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ACCT 2301 Chapter 4

A worksheet is not a journal, and it cannot be used as a basis for posting to the ledger accounts.
True
Closing entries are necessary for
temporary accounts only
When Alexander Company purchased supplies for $500, it incorrectly recorded a credit to Supplies for $5,000 and a debit to Cash for $5,000. Before correcting this error
Cash is overstated and Supplies is understated.
Patents and copyrights are
intangible assets
Use of reversing entries is not a required step in the accounting cycle.
True
Under IFRS, current assets are listed in reverse order of liquidity.
True
In a worksheet, net income is entered in the
income statement (Dr) and balance sheet (Cr) columns.
An account that will have a zero balance after closing entries have been journalized and posted is
Service Revenue
Which of the following steps in the accounting cycle may be performed more frequently than annually?
prepare a trial balance
The correct order of presentation in a classified balance sheet for the following current assets is
cash, accounts receivable, inventories, prepaid insurance.
Which of the following is an optional step in the accounting cycle?
Reversing entries
Companies that follow IFRS to prepare a statement of financial position generally use the following order of classification:
noncurrent assets, current assets, equity, noncurrent liabilities, current liabilities.
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
adjusted trial balance
The dividends account appears in which column(s) of the worksheet?
trial balance, adjusted trial balance, and balance sheet columns.
Income Summary has a credit balance of $12,000 after closing revenues and expenses. The entry to close Income Summary is
debit Income Summary $12,000, credit the Retained Earnings account $12,000.
The closing process involves separate entries to close (1) expenses, (2) dividends, (3) revenues, and (4) income summary. The correct sequencing of the entries is
(3), (1), (4), (2)
Which one of the following is an optional step in the accounting cycle of a business enterprise?
prepare a worksheet
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 Accounts 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.
On the balance sheet, companies usually list current assets in the order of largest to smallest.
False
A reversing entry
is the exact opposite of an adjusting entry made in a previous period.
IFRS generally requires a classified statement of financial position not similar to GAAP.
False

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