A worksheet is a device that eliminates the need to prepare financial statements.
(A worksheet may be used in preparing financial statements but does not eliminate the need to prepare financial statements)
A worksheet is not a journal, and it cannot be used as a basis for posting to ledger accounts
To enter net income for the period into a work sheet requires an entry to the
Income statement debit column and the balance sheet credit column.
In a worksheet, net income is entered in the following columns
Income statements (Dr) and balance sheet (Cr)
A worksheet is a
device used in preparing financial statements
The dividends account appears in which column(s) of the worksheet?
trial balance, adjusted trial balance, and balance sheet
In closing the books, all temporary accounts are closed
Closing entries are necessary for
temporary accounts only
An account that will have a zero balance after closing entries have been journalized and posted is
(because it is an income statement or temporary account)
The closing process involves separate entries to close (1) expenses, (2) drawings, (3) revenues, and (4) income summary. The correct sequencing of the entries is
(3), (1), (4), (2)
Companies generally prepare closing entries directly from the
adjusted balances in the ledger.
The post-closing trial balance will contain only temporary accounts.
(only real or permanent accounts will appear on a post-closing trial balance)
The purpose of the post-closing trial balance is to
prove the equality of the balance sheet account balances that are carried forward into the next accounting period.
Which one of the following is an optional step in the accounting cycle of a business enterprise?
prepare a work sheet
All of the following are required steps in the accounting cycle except:
preparing a worksheet
(Journalizing and posting closing entries, preparing financial statements, journalizing the transactions)
Correcting entries are only made at the end of an accounting period.
(correcting entries should be made as soon as the error is discovered)
On September 23, Reese Company received a $350 check from Mike Moluf for services to be performed in the future. The bookkeeper for Reese Company incorrectly debited Cash for $350 and credited Account Receivable for $350. The amounts have been posted to the ledger. To correct this entry the bookkeeper should
debit Accounts Receivable $350 and credit Unearned Service Revenue $350
Cash of $100 received at the time the service was provided was journalized and posted as a debit to Cash $100 and a credit to Accounts Receivable $100. Assuming the incorrect entry is not reversed, the correcting entry is
debit Accounts Receivable $100 and credit Service Revenue $100
Whitman Company paid $630 cash on account to a creditor. The transaction was incorrectly recorded as a debit to Cash of $360 and a credit to Accounts Receivable of $360. The correcting entry is
Debit to accounts Payable, $630, debit to Accounts Receivable, $360, and credit to Cash, $990
Current liabilities are obligations that are reasonably expected to be paid from existing current assets or through the creation of other current liabilities.
are obligations that the company expects to pay within the coming year
A company has purchased a tract of land. It expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. The land should be reported as
a long-term investment
(long-term investments include long-term assets such as land that a company is not currently using in its operating activities)
Current assets are listed
Patents and copyrights are
(because they have no physical substance)
Within the current liabilities section, companies usually list _____ first
All of the following are stockholders’ equity accounts except
Investment in Stock
(preferred stock, common stock, retained earnings)
Use of reversing entries is not a required step in the accounting cycle
Use of reversing entries
simplifies the recording of subsequent transactions
Which of the following is an optional step in the accounting cycle?
(adjusting entries, closing entries, correcting entries)
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