Question 1

If a company utilizes reversing entries, they will

Accepted Answer

A)   be made at the beginning of the next accounting period.
B)   not actually be posted to the general ledger accounts.
C)   be made before the post-closing trial balance.
D)   be part of the adjusting entry process.

Question 2

After closing entries are posted, the balance in the Owner's Capital account in the ledger will be equal to

Accepted Answer

A)   the beginning Owner's Capital reported on the statement of owner's equity.
B)   the amount of the Owner's Capital reported on the balance sheet.
C)   zero.
D)   the profit (or loss)  for the period.

Question 3

An incorrect debit to Accounts Receivable instead of the correct account Notes Receivable does NOT require a correcting entry because total assets will NOT be misstated.

Accepted Answer

A) True 
 B)False

Question 4

Reversing entries are used to reverse two type of adjusting entries:

Accepted Answer

A)   accrued revenue and unearned revenues.
B)   prepayments and unearned revenues.
C)   accrued revenue and expenses.
D)   prepayments and accrued expenses.

Question 5

The account used to temporarily hold the profit or loss before being transferred to the capital account is called

Accepted Answer

A)   Income Summary account.
B)   Closing account.
C)   Drawings account.
D)   Contra account.

Question 6

Current assets are normally listed in the balance sheet in order of permanency.

Accepted Answer

A) True 
 B)False

Question 7

Closing entries are an optional part of the accounting cycle.

Accepted Answer

A) True 
 B)False

Question 8

If errors occur in the recording process, they

Accepted Answer

A)   should be corrected as adjustments at the end of the period.
B)   should be corrected as soon as they are discovered.
C)   should be corrected when preparing annual financial statements.
D)   cannot be corrected until the next accounting period.

Question 9

Crimmins Boats paid a $350 cheque to a supplier for the balance due on an account payable. The transaction was erroneously recorded as a credit to Cash of $530 and a debit to Repairs Expense of $530. The correcting entry is

Accepted Answer

A)   debit Accounts Payable $350; credit Cash $350
B)   debit Accounts Payable $180; credit Cash $180
C)   debit Cash $180; debit Accounts Payable $350, credit Repairs Expense $530
D)   debit Cash $350; debit Accounts Payable $180 credit Repairs Expense $530

Question 10

Reversing entries are used to reverse accrued revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 11

Reversing entries are useful

Accepted Answer

A)   whenever adjusting entries are prepared.
B)   only when accruals are journalized in the current period.
C)   only when accruals have been journalized in the previous period.
D)   whenever correcting entries are prepared.

Question 12

After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.

Accepted Answer

A) True 
 B)False

Question 13

It is NOT necessary to prepare formal financial statements if a work sheet has been prepared because financial position and profit are shown on the work sheet.

Accepted Answer

A) True 
 B)False

Question 14

When all columns are in balance, the preparation of a work sheet will help ensure that no errors were made in the accounting records.

Accepted Answer

A) True 
 B)False

Question 15

An intangible asset

Accepted Answer

A)   derives its value from the rights and privileges it provides the owner.
B)   is a liability because it has no physical substance.
C)   is never amortized because it has an indefinite life.
D)   cannot be classified on the balance sheet because it lacks physical substance.

Question 16

Which of the following is an example of a temporary account that will be closed to Income Summary at the end of the accounting period?

Accepted Answer

A)   Accumulated Depreciation
B)   Land
C)   Accounts Payable
D)   Service Revenue

Question 17

A company has only one accounting cycle over its economic existence.

Accepted Answer

A) True 
 B)False

Question 18

On August 1, Rothesay Boat Club provided services on account for $800. Rothesay received the entire balance on August 31 and recorded the payment by debiting Cash for $800 and crediting Service Revenue for $800. On the August 31 financial statements

Accepted Answer

A)   assets and revenues will be understated.
B)   assets and liabilities will be overstated.
C)   assets and revenue will be overstated.
D)   assets and liabilities will be understated.

Question 19

Reversing entries are more relevant in corporations.

Accepted Answer

A) True 
 B)False

Question 20

Closing entries are

Accepted Answer

A)   an optional step in the accounting cycle.
B)   posted to the ledger accounts from the work sheet.
C)   made to close permanent or real accounts.
D)   journalized in the general journal.

Exam 4: Completion of the Accounting Cycle

Crimmins Boats paid a $350 cheque to a supplier for the balance due on an account payable. The transaction was erroneously recorded as a credit to Cash of $530 and a debit to Repairs Expense of $530. The correcting entry is

Correct AnswerverifiedShow Answer

An intangible asset

Correct AnswerverifiedShow Answer

Reversing entries are more relevant in corporations.

Correct AnswerverifiedShow Answer

A company has only one accounting cycle over its economic existence.

Correct AnswerverifiedShow Answer

Reversing entries are used to reverse accrued revenues and expenses.

Correct AnswerverifiedShow Answer

Current assets are normally listed in the balance sheet in order of permanency.

Correct AnswerverifiedShow Answer

The account used to temporarily hold the profit or loss before being transferred to the capital account is called

Correct AnswerverifiedShow Answer

On August 1, Rothesay Boat Club provided services on account for $800. Rothesay received the entire balance on August 31 and recorded the payment by debiting Cash for $800 and crediting Service Revenue for $800. On the August 31 financial statements

Correct AnswerverifiedShow Answer

Reversing entries are used to reverse two type of adjusting entries:

Correct AnswerverifiedShow Answer

If errors occur in the recording process, they

Correct AnswerverifiedShow Answer

An incorrect debit to Accounts Receivable instead of the correct account Notes Receivable does NOT require a correcting entry because total assets will NOT be misstated.

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It is NOT necessary to prepare formal financial statements if a work sheet has been prepared because financial position and profit are shown on the work sheet.

Correct AnswerverifiedShow Answer

When all columns are in balance, the preparation of a work sheet will help ensure that no errors were made in the accounting records.

Correct AnswerverifiedShow Answer

Which of the following is an example of a temporary account that will be closed to Income Summary at the end of the accounting period?

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Reversing entries are useful

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After closing entries are posted, the balance in the Owner's Capital account in the ledger will be equal to

Correct AnswerverifiedShow Answer

Closing entries are an optional part of the accounting cycle.

Correct AnswerverifiedShow Answer

Closing entries are

Correct AnswerverifiedShow Answer

If a company utilizes reversing entries, they will

Correct AnswerverifiedShow Answer

After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.

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