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Exam 4: Completing the Accounting Cycle

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Question 61

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

A) True
B) False

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Question 62

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Shown below is Adventure Travel's adjusted trial balance as of the end of its annual accounting period: (a) Prepare the necessary closing entries. (b) Prepare a post-closing trial balance.

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Question 63

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The third closing entry is to close Owner's Capital to the Owner's Withdrawals account.

Closing entries result in net income or net loss being transferred to the owner's capital account.

Listed below are a number of accounts. Use the table below to classify each account. Indicate whether it is a temporary or permanent account, whether it is included in the Income Statement or Balance sheet, and if it is closed at the end of the accounting period, and, if so, how it is closed. The first one is done as an example.

Current assets and current liabilities are expected to be used up or come due within one year or the company's operating cycle whichever is longer.

At the beginning of the year, Beta Company's balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000. During the year, the company reported total revenues of $226,000 and expenses of $175,000. Also, owner withdrawals during the year totaled $48,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of the year would be:

The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments columns contain entries for the following: 1. Office supplies used during the period, $1,200. 2) Expiration of prepaid rent, $700. 3) Accrued salaries expense, $500. 4) Depreciation expense, $800. 5) Accrued service fees receivable, $400. The Adjusted Trial Balance columns total is:

The current ratio is used to help assess a company's ability to pay its debts in the near future.

After preparing and posting the closing entries to close revenues (and gains) and expenses (and losses) , the income summary account has a debit balance of $33,000. The entry to close the income summary account will include:

The recurring steps performed each reporting period, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Harry's Bikes' current assets are $400 million and its current liabilities are $250 million. Its current ratio is 0.63. $400/$250 = 1.6

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

The current portion of long-term debt is classified with the ________________________.

The adjusted trial balance of the Thomas Company follows: Prepare the closing entries for Thomas Company.

The adjusted trial balance of Sara's Web Services follows: (a) Prepare the closing entries for Sara's Web Services. (b) What is the balance of Sara's capital account after the closing entries are posted?

An error is indicated if the following account has a balance appearing on the post-closing trial balance:

Adjustments must be entered in the journal and posted to the ledger after the work sheet is prepared.

Based on the following information from Raptor Company's balance sheet, calculate the current ratio.

List the steps in the accounting cycle.