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Exam 4: Completing the Accounting Cycle

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Question 71

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There is really no benefit in preparing financial statements in any particular order.

A) True
B) False

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Question 72

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Working capital is the excess of the current liabilities of a business over its current assets.

A) True
B) False

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Question 73

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If the totals of the Income Statement Debit and Credit columns of a work sheet are $27,000 and $29,000, respectively, after all account balances have been extended, the amount of the net loss is $2,000.

Reconstruct adjusting and closing entries for the month ended September 30 from the T accounts below.​​​ ​ ​

The post-closing trial balance differs from the adjusted trial balance in that it does not

Current assets and current liabilities for Brayden Company are as follows:​​ What conclusions can be drawn regarding Brayden's ability to meet its financial obligations?​

The following is the adjusted trial balance for Miller Company.​ Prepare closing entries and the post-closing trial balance.

Kirk Enterprises offers rug cleaning services to business clients. Below are the adjustments data for the year ended July 31. Using this information along with the spreadsheet below, record the adjusting entries in proper general journal form.Adjustments: (a) The equipment is estimated to last for five years with no salvage value. The asset will be depreciated evenly over its useful life. Record one month's depreciation. (b) Accrued wages, $2. (c) Unused supplies on hand, $8. (d) Of the unearned revenue, 75% has been earned. (e) Unexpired insurance remaining at the end of the month, $9.​

You have just accepted your first job out of college, which requires you to evaluate loan requests at Eastwood National Bank. The first loan request you receive is from Richard Enterprises, a small proprietorship. Richard Tracy, the owner, is requesting $105,000 and brings you the following trial balance (or statement of accounts) for his first year of operations ended December 31.Which of the following accounts do you think might need to be adjusted before an accurate set of financial statements could be prepared?

Austin Enterprises was started by Daniel Austin. During the current year, Daniel Austin invested $8,000 in the business. Based on the following end-of-period spreadsheet, prepare an income statement, statement of owner's equity, and balance sheet for Austin Enterprises for the year ended December 31.​​

Entries required to close the balances of the temporary accounts at the end of the period are called final entries.

When the end-of-period spreadsheet is complete, the Adjustments columns should have

The income statement will present

Reversing entries are recorded after adjusting entries have been recorded and before closing entries are recorded for the same period.

The trial balance may be listed on the work sheet instead of being prepared separately.

The post-closing trial balance will generally have fewer accounts than the trial balance.

Daniel's end-of-period spreadsheet at the end of July has $4,950 in the Balance Sheet Credit column for Accumulated Depreciation. The end-of-period spreadsheet at the end of August has $7,600 in the Balance Sheet Credit column for Accumulated Depreciation. What is the amount of the depreciation expense adjustment for the month of August?

Closing entries are entered directly on to the work sheet.

The majority of businesses end their fiscal year on December 31.

The ability to convert assets into cash is called liquidity.