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Exam 4: Completing the Accounting Cycle

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Question 1

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The worksheet does not show

A) net income or loss for the period.
B) revenue and expense account balances.
C) the ending balance in the owner's capital account.
D) the trial balance before adjustments.

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Question 2

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A company's operating cycle and fiscal year are usually the same length of time.

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Question 3

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Current liabilities

The most efficient way to accomplish closing entries is to

The income statement for the month of June 2016 of Snap Shot Inc. contains the following information: $\begin{array}{lr}\text { Revenues } &&\$7,300 \\\text { Expenses: } & \\\text { Salaries and Wages Expense } & \$ 3,000 \\\text { Rent Expense } & 1,300 \\\text { Advertising Expense } & 700 \\\text { Supplies Expense } & 200 \\\text { Insurance Expense } & 100 \\\quad \text { Total expenses } &&5,300 \\\text { Net income } &&\$2,000\end{array}$ At June 1 2016 Snap Shot reported owner's equity of $36000. The company had no owner drawings during June. At June 30 2016 the company will report owner's equity of

The adjusted trial balance columns of a worksheet are obtained by subtracting the adjustment columns from the trial balance columns.

The following items are taken from the financial statements of the Freight Service for the year ending December 31 2016: $\begin{array}{lr}\text { Accounts payable } & 19,000 \\\text { Accounts receivable } & 13,000 \\\text { Accumulated depreciation - equipment } & 26,000 \\\text { Advertising expense } & 21,200 \\\text { Cash } & 15,000 \\\text { Owner's capital }(1 / 1 / 16) & 104,000 \\\text { Owner's drawings } & 11,000 \\\text { Depreciation expense } & 12,000\\\text { Insurance expense } & 3,800 \\\text { Note payable, due } 6 / 30 / 17 & 72,000 \\\text { Prepaid insurance (12-month policy) } & 7,200 \\\text { Rent expense } & 16,000 \\\text { Salaries and wages expense } & 32,000 \\\text { Service revenue } & 135,000 \\\text { Supplies } & 5,000 \\\text { Supplies expense } & 6,000 \\\text { Equipment } & 210,000\end{array}$ What is the company's net income for the year ending December 31 2016?

Give the definition of current assets and current liabilities and provide two examples of each.

The worksheet for Montoya Company has been completed through the adjusted trial balance. You are ready to extend each amount to the appropriate financial statement column. Indicate for each account the financial statement column to which the account should be extended by placing a check mark ( $\surd$ ) in the appropriate column.

Eastwood Post Pavillion received a $650 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $560 and a credit to Service Revenue $560. The correcting entry is

What is the term used to describe the owner's equity section of a corporation? (b) Identify the two owners' equity accounts in a corporation and indicate the purpose of each.

The Owner's Drawings account is closed to the ______________ account at the end of the accounting period.

The following information is for Central Avenue Real Estate: $\begin{array}{c} \text { Central Avenue Real Estate}\\ \text { Balance Sheet }\\ \text { December 31, 2016}\\\\\begin{array}{lll} \text { Cash}& & \$ 25,000 \\ \text { Prepaid Insurance } & & 40,000 \\ \text { Accounts Receivable } & & 50,000 \\ \text {Inventory} & & 80,000 \\\text {Land Held for Investme } & & 75,000 \\\text {Land }& & 120,000 \\ \text { Building } & \$ 110,000 & \\\text { Less Accumulated } \\\text { Depreciation } & (20,000) &90,000 \\ \text { Trademark } & &70,000 \\ \text {Total Assets}&&\$550,000\\\end{array}\begin{array}{lr}\text { Accounts Payable } & \$ 60,000 \\\text { Salaries and Wages Payable } & 25,000 \\\text { Mortgage Payable } & 85,000\\\quad \text { Total Liabilities } & 170,000\\\\\\\\\text { Owner's Capital } &380,000 \\\\\text { Total Liabilities and } & \\\text { Owner's Equity } & \$ 550,0000\end{array}\end{array}$ The total dollar amount of assets to be classified as property plant and equipment is

A company's liquidity is concerned with the relationship between long-term investments and long-term debt.

Under IFRS

The following information is for Central Avenue Real Estate: $\begin{array}{c} \text { Central Avenue Real Estate}\\ \text { Balance Sheet }\\ \text { December 31, 2016}\\\\\begin{array}{lll} \text { Cash}& & \$ 25,000 \\ \text { Prepaid Insurance } & & 40,000 \\ \text { Accounts Receivable } & & 50,000 \\ \text {Inventory} & & 80,000 \\\text {Land Held for Investme } & & 75,000 \\\text {Land }& & 120,000 \\ \text { Building } & \$ 110,000 & \\\text { Less Accumulated } \\\text { Depreciation } & (20,000) &90,000 \\ \text { Trademark } & &70,000 \\ \text {Total Assets}&&\$550,000\\\end{array}\begin{array}{lr}\text { Accounts Payable } & \$ 60,000 \\\text { Salaries and Wages Payable } & 25,000 \\\text { Mortgage Payable } & 85,000\\\quad \text { Total Liabilities } & 170,000\\\\\\\\\text { Owner's Capital } &380,000 \\\\\text { Total Liabilities and } & \\\text { Owner's Equity } & \$ 550,0000\end{array}\end{array}$ The total dollar amount of assets to be classified as investments is

Use the following income statement for the year 2016 for Belle Company to prepare entries to close the revenue and expense accounts for the company. $\begin{array} { l r r } \text { Service revenue } & & \$ 85,000 \\\text { Expenses: } & \\\quad \text { Salaries and Wages Expense } & \$ 40,000 \\\quad \text { Rent Expense }& 12,500 & \\\quad \text { Advertising Expense }& \underline { 8,700 } & \\\quad \text { Total expenses } & & \underline { 61,200 } \\\text { Net income (loss) }& & \underline { \$ 23,800 }\end{array}$

The income statement for the month of June 2016 of Snap Shot Inc. contains the following information: $\begin{array}{lr}\text { Revenues } &&\$7,300 \\\text { Expenses: } & \\\text { Salaries and Wages Expense } & \$ 3,000 \\\text { Rent Expense } & 1,300 \\\text { Advertising Expense } & 700 \\\text { Supplies Expense } & 200 \\\text { Insurance Expense } & 100 \\\quad \text { Total expenses } &&5,300 \\\text { Net income } &&\$2,000\end{array}$ The entry to close Income Summary to Owner's Capital includes

It is not necessary to prepare formal financial statements if a worksheet has been prepared because financial position and net income are shown on the worksheet.

The following items are taken from the financial statements of the Freight Service for the year ending December 31 2016: $\begin{array}{lr}\text { Accounts payable } & 19,000 \\\text { Accounts receivable } & 13,000 \\\text { Accumulated depreciation - equipment } & 26,000 \\\text { Advertising expense } & 21,200 \\\text { Cash } & 15,000 \\\text { Owner's capital (1/1/16) } & 104,000 \\\text { Owner's drawings } & 11,000 \\\text { Depreciation expense } & 12,000 \\\text { Insurance expense } & 3,800\\\text { Note payable, due } 6 / 30 / 17 & 72,000 \\\text { Prepaid insurance (12-month policy) } & 7,200 \\\text { Rent expense } & 16,000 \\\text { Salaries and wages expense } & 32,000 \\\text { Service revenue } & 135,000 \\\text { Supplies } & 5,000 \\\text { Supplies expense } & 6,000 \\\text { Equipment } & 210,000\end{array}$ What are total current assets at December 31 2016?