is obvious that an error occurred in the preparation and/or posting of closing entries if:

The current portion of long-term debt is classified in the ________ section of a classified balance sheet.

An optional columnar working paper used to prepare a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements is a(n) :