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Exam 4: Completing the Accounting Cycle and Classifying Accounts

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Question 71

Multiple Choice

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Accounts that are used to describe assets, liabilities, and equity, that are not closed as long as the company continues to own the assets, owe the liabilities, or have equity, and whose balances appear on the balance sheet are called

A) Summary accounts
B) Temporary accounts
C) Permanent accounts
D) Contra accounts.
E) Accrued accounts

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

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Question 72

Multiple Choice

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Current Liabilities

A) Are listed in order of liquidity
B) Are closed at the end of the accounting period to current assets
C) Are due to be settled within the shorter of one year or the operating cycle
D) Are listed in the order in which they are to be paid, with the first one listed to be paid first
E) Are due to be settled after one year or the operating cycle

F) D) and E)
G) A) and E)

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Question 73

True/False

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A work sheet can be prepared manually or with a computer spreadsheet program.

The alphabetized adjusted trial balance for SimCo Electrical Outfitters at August 31, 2020, is shown below. Identify how each account balance would be classified on a balance sheet given the following classification symbols: $\begin{array} { | l | l | l | l | } \hline \text { CA } & \text { Curent assets } & \text { CL } & \text { Curent liabilities } \\\hline \text { PPE } & \text { Property, plart ard equipment } & \text { LTL } & \text { Long-term liabilities } \\\hline \text { IA } & \text { Intangible asset } & \text { OE } & \text { Equity } \\\hline \text { LTI } & \text { Long-term irvestment } & \text { NA } & \begin{array} { l } \text { Not applicable to a } \\\text { balance sheet }\end{array} \\\hline\end{array}$

The current ratio

If all columns balance upon completion of a work sheet, you can be sure that no errors were made in preparing the work sheet.

Which statement is true about liquidity? Prepaid Rent is

The first five steps in the accounting cycle include analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries.

If the Balance Sheet columns of a work sheet fail to balance when the amount of profit is added to the Balance Sheet Credit column, the cause could be

The items that follow appeared in the Income Statement columns of the work sheet prepared for a sole proprietorship at year-end, December 31, 2020. Also, the owner's withdrawals account was debited for $12,000 during the year. Prepare the necessary closing entries at December 31.

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

If interim financial statements are required, adjusting entries must be journalized and posted to obtain the adjusted data needed for their preparation.

Which statement is incorrect?

Sharp's post-closing trial balance has debit totals of $40,350 and credit totals of $40,650. The next step is to review for errors in the closing process.

Using the following partial Excel work sheet for Breakout Maze Co., prepare the Income Statement, the Statement of Changes in Equity, and an unclassified Balance Sheet for the company. Assume the owner did not make any investments in the business during the year.

Indicate beside each of the following accounts whether the account is a temporary or permanent account.(a) Cash(b) Prepaid insurance(c) Unearned Revenue(d) Accounts receivable(e) Insurance expense(f) Smith, capital(g) Smith, withdrawals(h) Rent expense(i) Revenue(j) Supplies(k) Supplies expense(l) Depreciation expense, building(m) Accumulated depreciation, building

When closing the Withdrawals account

Assets are classified into current assets, investments, property, plant and equipment, and intangible assets.

Describe a work sheet and explain why it is useful.

The current ratio