Chapter 4 Completing The Accounting Cycle PDF

Chapter 4--Completing the Accounting Cycle
Student: ___________________________________________________________________________
1. After analyzing transactions, the next step would be to post the transactions in the ledger.
True False
2. The most important output of the accounting cycle is the financial statements.
True False
3. The work sheet is not considered a part of the formal accounting records.
True False
4. Cross-referencing is useful in assuring that the debits and credits are in balance.
True False
5. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are
simply added to the account title column.
True False
6. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements.
True False
7. There is really no benefit in preparing financial statements in any particular order.

True False
8. Round tripping is a fraudulent scheme where business A artificially inflates revenue by lending money to
customer B who uses that money to buy products from A.
True False
9. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the
dollar amount.
True False
10. The usual presentation of the statement of owner's equity is (1) Beginning capital, (2) Net income or loss,
(3) Drawing, (4) Owner's contributions, (5) Ending capital.
True False
11. The difference between a classified balance sheet and one that is not classified is that the classified one has
subheadings.
True False
12. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the
normal operations of a business, usually longer than one year, are called current assets.
True False
13. Prepaid Insurance is an example of a current asset.

True False
14. Land is an example of a plant asset.

True False
15. Liabilities that will be due within one year or less and that are to be paid out of current assets are called
current liabilities.
True False
16. The amount of the net income for a period appears on both the income statement and the balance sheet for
that period.
True False
17. Accrued taxes payable are generally reported on the balance sheet as a current liability.
True False
18. At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses.
True False
19. Office Equipment is an example of a current asset account.

True False
20. Capital and Drawing are reported in the owner's equity section of the balance sheet.
True False
21. Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current
assets.
True False
22. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as
current assets.
True False
23. Accrued expenses are ordinarily listed on the balance sheet as current assets.
True False
24. Accrued revenues are ordinarily listed on the balance sheet as current liabilities.
True False
25. The income statement is prepared from the adjusted trial balance or the income statement columns on the
work sheet.
True False
26. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short
time before they expire.
True False
27. Accumulated Depreciation is a permanent account.
True False
28. The drawing account is a temporary account.

True False
29. The balance sheet accounts are referred to as real or permanent accounts.
True False
30. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting
period.
True False
31. The income summary account is closed to the owner's capital account.
True False
32. The accumulated depreciation account is closed to the income summary account.
True False
33. The drawing account is closed to the income summary account.

True False
34. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance.
True False
35. Entries required to close the balances of the temporary accounts at the end of the period are called final
entries.
True False
36. Journalizing and posting closing entries must be completed before financial statements can be prepared.
True False
37. During the closing process, some balance sheet accounts are closed and end the period with a zero balance.
True False
38. Closing entries are entered directly on to the work sheet.

True False
39. The post-closing trial balance will generally have fewer accounts than the trial balance.
True False
40. A post-closing trial balance contains only asset and liability accounts.
True False
41. A post-closing trial balance should be prepared before the financial statements are prepared.
True False
42. Assets, liabilities, and owner’s capital are real accounts and do not get closed at the end of the period.
True False
43. The income summary account is also known as the clearing account.
True False
44. All income statement accounts will be closed at the end of the period.
True False
45. Balance Sheet accounts are not considered real accounts.

True False
46. It is not necessary to post the closing entries to the general ledger.
True False
47. Once an account has been closed for the period, inserting a line in the balance columns zeros out the
account, making it ready for the following period.
True False
48. The last step of the accounting cycle is to prepare a post-closing trial balance.
True False
49. The accounting cycle begins with preparing an unadjusted trial balance.
True False
50. Financial statements should be prepared before the closing entries are journalized and posted.
True False
51. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period.
True False
52. Any twelve-month accounting period adopted by a company is known as its fiscal year.
True False
53. A fiscal year that ends when business activities have reached their lowest point is called the natural business
year.
True False
54. All companies must use a calendar year as their fiscal year.
True False
55. The majority of businesses end their fiscal year on December 31.
True False
56. The balances of the capital accounts from the Adjusted Trial Balance of the work sheet are extended to the
Statement of Owner’s Equity columns.
True False
57. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account
balances for the financial statements.
True False
58. In a computerized accounting system, a work sheet may not be necessary because the software program
automatically posts entries to the accounts and prepares financial statements.
True False
59. The trial balance may be listed on the work sheet instead of being prepared separately.
True False
60. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial
Balance column totals and the Adjustments column totals.
True False
61. A work sheet heading is dated for a period of time.

True False
62. On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns.
True False
63. After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet,
the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net
Loss.
True False
64. After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column
total for the Balance Sheet pair of columns.
True False
65. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the
Balance Sheet columns.
True False
66. Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit
column.
True False
67. 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.
True False
68. The worksheet and the financial statements both require dollar signs.
True False
69.
The balance in the capital account on the worksheet will equal the amount presented in the balance sheet.
True False
70. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post
them to the ledger.
True False
71. The chart of accounts, the journal, and the ledger are essential parts of the accounting system.
True False
72. The closing process is sometimes referred to as closing the books.

True False
73. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent
accounts.
True False
74. Real accounts are not permanent accounts.
True False
75. In the accounting cycle, the last step is

A. preparing the financial statements
B. journalizing and posting the adjusting entries
C. preparing a post-closing trial balance
D. journalizing and posting the closing entries
76. During the end-of-period processing which of the following best describes the logical order of this process
A. Preparation of adjustments, adjusted trial balance, financial statements
B. Preparation of Income Statement, adjusted trial balance, Balance Sheet
C. Preparation of adjusted trial balance, cross-referencing, journalizing
D. Preparation of adjustments, adjusted trial balance, posting
77. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance?
A. The Adjusted Trial Balance will show the net income (loss) as an additional account.
B. Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period
processing even if it is not in balance.
C. The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the
accounts.
D. The Adjusted Trial Balance will be used to record the adjustments for the period.
78. Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to
A. verify that the debits and credits are in balance.
B. verify that the net income correctly flows into the statement of owner’s equity from the income statement
C. verify that the net income (loss) is correct for the period.
D. verify the correct flow of accounts into the financial statements.
79. When preparing the statement of owner's equity, the beginning capital balance can always be found
A. in the Income Statement columns of the work sheet
B. in the statement of cash flows
C. in the general ledger
D. in the Balance Sheet columns of the work sheet
80. Accumulated Depreciation appears on the
A. balance sheet in the current assets section
B. balance sheet in the property, plant and equipment section
C. balance sheet in the long-term liabilities section
D. income statement as an operating expense
81. Notes Receivable due in 350 days appear on the

B. balance sheet in the fixed assets section
C. balance sheet in the current liabilities section
D. income statement as an expense
82. Unearned Fees appear on the

B. balance sheet as a current liability
C. balance sheet in the owner's equity section
D. income statement as revenue
83. Which one of the fixed asset accounts listed below will not have a related contra asset account?
A. Office Equipment
B. Land
C. Delivery Equipment
D. Building
84. Prepaid insurance is reported on the balance sheet as a

A. current asset
B. fixed asset
C. current liability
D. long-term liability
85. The income statement is prepared from:

A. the adjusted trial balance.
B. the income statement columns of the work sheet.
C. either the adjusted trial balance or the income statement columns of the work sheet.
D. both the adjusted trial balance and the income statement columns of the work sheet.
86. Round-tripping is when
A. a selling company sells to a customer company with huge discounts.
B. a selling company pretends to sell to a fictitious company with the intent of inflating revenues
C. a selling company lends money to a customer company to increase assets.
D. a selling company lends money to a customer company to be used to purchase goods from the selling
company.
87. The Statement of Owner’s Equity should be prepared

A. before the income statement and after the balance sheet
B. before the income statement and balance sheet
C. after the income statement and balance sheet
D. after the income statement and before the balance sheet
88. The income statement should be prepared

A. before the statement of owner’s equity and balance sheet
B. after the statement of owner’s equity and before the balance sheet
C. after the statement of owner’s equity and balance sheet
D. after the balance sheet and before the statement of owner’s equity
89. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash $ 6,530
Accounts Receivable 2,100
Prepaid Expenses 700
Equipment 13,700
Accumulated Depreciation $ 1,100
Accounts Payable 1,900
Notes Payable 4,300
Bob Steely, Capital 12,940
Bob Steely, Withdrawals 790
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Utilities Expense 775
Depreciation Expense 250
Miscellaneous Expense 185
Totals $29,490 $29,490
Determine the net income (loss) for the period.
A. Net Income $9,250
B. Net Loss $790
C. Net Loss $5,670
D. Net Income $3,580
questions.
Stockton Company
Cash $ 6,530
Equipment 13,700
Notes Payable 4,300
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Totals $29,490 $29,490
Determine the Owner’s Equity ending balance for the period.

A. $12,150
B. $15,730
C. $6,480
D. $21,400
questions.
Stockton Company
Cash $ 6,530
Equipment 13,700
Notes Payable 4,300
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Totals $29,490 $29,490
Determine total assets.

A. $24,130
B. $15,830
C. $21,930
D. $23,030
questions.
Stockton Company
Cash $ 6,530
Equipment 13,700
Notes Payable 4,300
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Totals $29,490 $29,490
Determine the current assets.
A. $23,030
B. $9,330
C. $21,930
D. $8,630
questions.
Stockton Company
Cash $ 6,530
Equipment 13,700
Notes Payable 4,300
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Totals $29,490 $29,490
Determine the total liabilities for the period.

A. $1,900
B. $6,200
C. $4,300
D. $20,240
94. The Balance Sheet should be prepared

A. before the income statement and the statement of owner’s equity
B. before the income statement and after the statement of owner’s equity
C. after the income statement and the statement of owner’s equity
D. after the income statement and before the statement of owner’s equity
95. The Statement of Owner’s Equity begins with the beginning balance followed by
A. plus Net Income (loss) less withdrawals
B. plus Net Income (loss) plus investments
C. plus investments less withdrawals
D. plus investments plus Net Income (loss) less withdrawals
96. The Income Statement will include the following accounts

A. Revenues less Expenses (ordered largest to smallest amount) with Miscellaneous Expense listed last
B. Revenues less Expenses (ordered smallest to largest amounts) with Miscellaneous Expense listed last
C. Revenues less Expenses (ordered in alphabetical order)
D. Revenues less Expenses (order is not important)
97. The classified Balance Sheet will subsection the assets section as follows
A. Current Assets and Other Assets
B. Current Assets and Property, Plant, and Equipment
C. Current Assets and Short-Term Assets
D. Other Assets and Property, Plant and Equipment
98. The classified Balance Sheet will divide its Liabilities Section as the following subsections
A. Current Liabilities and Long-Term Liabilities
B. Current Liabilities and Other Liabilities
C. Other Liabilities and Long-Term Liabilities
D. Present Liabilities and Tomorrow’s Liabilities
99. Short-term liabilities are those liabilities that

A. will be paid in less than one year
B. are due to be paid in 5 to 10 years
C. are due to be paid in more than one year
D. are owed to the owner and will never be paid
100. Owner’s Equity is

A. added to assets and the two are equal to liabilities
B. added to liabilities and the two are equal to assets
C. subtracted from liabilities and the net amount is equal to assets
D. equal to the total of assets and liabilities
101. Balance sheet accounts
A. represent amounts accumulated during a specific period of time
B. are called real accounts
C. have zero balances after the closing entries have been posted
D. are not affected by adjustments
102. On which financial statement will Income Summary be shown?

A. Statement of Owner’s Equity
B. Balance Sheet
C. Income Statement
D. No financial statement
103. Which of the following is not true about closing entries?

A. There are four closing entries that update the owner’s equity account.
B. After the second closing entry, the income summary account is equal to the net income or (loss) for the
period.
C. All real accounts are closed at the end of the period.
D. By closing nominal accounts at the end of the period to zero, it is possible to isolate next period’s
information correctly.
104. The income summary account is also called

A. the imprest account
B. the clearing account
C. the adjustments account
D. the helpful account
105. After posting the second closing entry to the income summary account, the balance will be equal to
A. zero.
B. owner’s equity.
C. revenues for the period
D. the net income or (loss) for the period.
106. What is the last account that should be listed in the Post Closing Trial Balance?
A. Income Summary
B. Capital account
C. Cash
D. Fees Earned
107. Which of the following account groups are all considered nominal accounts?
A. Cash, Owner’s Equity, Wages Payable
B. Prepaid Insurance, Property, Plant & Equipment, Fees Earned
C. Capital Account, Dividend Account, Income Summary
D. Rent Revenue, Fees Earned, Miscellaneous Expense
108. There are four closing entries. The first one is to close ____, the second one is to close ____, the third one
is to close ____, and the last one is to close ____.
A. Revenues, expenses, income summary, drawing account
B. Expenses, assets, income summary, capital account
C. Capital account, drawing account, income summary, assets
D. Drawing account, income summary, expenses, revenues
109. Closing entries

A. need not be journalized if adjusting entries are prepared
B. need not be posted if the financial statements are prepared from the work sheet
C. are not needed if adjusting entries are prepared
D. must be journalized and posted
110. Closing entries are dated in the journal as of

A. the date they are actually journalized, although they are generally prepared after the end of the accounting
period
B. the last day of the accounting period, although they are actually journalized after the end of the accounting
period
C. the first day of the accounting period, although they are actually journalized after the end of the accounting
period
D. the first day of the subsequent accounting period
111. Which of the accounts below would be closed by posting a debit to the account?
A. Unearned Revenue
B. Fees Earned
C. Josh Morton, Drawing
D. Miscellaneous Expense
112. Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
A. Supplies Expense
B. Accumulated Depreciation
C. Prepaid Insurance
D. Unearned Rent
113. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?
A. Salaries Expense
B. Fees Earned
C. Unearned Rent
D. Depreciation Expense
114. Which of the following accounts will be closed to the Capital account at the end of the fiscal year?
A. Rent Expense
B. Fees Earned
C. Income Summary
115. The entry to close the appropriate insurance account at the end of the accounting period is
A. debit Income Summary; credit Prepaid Insurance
B. debit Prepaid Insurance; credit Income Summary
C. debit Insurance Expense; credit Income Summary
D. debit Income Summary; credit Insurance Expense
116. Which of the following accounts ordinarily appears in the post-closing trial balance?
A. Fees Earned
B. Supplies Expense
C. Zane White, Drawing
D. Unearned Rent
117. The post-closing trial balance differs from the adjusted trial balance in that it
A. does not take into account closing entries
B. does not take into account adjusting entries
C. does not include balance sheet accounts
D. does not include income statement accounts
118. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:

Fees Earned 17,400
Depreciation Expense 1,300
Insurance Expense 200
Prepaid Insurance 4,800
Supplies 900
Supplies Expense 3,800
Net income for the period is
A. $3,200
B. $12,100
C. $17,400
D. $8,900
119. A summary of selected ledger accounts appear below for Alberto’s Plumbing Services for the current
calendar year end.
Alberto, Capital
12/31 8,500 1/1 6,500
12/31 15,000
Alberto, Drawing
6/30 3,500 12/31 8,500
11/30 5,000
Income Summary
12/31 18,500 12/31 33,500
12/31 15,000

A. $13,000
B. $33,500
C. $15,000
D. $18,500
120. Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $7,200 and
recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense
during the adjusting process at the end of Amir’s first month of operations on March 31st?
A. $7,200
B. $720
C. $600
D. $6,600
121. The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts on December 31st
during the closing process would be:
A. Dec. 31 Fees Earned 750
Rent Revenue 175
Income Summary 925
B. Dec. 31 Income Summary 925
Fees Earned 750
Rent Revenue 175
C. Dec. 31 Revenues 925
Income Summary 925
D. Dec. 31 Income Summary 925
Revenues 925
122. Use the following worksheet to answer the following questions.
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement Balance Sheet
Balance
Account Title Debit Credit Debit Credit Debit Credit
Cash 48,000 48,000
Accounts Receivable 18,000 18,000
Supplies 6,000 6,000
Equipment 57,000 57,000
Accumulated Depr-Equip 18,000 18,000
Accounts Payable 25,000 25,000
Wages Payable 6,000 6,000
C. Finley, Capital 33,000 33,000
C. Finley, Drawing 3,000 3,000
Fees Earned 155,000 155,000
Wages Expense 63,000 63,000
Rent Expense 27,000 27,000
Depreciation Expense 15,000 15,000
Totals 237,000 237,000 105,000 155,000 132,000 82,000
Net Income (Loss) 50,000 50,000
155,000 155,000 132,000 132,000
The journal entry to close revenues would be:

A. debit Income Summary $155,000, credit Fees Earned $155,000
B. debit C. Finley, Capital $155,000, credit Fees Earned $155,000
C. debit Fees Earned $155,000; credit Income Summary $155,000
D. credit Fees Earned $155,000; credit C. Finley, Capital $155,000
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Balance
Cash 48,000 48,000
Equipment 57,000 57,000
Fees Earned 155,000 155,000
Totals 237,000 237,000 105,000 155,000 132,000 82,000
155,000 155,000 132,000 132,000
Based on the preceding trial balance, the entry to close expenses would be:
A. Wages Expense 63,000
Rent Expense 27,000
Income Summary 105,000
B. Expenses 105,000
C. Wages Expense 63,000
Rent Expense 27,000
C. Finley, Drawing 105,000
D. Income Summary 105,000
Wages Expense 63,000
Rent Expense 27,000
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Balance
Cash 48,000 48,000
Equipment 57,000 57,000
Fees Earned 155,000 155,000
Totals 237,000 237,000 105,000 155,000 132,000 82,000
155,000 155,000 132,000 132,000
Based on the preceding trial balance, the entry to close income summary would be:
A. debit C. Finley, Capital $50,000; credit Income Summary $50,000
B. debit Income Summary $155,000; credit C. Finley, Capital $155,000
C. debit Income Summary $50,000, credit C. Finley, Capital $50,000
D. debit C. Finley, Capital $9,000; credit Income Summary $9,000
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Balance
Cash 48,000 48,000
Equipment 57,000 57,000
Fees Earned 155,000 155,000
Totals 237,000 237,000 105,000 155,000 132,000 82,000
155,000 155,000 132,000 132,000
Based on the preceding trial balance, the entry to close C. Finley, Drawing would be:
A. debit C. Finley, Capital $3,000, credit C. Finley, Drawing $3,000
B. debit C. Finley, Capital $12,000, credit C. Finley, Drawing $12,000
C. debit C. Finley, Drawing $3,000; credit C. Finley, Capital $3,000
D. debit C. Finley, Drawing $12,000; credit C. Finley, Capital $12,000
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Balance
Cash 48,000 48,000
Equipment 57,000 57,000
Fees Earned 155,000 155,000
Totals 237,000 237,000 105,000 155,000 132,000 82,000
155,000 155,000 132,000 132,000
Based on the preceding trial balance, the ending balance in C. Finley, Capital is:
A. $33,000
B. $80,000
C. $30,000
D. $83,000
127. The proper sequence of steps in the accounting cycle is as follows
A. analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial
statements, journalize closing entries, analyze adjustment data and prepare adjusting entries
B. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements,
journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger
C. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment
data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger,
and finally prepare a post-closing trial balance
D. prepare financial statements, journalize closing entries and post to the ledger, analyze and record
transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting
entries
128. The following are steps to the accounting cycle. Of the following, which step should be done first?
A. Closing entries are journalized and posted to the ledger.
B. Transactions are posted to the ledger.
C. Adjusting entries are journalized and posted to the ledger.
D. Financial statements are prepared.
129. The following are steps in the accounting cycle. Of the following, which would be prepared last?
A. An adjusted trial balance is prepared.
C. An unadjusted trial balance is prepared.
D. Adjusting entries are journalized and posted to the ledger.
130. The accounting cycle requires three trial balances be done. In what order should they be prepared?
A. Post-closing, unadjusted, adjusted
B. Unadjusted, post-closing, adjusted
C. Unadjusted, adjusted, post-closing
D. Post-closing, adjusted, unadjusted
131. The fiscal year selected by companies

A. is the same as the calendar year
B. begins with the first day of the month and ends on the last day of the twelfth month
C. must always begin on January 1
D. will change each year
132. A fiscal year
A. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month
B. for a business is determined by the federal government
C. always begins on January 1 and ends on December 31 of the same year
D. should end at the height of the business's annual operating cycle
133. The natural business year

A. is a fiscal year that ends when business activities are at its lowest point.
B. is a calendar year that ends when business activities are at its lowest point.
C. is a fiscal year that ends when business activities are at its highest point.
D. is a calendar year that ends when business activities are at its highest point.
134. The worksheet

A. is an integral part of the accounting cycle
B. eliminates the need to rewrite the financial statements
C. is a working paper that is required
D. is used to summarize account balances and adjustments for the financial statements
135. Which one of the steps below is not aided by the preparation of the work sheet?
A. preparing the adjusted trial balance
B. posting to the general ledger
C. preparing the financial statements
D. preparing the closing entries
136. A work sheet includes columns for

A. adjusting entries
B. closing entries
C. reversing entries
D. adjusting and closing entries
137. When a work sheet is complete, the adjustment columns should have
A. total credits greater than total debits if a net income was earned
B. total debits greater than total credits if a net loss was incurred
C. total debits greater than total credits if a net income was earned
D. total debits equal total credits
138. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on
a work sheet
A. is the amount of net income or loss
B. indicates there is an error on the work sheet
C. is the amount of retained earnings
D. is the difference between revenue and expenses
139. Net income appears on the work sheet in the

A. debit column of the Balance Sheet columns
B. debit column of the Adjustments columns
C. debit column of the Income Statement columns
D. credit column of the Income Statement columns
140. A net loss appears on the work sheet in the

B. credit column of the Balance Sheet columns
D. credit column of the Adjustments columns
141. After net income is entered on the work sheet, the Balance Sheet debit and credit columns must
A. be the same amount as the total amount of the Income Statement debit and credit columns
B. equal each other
C. be the same amount as the total amount in the Adjusted Trial Balance debit and credit columns
D. not be equal to each other and need not be the same total amounts as any other pair of columns on the work
sheet
142. Which of the statements below indicates that a company earned a net income for the period?
A. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the work sheet.
B. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet.
C. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet.
D. Cash inflows exceeded cash outflows.
143. Which of the items below would appear in the Income Statement columns of the work sheet?
A. Equipment
B. Unearned Fees
C. Prepaid Expense
D. Net Loss
144. Which of the accounts below would not appear in the balance sheet columns of the worksheet?
A. Chad Daniels, Drawing
B. Rent Earned
C. Unearned Revenue
D. Chad Daniels, Drawing and Unearned Revenue
145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet?
A. Service Revenue
B. Prepaid Rent
C. Supplies Expense
D. None are correct
146. The work sheet at the end of July has $5,950 in the Balance Sheet credit column for Accumulated
Depreciation. The work sheet at the end of August has $7,600 in the Balance Sheet credit column for
Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of
August?
A. amount can not be determined
B. $7,600
C. $5,950
D. $1,650
147. Which of the items below does not appear on the work sheet?
B. the unadjusted trial balance
C. closing entries
D. the drawing account
148. An indication that the work sheet columns are in balance and the work sheet is completed is
A. the word "Total" is written at the bottom of each pair of columns
B. each pair of columns is double underlined
C. each pair of columns has the totals circled
D. the final figures are written in ink
149. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns are $38,755 and $32,735, respectively. What is the amount of net income
or net loss for the period?
A. $6,020 net income
B. $38,755 net loss
C. $6,020 net loss
D. $32,735 net income
150. After all of the account balances have been extended to the Income Statement columns of the work sheet,
the totals of the debit and credit columns are $77,500 and $83,900, respectively. What is the amount of the net
income or net loss for the period?
B. $6,400 net loss
C. $83,900 net income
D. $77,500 net loss
151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At
year end, the adjusting entry on the work sheet would
A. increase an expense account
B. decrease a liability account
C. increase an asset account
D. decrease an expense account
152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability
account. The adjusting entry at year end on the work sheet would
A. increase a liability account
B. decrease an asset account
C. decrease a revenue account
D. decrease a liability account
153. Which of the following is not an essential part of the accounting records?
A. The journal
B. The ledger
C. The chart of accounts
D. The work sheet
totals of the debit and credit columns show debits of $37,686 and the credits of $41,101. This indicates that
A. neither net income or loss can be calculated because it is found on the income statement
B. the company has a net loss of $3,415 for the period
C. the company has a net income of $3,415 for the period
D. The amounts are out of balance and need to be corrected
155. The income statement columns in the worksheet show that debits are equal to $55,800 and credits are
$67,520. What does this information mean to the accountant?
A. Net income of $11,720
B. Net loss of $11,720
C. The accounts are out of balance, indicating an error has been made.
D. The accounts have not been updated.
156. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.
Debit Credit
Cash $ 1,500
Accounts receivable 2,000
Interest receivable 100
Prepaid insurance 1,600
Notes receivable (long-term) 2,800
Equipment 15,000
Accumulated depreciation $3,000
Accounts payable 2,400
Accrued expenses payable 3,920
Income taxes payable 2,700
Unearned rent fees 500
Bob Evans, Capital 7,700
Bob Evans, Drawing 2,000
Rent fees earned 37,000
Furniture rental revenue 1,200
Interest revenue 100
Wages expense 19,000
Depreciation expense 1,800
Utilities expense 320
Insurance expense 700
Maintenance expense 9,000
Income tax expense 2,700
$58,520 $58,520
The entry required to close the revenue accounts at the end of the period includes a:
A. debit to Income Summary for $37,000

B. credit to Income Summary for $38,300
C. debit to Income Summary for $38,200
D. credit to Income Summary for $37,000
Debit Credit
Cash $ 1,500
Equipment 15,000
$58,520 $58,520
The entry required to close the expense accounts at the end of the period includes a:
A. a debit to Income Summary for $35,520

B. a credit to Income Summary for $35,520
C. a debit to Income Summary for $33,520
D. a credit to Income Summary for $33,520
158. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the
end-of-period spreadsheet (work sheet). Indicate whether each balance should be extended to an Income
Statement column or (b) a Balance Sheet column.
1. Dobson, Capital
2. Dobson, Drawing
3. Depreciation Expense
4. Accumulated Depreciation
5. Fees earned
6. Unearned Fees
7. Supplies
8. Supplies Expense
159. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $630,430 and a credit total of $614,210. This is before the amount for net
income or net loss has been included. In preparing the income statement from work sheet, what is the amount
of net income or net loss?
160. Morgan Olsen owns and operates Crystal Pool Service Company. On January 1, 2014, Morgan Olsen,
Capital had a balance of $252,000. During the year Morgan invested an additional $32,000 and withdrew
$52,400. For the year ended December 31, 2014 Crystal Pool Service Company reported a net income of
$73,200. Prepare a Statement of Owner’s Equity for the year ended December 31, 2014.
161. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate
whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current
liabilities, (d) long-term liabilities, or (e) owner’s equity section of the December 31, 2010, balance sheet of
Brock Pool Service Company.
1. Taylor Brock, Capital

3. Unearned Revenues
4. Mortgage Payable
5. Equipment
6. Notes Payable (due in 2012)
7. Cash
8. Accounts Receivable
162. Describe a classified balance sheet.
163. List and describe the purpose of the four closing entries.
164. After the accounts have been adjusted at January 31, 2014, the end of the fiscal year, the following
balances are taken from the ledger of Taylor Pool Service Company:
Hope Taylor, Capital $349,000

Hope Taylor, Drawing 5,000
Fees Earned 124,600
Rent Expense 43,000
Miscellaneous Expense 5,700
Journalize the four entries required to close the accounts
165. Prior to adjustment at August 31, 2014, Salary Expense has a debit balance of $298,500. Salaries owed
but not paid as of the same date total $7,200.
Present
the
entries to
record
the
followin
g:
(1) Accrued salaries as of August 31.
(2) Closing of Salary Expense as of August 31.
166. The following are all the steps in the accounting cycle. List them in the order in which they should be
done.
- Closing entries are journalized and posted to the ledger.

- An unadjusted trial balance is prepared.
- An optional end-of-period spreadsheet (work sheet) is prepared.
- A post-closing trial balance is prepared.
- Adjusting entries are journalized and posted to the ledger.
- Transactions are analyzed and recorded in the journal.
- Adjustment data are assembled and analyzed.
- Financial statements are prepared.
- An adjusted trial balance is prepared.
- Transactions are posted to the ledger.
167. If working papers are not considered part of the formal accounting records, then why are they used?
168. Explain how net income or loss is determined by using the work sheet.
169. You evaluate loan requests as part of your job at Beach Front National Bank. One loan request you
received is from Surfer Dude Supplies, a small proprietorship. Tracy Roberts, the owner, is requesting $75,000
and brings you a trial balance (or Statement of Accounts) for his first year of operations ended December 31,
2010.
REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of
financial statements from his accountant would be more useful for evaluating the loan request?
170. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach
Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small
proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or
Statement of Accounts) for his first year of operations ended December 31, 2010.
What three accounts do you think should be relabeled for greater clarity?
Surfer Dude Enterprises

Statement of Accounts
December 31, 2010
Cash 2,050
Billings Due from Others 15,070
Office Supplies 7,470
Trucks 26,370
Equipment 8,090
Amounts Owed to Others 2,850
Investment in Business 23,500
Service Revenues 73,650
Rent Expense 7,330
Insurance Expense 2,400
Utilities Expenses 700
Miscellaneous Expenses 470
100,000 100,000
Which of the following accounts do you think might need to be adjusted before an accurate set of financial
statements could be prepared?

December 31, 2010
Cash 2,050
Trucks 26,370
Equipment 8,090
Rent Expense 7,330
100,000 100,000
172. Hakik Enterprises offers rug cleaning services to business clients. Below is the trial balance for Hakik
Enterprises, which was prepared on the end of period spreadsheet (work sheet) for the year ended July 31,
2010.
Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010
Trial Balance Adjustments Adjusted
Trial Balance
Debit Credit Debit Credit Debit Credit
Cash 36
Prepaid Insurance 12
Fees Receivable 56
Supplies 12
Equipment 60
Accum. Depreciation 12
Unearned Revenue 20
Accounts Payable 32
Wages Payable
Ramon Hakik, Capital 84
Ramon Hakik, Drawings 4
Service Revenue 80
Advertising Expense 28
Wage Expense 20
Insurance Expense
Supplies Expense
Depreciation Expense
Totals 228 228
REQUIRED: Enter the adjustment data in the work sheet for the transactions shown below and place the balances in the Adjusted Trial Balance
columns.
a) The equipment is estimated to last for 5 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.
173. Hakik Enterprises offers rug cleaning services to business clients. Below are the adjustments data for the
year ended July 31, 2010. REQUIRED: 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 5 years with no salvage value. The asset will be depreciated evenly
over its useful life. Please record one month’s depreciation.
Hakik Enterprises
Sheet)
Trial
Balance
Cash 36
Fees Receivable 56
Supplies 12
Equipment 60
Accum. Deprec. - Equip 12
Unearned Revenue 20
Accounts Payable 32
Wages Payable
Service Revenue 80
Wage Expense 20
Insurance Expense
Supplies Expense
Totals 228 228
Debit Credit
Cash $ 1,500
Equipment 15,000
Total $ 58,520 $ 58,520
Prepare the entry required to close the revenue accounts at the end of the period.
Debit Credit
Cash $ 1,500
Equipment 15,000
$ 58,520 $ 58,520
Prepare the entry required to close the expense accounts at the end of the period.
Debit Credit
Cash $ 1,500
Equipment 15,000
$ 58,520 $ 58,520
Prepare the closing entry required to transfer the income or loss at the end of the period.
Debit Credit
Cash $ 1,500
Equipment 15,000
$ 58,520 $ 58,520
Prepare the entry required to close the Drawing account at the end of the period.
178. Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted,
will overstate or understate assets, liabilities, owner’s equity, revenues, expenses, or net income. Indicate the
amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the
transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-)
for understate, and (NE) for no effect.
1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand.
2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years
of insurance.
3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months
rent.
Transaction Assets Liabilities Owner’s Equity Revenues Expenses Net Income

1.
2.
3.
180. Identify which of the following accounts should be closed with a debit or a credit to Income Summary at
the end of the fiscal year. If it is not closed to Income Summary, mark as n/a.
1. Utilities Payable
2. Utilities Expense
3. Supplies
4. Supplies Expense
5. Fees Earned
6. Unearned Fees
8. Jason Hill, Drawing
9. Jason Hill, Capital
10. Accumulated Depreciation - Equipment
11. Depreciation Expense - Equipment
12. Equipment
13. Prepaid Insurance
14. Insurance Expense
181. The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work
sheet. Indicate whether each balance should be extended to (a) the Income Statement columns or (b) the
(1) Salaries Payable (7) Felipe Ramos, Drawing

(2) Fees Earned (8) Equipment
(3) Accounts Payable (9) Accounts Receivable
(4) Felipe Ramos, Capital (10) Accumulated Depreciation
(5) Supplies Expense (11) Salary Expense
(6) Unearned Rent (12) Depreciation Expense
182. Indicate whether each of the following would be reported in the financial statements as a(n) (a) current
asset, (b) current liability, (c) revenue, or (d) expense:
(1) Supplies (5) Supplies Expense

(2) Unearned Fees (6) Prepaid Insurance
(3) Prepaid Advertising (7) Accounts Payable
(4) Advertising Expense (8) Fees Earned
183. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for April
30, 2010 for Finnegan Co.:

Fees Earned 78,000
Rent Expense 34,000
Supplies 400
Prepare an income statement.
184. The following revenue and expense account balances were taken from the Income Statement columns of
the work sheet for Fraser Services Co. for December 31, 2010:
Depreciation Expense $ 4,950

Rent Expense 24,000
Service Revenue 92,500
Utilities Expense 5,000
185. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2010 for
Mackenzie Company:
Accumulated Depreciation-Trucks $42,400

Prepaid Rent 6,800
Supplies 850
Unearned Fees 7,310
Trucks 49,300
Cash 3,400
Mackenzie, Capital ?
Prepare a classified balance sheet.
186. Indicate whether each of the following would be reported in the section of financial statements identified
as (a) current asset, (b) property, plant, and equipment, (c) current liability, (d) revenue, or (e) expense:
(1) Automobile
(2) Accumulated depreciation
(3) Rent expense
(4) Fees earned
(5) Salaries payable
(6) Prepaid rent
(7) Store supplies
(8) Advertising expense
(9) Unearned rent
187. The following balance sheet contains errors.
Brock Morton Services Co.

Balance Sheet
For the Year Ended December 31, 2010
Assets Liabilities
Current assets: Current liabilities:
Cash $ 7,170 Accounts receivable $ 10,000
Accounts payable 7,500 Accum. depr-building 12,525
Supplies 2,590 Accum. depr-equipment 7,340
Prepaid insurance 800 Net income 11,500
Land 24,000
Total current assets $ 42,060 Total liabilities $ 41,365
Owner's Equity
Property, plant, and equipment: Wages payable $ 1,500
Building $43,700 Brock Morton, Capital 88,645
Equipment 29,250 Total owner's equity $ 90,145
Total property, plant,
and equipment 72,950
Total liabilities and
Total assets $131,510 owner's equity $131,510
(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.
188. The following is the adjusted trial balance for Nadia Company.
Nadia Company
December 31, 2014
Cash 5,130
Equipment 12,400
Accumulated Depreciation 2,200
Accounts Payable 700
Notes Payable - Due on June 30, 2011 3,070
Nadia Porter, Capital 13,000
Nadia Porter, Drawing 700
Fees Earned 10,930
Wages Expense 2,450
Rent Expense 1,900
Totals 29,900 29,900
Prepare an Income Statement, Balance Sheet, and Statement of Owner’s Equity. Assume that the capital account started with a beginning balance of
$10,000.
189. Prepare an income statement and a statement of owner’s equity, for the month ended August 31, 2014,
from the following T-Accounts of Marley Company.
Prepaid Accou Unearned Wages

Insurance nts Revenues Payable
Receiv
able
1,100 5,400 1,400 480
200 800 400
Marley, Marley Income Fees Earned
Capital , Summary
Drawin
g
6,500 3,200 9,775 7,500
2,800 3,200 3,995 2,000
5,780 5,780 275
3,200 9,775
Wages Rent Insurance Utilities

Expense Expens Expense Expense
e
2,200 990 285 95
425 990 285 95
2,625
190. Prepare an income statement and a statement of owner’s equity for the month ended September 30, 2010
from the T-accounts below of Carson Company.

Receiv
able
1,400 1,600 1,200 435
120 400 200
Carson, Carson Income Fees Earned

Capital , Summary
Drawin
g
6,800 2,400 4,150 3,300
2,500 2400 4,760 500
610 610 350
2,400 4,150
e
3,200 1,130 80 125
225 1,130 80 125
3,425
191. Selected ledger accounts appear below for Fulton Surveying Services for 2014.
Fulton, Fulton,
Capital Drawing
12/31 25,000 1/1 20,000 3/31 12,000 12/31 25,000
12/31 48,000 12/22 13,000
Income
Summary
12/31 19,000 12/31 67,000
12/31 48,000
Prepare a statement of owner's equity.

192. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the
year ended March 31 for Boles Athletic Company, journalize the four closing entries.
Cash $ 30,000
Supplies 5,000
Equipment 169,900
Jason Boles, Capital 71,600
Jason Boles, Drawing 47,000
Fees Earned 510,000
Salary Expense 244,500
Rent Expense 48,000
$626,100 $626,100
193. After all adjustments have been made, but before the accounts have been closed, the following balances
were taken from the ledger of Ramona’s Designs:
Accounts Payable $ 27,600 Rent Expense $ 32,700

Accounts Receivable 64,500 Salary Expense 41,390
Accumulated Depreciation 73,325 Salaries Payable 8,150
Cash 17,150 Service Revenue 186,000
Depreciation Expense 13,500 Supplies 1,500
Equipment 165,000 Supplies Expense 2,500
Insurance Expense 2,510 Ramona Cross, Capital 99,950
Prepaid Insurance 6,275 Ramona Cross, Drawing 48,000
Journalize the entries to close the appropriate accounts.

194. On the basis of the following information taken from the Adjusted Trial Balance columns of the work
sheet for the month ended September 30th, journalize the closing entries for Perez Roofing Company.
Cash $22,500.00
Accounts Receivable 3,575.00
Office Supplies 2,850.00
Repair Parts 3,785.00
Machinery 17,750.00
Accumulated Depreciation 3,250.00
Accounts Payable 1,150.00
Notes Payable 6,500.00
Sam Perez, Capital 2,500.00
Sam Perez, Drawing 1,750.00
Service Revenue 47,200.00
Wages Expense 4,840.00
Office Supplies Expense 1,275.00
Repair Parts Expense 925.00
Depreciation Expense 1,350.00
$60,600.00 $60,600.00
195. The following adjusted trial balance is the result of the adjustments made at the end of the month of March
for Erik Martin Company. Utilize these adjusted values to perform the closing entries for Erik Martin Company.
Cash $24,750.00
Store Supplies 4,785.00
Machinery 9,750.00
Erik Martin, Capital 19,725.00
Erik Martin, Drawing 6,250.00
Store Supplies Expense 5,150.00
Depreciation Expense 1, 575.00 ________
$69,425.00 $69,425.00
196. The following adjusted trial balance is the result of the adjustments made at the end of the month of July
for Ladonna Douglas Company. Utilize these adjusted values to perform the closing entries for Ladonna
Douglas Company.
Cash $34,750.00
Machinery 10,750.00
Ladonna Douglas, Capital 53,725.00
Ladonna Douglas, Drawing 13,250.00
Rent Expense 3,000.00
Advertising Expense 2,750.00
Depreciation Expense 575.00 ________
$123,175.00 $123,175.00
197. Marcus Enterprises was started by Damien Marcus in 2010. During 2010, Damien Marcus invested
$8,000 in the business. Based on the following worksheet, prepare an income statement, statement of owner’s
equity, and balance sheet for Marcus Enterprises for the year ended December 31, 2010.
Marcus Enterprises
Worksheet

Balance
Cash 26,500 26,500
Equipment 18,500 18,500
Damien Marcus, Capital 8,000 8,000
Damien Marcus, Drawing 2,000 2,000
Fees Earned 59,500 59,500
Totals 84,500 84,500 29,500 59,500 55,000 25,000
59,500 59,500 55,000 55,000
198. Prepare closing entries from the following work sheet.
Lakendra Enterprises
Worksheet

Balance
Cash 26,500 26,500
Equipment 18,500 18,500
Lakendra Thomas, Capital 8,000 8,000
Lakendra Thomas, Drawing 2,000 2,000
Totals 84,500 84,500 29,500 59,500 55,000 25,000
59,500 59,500 55,000 55,000
199. The following is the adjusted trial balance for Sandeep Company.
Sandeep Company
December 31, 2010
Cash 8,130
Prepaid Expenses 2,750
Equipment 10,400
Notes Payable 1,000
Rena Sandeep, Capital 11,200
Rena Sandeep, Drawing 4,870
Fees Earned 36,600
Rent Expense 4,900
Totals 53,700 53,700
Prepare closing entries and the post closing trial balance.

200. Reconstruct the adjusting and closing entries from the following T-Accounts.

Receiv
able.
1,200 6,000 1,350 530
200 1,500 435 530
1,000 7,500 915
Madison Madis Income Fees Earned

Cox, Capital on Summary
Cox,
Drawi
ng
7,000 2,100 9,935 8,000
5,280 2,100 4,655 1,500
2,100 0 5,280 435
10,180 0 9,935
0

e
2,600 1,145 200 180
530 1,145 200 180
3,130 0 0 0
0
201. Reconstruct adjusting and closing entries for the month ended September 30, 2010 from the T-accounts
below.

Receiv
able.
1,350 1,250 1,050 385
130 275 235 385
1,220 1,525 815
Mai Lui, Mai Income Fees Earned
Capital Lui, Summary
Drawin
g
7,000 2,400 5,510 5,000
580 2,400 6,090 275
2,400 0 580 235
4,020 5,510

e
3,600 1,880 130 95
385 1,880 130 95
3,985 0 0 0
0
202.
1) Dana Bowen
Company is
completing its
first year of
operations on
April 30,
2010. Reconstru
ct the entries for
the year ended
April 30, 2010
from the
T-accounts
below. Record
them as follows:
A - L Journal Entries
M- R Adjusting Journal Entries
2) Balance and
prepare the
Income
Statement,
Statement of
Owner’s Equity,
and the Balance
Sheet from the
T-Accounts.
3) Prepare the four

closing entries (S
- V).
4) Prepare the
Post-Closing
Trial Balance.
Cash Accou Supplies Prepaid

nts Insurance
Receiv
able
6,500 1,250 870 1,940
900 385 540 725
400
420
1,940
2,500
50
350
930
Equipment Accum Accounts Wages

ulated Payable Payable
Deprec
iation
2,500 130 870 225
Unearned Dana Dana Income
Revenues Bowen Bowen, Summary
, Drawing
Capital
930 6,500 350
590 2,500
Fees Earned Wages Rent Supplies

Expens Expense Expense
e
900 420 400 540
1,250 225
2,500
385
590
Insurance Deprec Miscellaneo

Expense iation us Expense
Expens
e
725 130 50
203. The balances in the ledger of Good Landscape Services as of January 31, 2014 before adjustments, are as
follows:
Cash $ 6,750 Dalton Good, Capital $29,775

Supplies 3,900 Dalton Good, Drawing 3,425
Prepaid Insurance 8,400 Service Revenue 56,300
Equipment 41,750 Salary Expense 24,300
Accumulated Rent Expense 6,000
Depreciation 9,950 Miscellaneous Expense 1,500
Adjustment data are as follows: supplies on hand, January 31, $900; insurance expired for January, $1,100; depreciation on equipment for January,
$1,600; salaries accrued, January 31, $1,650.
(a) Prepare a ten-column work sheet for Good Landscape Services for January, 2014.
(b) On the basis of the work sheet in (a), present the following in good order: (1) income statement, (2) statement of owner's equity
(no additional investments were made during the month), and (3) balance sheet.
(c) On the basis of the work sheet in (a), journalize the closing entries as of January 31, 2014.
204. Complete the following worksheet for Danilo Enterprises.
Danilo Enterprises
Worksheet
Adjusted Trial Income Statement B

Balance a
l
a
n
c
e
S
h
e
e
t
Account Title Debit Credit DCredit Debit Credit
e
b
i
t
Cash 14,500
Supplies 500
Equipment 20,500
Accumulated Depr-Equip 15,000
Wages Payable 3,060
Tony Danilo, Capital 18,240
Tony Danilo, Drawing 1,000
Fees Earned 34,000
Rent Expense 9,300
Totals 79,800 79,800
Net Income (Loss)
Chapter 4--Completing the Accounting Cycle Key
1. After analyzing transactions, the next step would be to post the transactions in the ledger.
FALSE
2. The most important output of the accounting cycle is the financial statements.
TRUE
3. The work sheet is not considered a part of the formal accounting records.
TRUE
4. Cross-referencing is useful in assuring that the debits and credits are in balance.
FALSE
5. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are
simply added to the account title column.
TRUE
6. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements.
TRUE
7. There is really no benefit in preparing financial statements in any particular order.

FALSE
8. Round tripping is a fraudulent scheme where business A artificially inflates revenue by lending money to
customer B who uses that money to buy products from A.
TRUE
9. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the
dollar amount.
TRUE
10. The usual presentation of the statement of owner's equity is (1) Beginning capital, (2) Net income or loss,
(3) Drawing, (4) Owner's contributions, (5) Ending capital.
FALSE
11. The difference between a classified balance sheet and one that is not classified is that the classified one has
subheadings.
TRUE
12. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the
normal operations of a business, usually longer than one year, are called current assets.
FALSE
13. Prepaid Insurance is an example of a current asset.

TRUE
14. Land is an example of a plant asset.

TRUE
15. Liabilities that will be due within one year or less and that are to be paid out of current assets are called
current liabilities.
TRUE
16. The amount of the net income for a period appears on both the income statement and the balance sheet for
that period.
FALSE
17. Accrued taxes payable are generally reported on the balance sheet as a current liability.
TRUE
18. At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses.
FALSE
19. Office Equipment is an example of a current asset account.

FALSE
20. Capital and Drawing are reported in the owner's equity section of the balance sheet.
FALSE
21. Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current
assets.
TRUE
22. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as
current assets.
FALSE
23. Accrued expenses are ordinarily listed on the balance sheet as current assets.
FALSE
24. Accrued revenues are ordinarily listed on the balance sheet as current liabilities.
FALSE
25. The income statement is prepared from the adjusted trial balance or the income statement columns on the
work sheet.
TRUE
26. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short
time before they expire.
FALSE
27. Accumulated Depreciation is a permanent account.
TRUE
28. The drawing account is a temporary account.

TRUE
29. The balance sheet accounts are referred to as real or permanent accounts.
TRUE
30. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting
period.
TRUE
31. The income summary account is closed to the owner's capital account.
TRUE
32. The accumulated depreciation account is closed to the income summary account.
FALSE
33. The drawing account is closed to the income summary account.

FALSE
34. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance.
FALSE
35. Entries required to close the balances of the temporary accounts at the end of the period are called final
entries.
FALSE
36. Journalizing and posting closing entries must be completed before financial statements can be prepared.
FALSE
37. During the closing process, some balance sheet accounts are closed and end the period with a zero balance.
FALSE
38. Closing entries are entered directly on to the work sheet.

FALSE
39. The post-closing trial balance will generally have fewer accounts than the trial balance.
TRUE
40. A post-closing trial balance contains only asset and liability accounts.
FALSE
41. A post-closing trial balance should be prepared before the financial statements are prepared.
FALSE
42. Assets, liabilities, and owner’s capital are real accounts and do not get closed at the end of the period.
TRUE
43. The income summary account is also known as the clearing account.
TRUE
44. All income statement accounts will be closed at the end of the period.
TRUE
45. Balance Sheet accounts are not considered real accounts.

FALSE
46. It is not necessary to post the closing entries to the general ledger.
FALSE
47. Once an account has been closed for the period, inserting a line in the balance columns zeros out the
account, making it ready for the following period.
TRUE
48. The last step of the accounting cycle is to prepare a post-closing trial balance.
TRUE
49. The accounting cycle begins with preparing an unadjusted trial balance.
FALSE
50. Financial statements should be prepared before the closing entries are journalized and posted.
TRUE
51. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period.
FALSE
52. Any twelve-month accounting period adopted by a company is known as its fiscal year.
TRUE
53. A fiscal year that ends when business activities have reached their lowest point is called the natural business
year.
TRUE
54. All companies must use a calendar year as their fiscal year.
FALSE
55. The majority of businesses end their fiscal year on December 31.
TRUE
56. The balances of the capital accounts from the Adjusted Trial Balance of the work sheet are extended to the
Statement of Owner’s Equity columns.
FALSE
57. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account
balances for the financial statements.
TRUE
58. In a computerized accounting system, a work sheet may not be necessary because the software program
automatically posts entries to the accounts and prepares financial statements.
TRUE
59. The trial balance may be listed on the work sheet instead of being prepared separately.
TRUE
60. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial
Balance column totals and the Adjustments column totals.
FALSE
61. A work sheet heading is dated for a period of time.

TRUE
62. On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns.
TRUE
63. After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet,
the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net
Loss.
TRUE
64. After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column
total for the Balance Sheet pair of columns.
TRUE
65. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the
FALSE
66. Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit
column.
TRUE
67. 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.
FALSE
68. The worksheet and the financial statements both require dollar signs.
FALSE
69.
The balance in the capital account on the worksheet will equal the amount presented in the balance sheet.
FALSE
70. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post
them to the ledger.
FALSE
71. The chart of accounts, the journal, and the ledger are essential parts of the accounting system.
TRUE
72. The closing process is sometimes referred to as closing the books.

TRUE
73. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent
accounts.
TRUE
74. Real accounts are not permanent accounts.
FALSE
75. In the accounting cycle, the last step is

A. preparing the financial statements
B. journalizing and posting the adjusting entries
C. preparing a post-closing trial balance
D. journalizing and posting the closing entries
76. During the end-of-period processing which of the following best describes the logical order of this process
A. Preparation of adjustments, adjusted trial balance, financial statements
B. Preparation of Income Statement, adjusted trial balance, Balance Sheet
C. Preparation of adjusted trial balance, cross-referencing, journalizing
D. Preparation of adjustments, adjusted trial balance, posting
77. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance?
A. The Adjusted Trial Balance will show the net income (loss) as an additional account.
B. Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period
processing even if it is not in balance.
C. The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the
accounts.
D. The Adjusted Trial Balance will be used to record the adjustments for the period.
78. Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to
A. verify that the debits and credits are in balance.
B. verify that the net income correctly flows into the statement of owner’s equity from the income statement
C. verify that the net income (loss) is correct for the period.
D. verify the correct flow of accounts into the financial statements.
79. When preparing the statement of owner's equity, the beginning capital balance can always be found
A. in the Income Statement columns of the work sheet
B. in the statement of cash flows
C. in the general ledger
D. in the Balance Sheet columns of the work sheet
80. Accumulated Depreciation appears on the
B. balance sheet in the property, plant and equipment section
C. balance sheet in the long-term liabilities section
D. income statement as an operating expense
81. Notes Receivable due in 350 days appear on the

B. balance sheet in the fixed assets section
C. balance sheet in the current liabilities section
D. income statement as an expense
82. Unearned Fees appear on the

B. balance sheet as a current liability
C. balance sheet in the owner's equity section
D. income statement as revenue
83. Which one of the fixed asset accounts listed below will not have a related contra asset account?
A. Office Equipment
B. Land
C. Delivery Equipment
D. Building
84. Prepaid insurance is reported on the balance sheet as a

A. current asset
B. fixed asset
C. current liability
D. long-term liability
85. The income statement is prepared from:

A. the adjusted trial balance.
B. the income statement columns of the work sheet.
C. either the adjusted trial balance or the income statement columns of the work sheet.
D. both the adjusted trial balance and the income statement columns of the work sheet.
86. Round-tripping is when
A. a selling company sells to a customer company with huge discounts.
B. a selling company pretends to sell to a fictitious company with the intent of inflating revenues
C. a selling company lends money to a customer company to increase assets.
D. a selling company lends money to a customer company to be used to purchase goods from the selling
company.
87. The Statement of Owner’s Equity should be prepared

A. before the income statement and after the balance sheet
B. before the income statement and balance sheet
C. after the income statement and balance sheet
D. after the income statement and before the balance sheet
88. The income statement should be prepared

A. before the statement of owner’s equity and balance sheet
B. after the statement of owner’s equity and before the balance sheet
C. after the statement of owner’s equity and balance sheet
D. after the balance sheet and before the statement of owner’s equity
questions.
Stockton Company
Cash $ 6,530
Equipment 13,700
Notes Payable 4,300
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Totals $29,490 $29,490
Determine the net income (loss) for the period.
A. Net Income $9,250
B. Net Loss $790
C. Net Loss $5,670
D. Net Income $3,580
questions.
Stockton Company
Cash $ 6,530
Equipment 13,700
Notes Payable 4,300
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Totals $29,490 $29,490
Determine the Owner’s Equity ending balance for the period.

A. $12,150
B. $15,730
C. $6,480
D. $21,400
questions.
Stockton Company
Cash $ 6,530
Equipment 13,700
Notes Payable 4,300
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Totals $29,490 $29,490
Determine total assets.

A. $24,130
B. $15,830
C. $21,930
D. $23,030
questions.
Stockton Company
Cash $ 6,530
Equipment 13,700
Notes Payable 4,300
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Totals $29,490 $29,490
Determine the current assets.
A. $23,030
B. $9,330
C. $21,930
D. $8,630
questions.
Stockton Company
Cash $ 6,530
Equipment 13,700
Notes Payable 4,300
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Totals $29,490 $29,490
Determine the total liabilities for the period.

A. $1,900
B. $6,200
C. $4,300
D. $20,240
94. The Balance Sheet should be prepared

A. before the income statement and the statement of owner’s equity
B. before the income statement and after the statement of owner’s equity
C. after the income statement and the statement of owner’s equity
D. after the income statement and before the statement of owner’s equity
95. The Statement of Owner’s Equity begins with the beginning balance followed by
A. plus Net Income (loss) less withdrawals
B. plus Net Income (loss) plus investments
C. plus investments less withdrawals
D. plus investments plus Net Income (loss) less withdrawals
96. The Income Statement will include the following accounts

A. Revenues less Expenses (ordered largest to smallest amount) with Miscellaneous Expense listed last
B. Revenues less Expenses (ordered smallest to largest amounts) with Miscellaneous Expense listed last
C. Revenues less Expenses (ordered in alphabetical order)
D. Revenues less Expenses (order is not important)
97. The classified Balance Sheet will subsection the assets section as follows
A. Current Assets and Other Assets
B. Current Assets and Property, Plant, and Equipment
C. Current Assets and Short-Term Assets
D. Other Assets and Property, Plant and Equipment
98. The classified Balance Sheet will divide its Liabilities Section as the following subsections
A. Current Liabilities and Long-Term Liabilities
B. Current Liabilities and Other Liabilities
C. Other Liabilities and Long-Term Liabilities
D. Present Liabilities and Tomorrow’s Liabilities
99. Short-term liabilities are those liabilities that

A. will be paid in less than one year
B. are due to be paid in 5 to 10 years
C. are due to be paid in more than one year
D. are owed to the owner and will never be paid
100. Owner’s Equity is

A. added to assets and the two are equal to liabilities
B. added to liabilities and the two are equal to assets
C. subtracted from liabilities and the net amount is equal to assets
D. equal to the total of assets and liabilities
101. Balance sheet accounts
A. represent amounts accumulated during a specific period of time
B. are called real accounts
C. have zero balances after the closing entries have been posted
D. are not affected by adjustments
102. On which financial statement will Income Summary be shown?

A. Statement of Owner’s Equity
B. Balance Sheet
C. Income Statement
D. No financial statement
103. Which of the following is not true about closing entries?

A. There are four closing entries that update the owner’s equity account.
B. After the second closing entry, the income summary account is equal to the net income or (loss) for the
period.
C. All real accounts are closed at the end of the period.
D. By closing nominal accounts at the end of the period to zero, it is possible to isolate next period’s
information correctly.
104. The income summary account is also called

A. the imprest account
B. the clearing account
C. the adjustments account
D. the helpful account
105. After posting the second closing entry to the income summary account, the balance will be equal to
A. zero.
B. owner’s equity.
C. revenues for the period
D. the net income or (loss) for the period.
106. What is the last account that should be listed in the Post Closing Trial Balance?
A. Income Summary
B. Capital account
C. Cash
D. Fees Earned
107. Which of the following account groups are all considered nominal accounts?
A. Cash, Owner’s Equity, Wages Payable
B. Prepaid Insurance, Property, Plant & Equipment, Fees Earned
C. Capital Account, Dividend Account, Income Summary
D. Rent Revenue, Fees Earned, Miscellaneous Expense
108. There are four closing entries. The first one is to close ____, the second one is to close ____, the third one
is to close ____, and the last one is to close ____.
A. Revenues, expenses, income summary, drawing account
B. Expenses, assets, income summary, capital account
C. Capital account, drawing account, income summary, assets
D. Drawing account, income summary, expenses, revenues
109. Closing entries

A. need not be journalized if adjusting entries are prepared
B. need not be posted if the financial statements are prepared from the work sheet
C. are not needed if adjusting entries are prepared
D. must be journalized and posted
110. Closing entries are dated in the journal as of

A. the date they are actually journalized, although they are generally prepared after the end of the accounting
period
B. the last day of the accounting period, although they are actually journalized after the end of the accounting
period
C. the first day of the accounting period, although they are actually journalized after the end of the accounting
period
D. the first day of the subsequent accounting period
111. Which of the accounts below would be closed by posting a debit to the account?
A. Unearned Revenue
B. Fees Earned
C. Josh Morton, Drawing
D. Miscellaneous Expense
112. Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
A. Supplies Expense
B. Accumulated Depreciation
C. Prepaid Insurance
D. Unearned Rent
113. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?
A. Salaries Expense
B. Fees Earned
C. Unearned Rent
114. Which of the following accounts will be closed to the Capital account at the end of the fiscal year?
A. Rent Expense
B. Fees Earned
C. Income Summary
115. The entry to close the appropriate insurance account at the end of the accounting period is
A. debit Income Summary; credit Prepaid Insurance
B. debit Prepaid Insurance; credit Income Summary
C. debit Insurance Expense; credit Income Summary
D. debit Income Summary; credit Insurance Expense
116. Which of the following accounts ordinarily appears in the post-closing trial balance?
A. Fees Earned
B. Supplies Expense
C. Zane White, Drawing
D. Unearned Rent
117. The post-closing trial balance differs from the adjusted trial balance in that it
A. does not take into account closing entries
B. does not take into account adjusting entries
C. does not include balance sheet accounts
D. does not include income statement accounts
118. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:

Fees Earned 17,400
Supplies 900
A. $3,200
B. $12,100
C. $17,400
D. $8,900
119. A summary of selected ledger accounts appear below for Alberto’s Plumbing Services for the current
calendar year end.
Alberto, Capital
12/31 8,500 1/1 6,500
12/31 15,000
Alberto, Drawing
6/30 3,500 12/31 8,500
11/30 5,000
Income Summary
12/31 18,500 12/31 33,500
12/31 15,000

A. $13,000
B. $33,500
C. $15,000
D. $18,500
120. Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $7,200 and
recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense
during the adjusting process at the end of Amir’s first month of operations on March 31st?
A. $7,200
B. $720
C. $600
D. $6,600
121. The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts on December 31st
during the closing process would be:
A. Dec. 31 Fees Earned 750
Rent Revenue 175
Income Summary 925
B. Dec. 31 Income Summary 925
Fees Earned 750
Rent Revenue 175
C. Dec. 31 Revenues 925
Income Summary 925
D. Dec. 31 Income Summary 925
Revenues 925
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Balance
Cash 48,000 48,000
Equipment 57,000 57,000
Fees Earned 155,000 155,000
Totals 237,000 237,000 105,000 155,000 132,000 82,000
155,000 155,000 132,000 132,000
The journal entry to close revenues would be:

A. debit Income Summary $155,000, credit Fees Earned $155,000
B. debit C. Finley, Capital $155,000, credit Fees Earned $155,000
C. debit Fees Earned $155,000; credit Income Summary $155,000
D. credit Fees Earned $155,000; credit C. Finley, Capital $155,000
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Balance
Cash 48,000 48,000
Equipment 57,000 57,000
Fees Earned 155,000 155,000
Totals 237,000 237,000 105,000 155,000 132,000 82,000
155,000 155,000 132,000 132,000
Based on the preceding trial balance, the entry to close expenses would be:
A. Wages Expense 63,000
Rent Expense 27,000
B. Expenses 105,000
C. Wages Expense 63,000
Rent Expense 27,000
C. Finley, Drawing 105,000
D. Income Summary 105,000
Rent Expense 27,000
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Balance
Cash 48,000 48,000
Equipment 57,000 57,000
Fees Earned 155,000 155,000
Totals 237,000 237,000 105,000 155,000 132,000 82,000
155,000 155,000 132,000 132,000
Based on the preceding trial balance, the entry to close income summary would be:
A. debit C. Finley, Capital $50,000; credit Income Summary $50,000
B. debit Income Summary $155,000; credit C. Finley, Capital $155,000
C. debit Income Summary $50,000, credit C. Finley, Capital $50,000
D. debit C. Finley, Capital $9,000; credit Income Summary $9,000
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Balance
Cash 48,000 48,000
Equipment 57,000 57,000
Fees Earned 155,000 155,000
Totals 237,000 237,000 105,000 155,000 132,000 82,000
155,000 155,000 132,000 132,000
Based on the preceding trial balance, the entry to close C. Finley, Drawing would be:
A. debit C. Finley, Capital $3,000, credit C. Finley, Drawing $3,000
B. debit C. Finley, Capital $12,000, credit C. Finley, Drawing $12,000
C. debit C. Finley, Drawing $3,000; credit C. Finley, Capital $3,000
D. debit C. Finley, Drawing $12,000; credit C. Finley, Capital $12,000
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Balance
Cash 48,000 48,000
Equipment 57,000 57,000
Fees Earned 155,000 155,000
Totals 237,000 237,000 105,000 155,000 132,000 82,000
155,000 155,000 132,000 132,000
Based on the preceding trial balance, the ending balance in C. Finley, Capital is:
A. $33,000
B. $80,000
C. $30,000
D. $83,000
127. The proper sequence of steps in the accounting cycle is as follows
A. analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial
statements, journalize closing entries, analyze adjustment data and prepare adjusting entries
B. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements,
journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger
C. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment
data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger,
and finally prepare a post-closing trial balance
D. prepare financial statements, journalize closing entries and post to the ledger, analyze and record
transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting
entries
128. The following are steps to the accounting cycle. Of the following, which step should be done first?
A. Closing entries are journalized and posted to the ledger.
C. Adjusting entries are journalized and posted to the ledger.
D. Financial statements are prepared.
129. The following are steps in the accounting cycle. Of the following, which would be prepared last?
A. An adjusted trial balance is prepared.
C. An unadjusted trial balance is prepared.
D. Adjusting entries are journalized and posted to the ledger.
130. The accounting cycle requires three trial balances be done. In what order should they be prepared?
A. Post-closing, unadjusted, adjusted
B. Unadjusted, post-closing, adjusted
C. Unadjusted, adjusted, post-closing
D. Post-closing, adjusted, unadjusted
131. The fiscal year selected by companies

A. is the same as the calendar year
B. begins with the first day of the month and ends on the last day of the twelfth month
C. must always begin on January 1
D. will change each year
132. A fiscal year
A. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month
B. for a business is determined by the federal government
C. always begins on January 1 and ends on December 31 of the same year
D. should end at the height of the business's annual operating cycle
133. The natural business year

A. is a fiscal year that ends when business activities are at its lowest point.
B. is a calendar year that ends when business activities are at its lowest point.
C. is a fiscal year that ends when business activities are at its highest point.
D. is a calendar year that ends when business activities are at its highest point.
134. The worksheet

A. is an integral part of the accounting cycle
B. eliminates the need to rewrite the financial statements
C. is a working paper that is required
D. is used to summarize account balances and adjustments for the financial statements
135. Which one of the steps below is not aided by the preparation of the work sheet?
A. preparing the adjusted trial balance
B. posting to the general ledger
C. preparing the financial statements
D. preparing the closing entries
136. A work sheet includes columns for

B. closing entries
C. reversing entries
D. adjusting and closing entries
137. When a work sheet is complete, the adjustment columns should have
A. total credits greater than total debits if a net income was earned
B. total debits greater than total credits if a net loss was incurred
C. total debits greater than total credits if a net income was earned
D. total debits equal total credits
138. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on
a work sheet
A. is the amount of net income or loss
B. indicates there is an error on the work sheet
C. is the amount of retained earnings
D. is the difference between revenue and expenses
139. Net income appears on the work sheet in the

B. debit column of the Adjustments columns
D. credit column of the Income Statement columns
140. A net loss appears on the work sheet in the

B. credit column of the Balance Sheet columns
D. credit column of the Adjustments columns
141. After net income is entered on the work sheet, the Balance Sheet debit and credit columns must
A. be the same amount as the total amount of the Income Statement debit and credit columns
B. equal each other
C. be the same amount as the total amount in the Adjusted Trial Balance debit and credit columns
D. not be equal to each other and need not be the same total amounts as any other pair of columns on the work
sheet
142. Which of the statements below indicates that a company earned a net income for the period?
A. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the work sheet.
B. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet.
C. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet.
D. Cash inflows exceeded cash outflows.
143. Which of the items below would appear in the Income Statement columns of the work sheet?
A. Equipment
B. Unearned Fees
C. Prepaid Expense
D. Net Loss
144. Which of the accounts below would not appear in the balance sheet columns of the worksheet?
A. Chad Daniels, Drawing
B. Rent Earned
C. Unearned Revenue
D. Chad Daniels, Drawing and Unearned Revenue
145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet?
A. Service Revenue
B. Prepaid Rent
C. Supplies Expense
D. None are correct
146. The work sheet at the end of July has $5,950 in the Balance Sheet credit column for Accumulated
Depreciation. The work sheet at the end of August has $7,600 in the Balance Sheet credit column for
Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of
August?
A. amount can not be determined
B. $7,600
C. $5,950
D. $1,650
147. Which of the items below does not appear on the work sheet?
B. the unadjusted trial balance
C. closing entries
D. the drawing account
148. An indication that the work sheet columns are in balance and the work sheet is completed is
A. the word "Total" is written at the bottom of each pair of columns
B. each pair of columns is double underlined
C. each pair of columns has the totals circled
D. the final figures are written in ink
totals of the debit and credit columns are $38,755 and $32,735, respectively. What is the amount of net income
or net loss for the period?
B. $38,755 net loss
C. $6,020 net loss
D. $32,735 net income
150. After all of the account balances have been extended to the Income Statement columns of the work sheet,
the totals of the debit and credit columns are $77,500 and $83,900, respectively. What is the amount of the net
income or net loss for the period?
B. $6,400 net loss
C. $83,900 net income
D. $77,500 net loss
151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At
year end, the adjusting entry on the work sheet would
A. increase an expense account
B. decrease a liability account
C. increase an asset account
D. decrease an expense account
152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability
account. The adjusting entry at year end on the work sheet would
A. increase a liability account
B. decrease an asset account
C. decrease a revenue account
D. decrease a liability account
153. Which of the following is not an essential part of the accounting records?
A. The journal
B. The ledger
C. The chart of accounts
D. The work sheet
totals of the debit and credit columns show debits of $37,686 and the credits of $41,101. This indicates that
A. neither net income or loss can be calculated because it is found on the income statement
B. the company has a net loss of $3,415 for the period
C. the company has a net income of $3,415 for the period
D. The amounts are out of balance and need to be corrected
155. The income statement columns in the worksheet show that debits are equal to $55,800 and credits are
$67,520. What does this information mean to the accountant?
A. Net income of $11,720
B. Net loss of $11,720
C. The accounts are out of balance, indicating an error has been made.
D. The accounts have not been updated.
Debit Credit
Cash $ 1,500
Equipment 15,000
$58,520 $58,520
The entry required to close the revenue accounts at the end of the period includes a:
A. debit to Income Summary for $37,000

B. credit to Income Summary for $38,300
C. debit to Income Summary for $38,200
D. credit to Income Summary for $37,000
Debit Credit
Cash $ 1,500
Equipment 15,000
$58,520 $58,520
The entry required to close the expense accounts at the end of the period includes a:
A. a debit to Income Summary for $35,520

B. a credit to Income Summary for $35,520
C. a debit to Income Summary for $33,520
D. a credit to Income Summary for $33,520
158. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the
end-of-period spreadsheet (work sheet). Indicate whether each balance should be extended to an Income
Statement column or (b) a Balance Sheet column.
1. Dobson, Capital
2. Dobson, Drawing
3. Depreciation Expense
5. Fees earned
6. Unearned Fees
7. Supplies
8. Supplies Expense
1. Balance sheet column

3. Income statement column
A net income of $16,220
160. Morgan Olsen owns and operates Crystal Pool Service Company. On January 1, 2014, Morgan Olsen,
Capital had a balance of $252,000. During the year Morgan invested an additional $32,000 and withdrew
$52,400. For the year ended December 31, 2014 Crystal Pool Service Company reported a net income of
$73,200. Prepare a Statement of Owner’s Equity for the year ended December 31, 2014.
Crystal Pool Service Company

Statement of Owner’s Equity
Morgan Olsen, Capital January 1, 2014 $252,000

Additional investment during 2014 32,000
Total $284,000
Net Income $ 73,200
Less: Withdrawals (52,400)
Increase in owner’s equity 20,800
Morgan Olsen, Capital, December 31, 2014 $304,800
161. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate
whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current
liabilities, (d) long-term liabilities, or (e) owner’s equity section of the December 31, 2010, balance sheet of
Brock Pool Service Company.
1. Taylor Brock, Capital

3. Unearned Revenues
4. Mortgage Payable
5. Equipment
6. Notes Payable (due in 2012)
7. Cash
1. (e) Owner’s equity

2. (b) Property, plant and equipment
3. (c) Current liabilities
4. (d) Long-term liabilities
5. (b) Property, plant and equipment
6. (d) Long-term liabilities
7. (a) Current assets
8. (a) Current assets
162. Describe a classified balance sheet.
A classified balance sheet subsections assets as current assets and property, plant, and equipment. It also
subsections liabilities as current liabilities and long-term liabilities. It also includes the owner's equity section.
163. List and describe the purpose of the four closing entries.
1. Close revenues to income summary.

2. Close expenses to income summary.
3. Close income summary to capital account.
4. Close drawing account to capital account.
At the beginning of the next period, temporary accounts should have zero balances. To achieve a zero balance,
temporary account balances are transferred to permanent accounts at the end of the accounting period. The
entries that transfer these balances are called closing entries and the transfer process is called the closing
process.
164. After the accounts have been adjusted at January 31, 2014, the end of the fiscal year, the following
balances are taken from the ledger of Taylor Pool Service Company:
Hope Taylor, Capital $349,000

Fees Earned 124,600
Rent Expense 43,000
Journalize the four entries required to close the accounts
Jan 31 Fees Earned 124,600

31 Income 85,000
Summary
Rent Expense 43,000
31 Income 39,600
Summary
Hope Taylor, Capital 39,600
31 Hope Taylor, 5,000

Capital
165. Prior to adjustment at August 31, 2014, Salary Expense has a debit balance of $298,500. Salaries owed
but not paid as of the same date total $7,200.
Present
the
entries to
record
the
followin
g:
(1) Accrued salaries as of August 31.
(2) Closing of Salary Expense as of August 31.
(1) Salary Expense 7,200

Salaries Payable 7,200
(2) Income Summary 305,700

166. The following are all the steps in the accounting cycle. List them in the order in which they should be
done.
- Closing entries are journalized and posted to the ledger.

- An unadjusted trial balance is prepared.
- An optional end-of-period spreadsheet (work sheet) is prepared.
- A post-closing trial balance is prepared.
- Adjusting entries are journalized and posted to the ledger.
- Transactions are analyzed and recorded in the journal.
- Adjustment data are assembled and analyzed.
- Financial statements are prepared.
- An adjusted trial balance is prepared.
- Transactions are posted to the ledger.
1. Transactions are analyzed and recorded in the journal.

2. Transactions are posted to the ledger.
3. An unadjusted trial balance is prepared.
4. Adjustment data are assembled and analyzed.
5. An optional end-of-period spreadsheet (work sheet) is prepared.
6. Adjusting entries are journalized and posted to the ledger.
7. An adjusted trial balance is prepared.
8. Financial statements are prepared.
9. Closing entries are journalized and posted to the ledger.
10. A post-closing trial balance is prepared.
167. If working papers are not considered part of the formal accounting records, then why are they used?
Working papers are tools used by accountants to collect and summarize data for for various analysis and
reports.
168. Explain how net income or loss is determined by using the work sheet.
The difference between the debits and credits from the Income Statement columns are compared to the debits
and credits from the Balance Sheet columns. They should be the same amounts but opposite from each
other. If the debits are more than the credits on the income statement columns, signifying a net loss, then the
credits should be higher than the debits on the balance sheet columns by the same amount. If the credits are
more than the debits on the income statement columns, signifying a net income, then the debits should be higher
than the credits on the balance sheet columns by the same amount.
169. You evaluate loan requests as part of your job at Beach Front National Bank. One loan request you
received is from Surfer Dude Supplies, a small proprietorship. Tracy Roberts, the owner, is requesting $75,000
and brings you a trial balance (or Statement of Accounts) for his first year of operations ended December 31,
2010.
REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of
financial statements from his accountant would be more useful for evaluating the loan request?
A set of financial statements provides useful information concerning the economic condition of a company. For
example, the balance sheet describes the financial condition of the company as of a given date and is useful in
assessing the company’s financial soundness and liquidity. The income statement describes the results of
operations for a period and indicates the profitability of the company. The statement of owner’s equity describes
the changes in the owner’s interest in the company for a period. Each of these statements is useful in evaluating
whether to extend credit to the company.
What three accounts do you think should be relabeled for greater clarity?

December 31, 2010
Cash 2,050
Trucks 26,370
Equipment 8,090
Rent Expense 7,330
Utilities Expenses 700
100,000 100,000
· The following items should be relabeled for greater clarity:

Billings Due from Others—Accounts Receivable
Amounts Owed to Others—Accounts Payable
Investment in Business—Marty Monroe, Capital
Which of the following accounts do you think might need to be adjusted before an accurate set of financial
statements could be prepared?

December 31, 2010
Cash 2,050
Trucks 26,370
Equipment 8,090
Rent Expense 7,330
100,000 100,000
The following adjustments might be necessary before an accurate set of financial statements could be prepared:
· No office supplies expense is shown. The office supplies account should be adjusted for the supplies used during the year.
· No depreciation expense is shown for the trucks or equipment accounts. An adjusting entry should be prepared for depreciation
expense on each of these assets.
· An inquiry should be made as to whether any accrued expenses, such as wages or utilities, exist at the end of the year.
· An inquiry should be made as to whether any prepaid expenses, such as rent or insurance, exist at the end of the year.
· An inquiry should be made as to whether any unearned revenue exist at the end of the year.
· An inquiry should be made as to whether the owner withdrew any funds from the company during the year. No drawing account is
shown in the “Statement of Accounts.”
172. Hakik Enterprises offers rug cleaning services to business clients. Below is the trial balance for Hakik
Enterprises, which was prepared on the end of period spreadsheet (work sheet) for the year ended July 31,
2010.
Hakik Enterprises
Sheet)
Trial Balance
Cash 36
Fees Receivable 56
Supplies 12
Equipment 60
Accum. Depreciation 12
Unearned Revenue 20
Accounts Payable 32
Wages Payable
Service Revenue 80
Wage Expense 20
Insurance Expense
Supplies Expense
Totals 228 228
REQUIRED: Enter the adjustment data in the work sheet for the transactions shown below and place the balances in the Adjusted Trial Balance
columns.
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Record one
month’s depreciation.
Hakik Enterprises
Sheet)
Trial Balance Adjustments Adjusted Trial
Balance
Cash 36 36
Prepaid Insurance 12 (e) 3 9
Fees Receivable 56 56
Supplies 12 (c) 4 8
Equipment 60 60
Accum. Depreciation 12 (a) 1 13
Unearned Revenue 20 (d) 15 5
Accounts Payable 32 32
Wages Payable (b) 2 2
Ramon Hakik, Capital 84 84
Ramon Hakik, Drawings 4 4
Service Revenue 80 (d) 15 95
Advertising Expense 28 28
Wage Expense 20 (b) 2 22
Insurance Expense (e) 3 3
Supplies Expense (c) 4 4
Depreciation Expense (a) 1 1
Totals 228 228 25 25 231 231
173. Hakik Enterprises offers rug cleaning services to business clients. Below are the adjustments data for the
year ended July 31, 2010. REQUIRED: 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 5 years with no salvage value. The asset will be depreciated evenly
over its useful life. Please record one month’s depreciation.
Hakik Enterprises
Sheet)
Trial
Balance
Cash 36
Fees Receivable 56
Supplies 12
Equipment 60
Accum. Deprec. - Equip 12
Unearned Revenue 20
Accounts Payable 32
Wages Payable
Service Revenue 80
Wage Expense 20
Insurance Expense
Supplies Expense
Totals 228 228
GENERAL
JOURNAL
Page 1
DATE Description Post.Ref. Debit Credit
2010
Adjusting Entries
(a) Depreciation Expense 1
Accum. Deprec. - Equipment 1
(b) Wage Expense 2

Wages Payable 2
(c) Supplies Expense 4

Supplies 4
(d) Unearned Revenue 15

Service Revenue 15
(e) Insurance Expense 3

Prepaid Insurance 3
Debit Credit
Cash $ 1,500
Equipment 15,000
Total $ 58,520 $ 58,520
Prepare the entry required to close the revenue accounts at the end of the period.
Dec. 31 Rent fees earned 37,000

Debit Credit
Cash $ 1,500
Equipment 15,000
$ 58,520 $ 58,520
Prepare the entry required to close the expense accounts at the end of the period.
Dec 31 Income Summary 33,520

Debit Credit
Cash $ 1,500
Equipment 15,000
$ 58,520 $ 58,520
Prepare the closing entry required to transfer the income or loss at the end of the period.

Debit Credit
Cash $ 1,500
Equipment 15,000
$ 58,520 $ 58,520
Prepare the entry required to close the Drawing account at the end of the period.
Dec 31 Bob Evans, Capital 2,000

178. Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted,
will overstate or understate assets, liabilities, owner’s equity, revenues, expenses, or net income. Indicate the
amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the
transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-)
for understate, and (NE) for no effect.
1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand.
2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years
of insurance.
3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months
rent.

1.
2.
3.

1. +550 NE +550 NE -550 +550
2. +225 NE +225 NE -225 +225
3. NE +130 -130 -130 NE -130
Net loss of $16,220

180. Identify which of the following accounts should be closed with a debit or a credit to Income Summary at
the end of the fiscal year. If it is not closed to Income Summary, mark as n/a.
1. Utilities Payable
2. Utilities Expense
3. Supplies
4. Supplies Expense
5. Fees Earned
6. Unearned Fees
8. Jason Hill, Drawing
9. Jason Hill, Capital
10. Accumulated Depreciation - Equipment
11. Depreciation Expense - Equipment
12. Equipment
13. Prepaid Insurance
14. Insurance Expense
1. Utilities Payable n/a

2. Utilities Expense debit
3. Supplies n/a
4. Supplies Expense debit
5. Fees Earned credit
6. Unearned Fees n/a
7. Accounts Receivable n/a
8. Jason Hill, Drawing n/a
9. Jason Hill, Capital n/a
10. Accumulated Depreciation - Equipment n/a
11. Depreciation Expense - Equipment debit
12. Equipment n/a
13. Prepaid Insurance n/a
14. Insurance Expense debit
181. The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work
sheet. Indicate whether each balance should be extended to (a) the Income Statement columns or (b) the
(1) Salaries Payable (7) Felipe Ramos, Drawing

(2) Fees Earned (8) Equipment
(3) Accounts Payable (9) Accounts Receivable
(4) Felipe Ramos, Capital (10) Accumulated Depreciation
(5) Supplies Expense (11) Salary Expense
(6) Unearned Rent (12) Depreciation Expense
(a) Income statement: 2, 5, 11, 12
(b) Balance sheet: 1, 3, 4, 6, 7, 8, 9, 10
182. Indicate whether each of the following would be reported in the financial statements as a(n) (a) current
asset, (b) current liability, (c) revenue, or (d) expense:
(1) Supplies (5) Supplies Expense

(2) Unearned Fees (6) Prepaid Insurance
(3) Prepaid Advertising (7) Accounts Payable
(4) Advertising Expense (8) Fees Earned
(1) current asset

(2) current liability
(3) current asset
(4) expense
(5) expense
(6) current asset
(8) revenue
183. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for April
30, 2010 for Finnegan Co.:

Fees Earned 78,000
Rent Expense 34,000
Supplies 400
Finnegan Co.
Income Statement
For the Year Ended April 30, 2010
Fees earned $78,000
Expenses:
Rent expense $34,000
Supplies expense 1,800
Total expenses 43,050
Net income $34,950
184. The following revenue and expense account balances were taken from the Income Statement columns of
the work sheet for Fraser Services Co. for December 31, 2010:
Depreciation Expense $ 4,950

Rent Expense 24,000
Fraser Services Co.

Income Statement
Service revenue $ 92,500
Operating expenses:
Wages expense $63,750
Rent expense 24,000
Utilities expense 5,000
Insurance expense 2,900
Miscellaneous expense 1,200
Total operating expenses 104,950
Net loss $ (12,450)
185. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2010 for
Mackenzie Company:
Accumulated Depreciation-Trucks $42,400

Prepaid Rent 6,800
Supplies 850
Unearned Fees 7,310
Trucks 49,300
Cash 3,400
Mackenzie, Capital ?
Prepare a classified balance sheet.
Mackenzie Company
Balance Sheet
April 30, 2010
Assets Liabilities
Current assets:
Cash $ 3,400 Current liabilities:
Supplies 850 Unearned fees $ 7,310
Prepaid rent 6,800
Total current assets $ 11,050 Owner's Equity
Property, plant, and equipment: Mackenzie, Capital 10,640
Trucks $49,300 Total liabilities and owner's
equity $17,950
Less accum.
depreciation 42,400
Total property, plant
and equipment 6,900
Total assets $17,950
186. Indicate whether each of the following would be reported in the section of financial statements identified
as (a) current asset, (b) property, plant, and equipment, (c) current liability, (d) revenue, or (e) expense:
(1) Automobile
(2) Accumulated depreciation
(3) Rent expense
(4) Fees earned
(5) Salaries payable
(6) Prepaid rent
(7) Store supplies
(8) Advertising expense
(9) Unearned rent
(1) property, plant, and equipment

(2) property, plant, and equipment
(3) expense
(4) revenue
(6) current asset
(7) current asset
(8) expense
187. The following balance sheet contains errors.
Brock Morton Services Co.

Balance Sheet
Assets Liabilities
Current assets: Current liabilities:
Cash $ 7,170 Accounts receivable $ 10,000
Accounts payable 7,500 Accum. depr-building 12,525
Supplies 2,590 Accum. depr-equipment 7,340
Prepaid insurance 800 Net income 11,500
Land 24,000
Total current assets $ 42,060 Total liabilities $ 41,365
Owner's Equity
Property, plant, and equipment: Wages payable $ 1,500
Building $43,700 Brock Morton, Capital 88,645
Equipment 29,250 Total owner's equity $ 90,145
Total liabilities and
Total assets $131,510 owner's equity $131,510
(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.
(a)
(1) Date of statement should be "December 31, 2010" and not "For the Year Ended December 31, 2010."
(2) Accounts payable should be a current liability.
(3) Land is a fixed asset and should be listed as Property, Plant and Equipment.
(4) Accumulated depreciation should be deducted from the related fixed asset in the Property Plant, and Equipment section.
(5) An adding error was made in determining the amount of total assets.
(6) Accounts receivable should be a current asset.
(7) Net income would be reported on the income statement.
(8) Wages payable should be a current liability.
A corrected balance sheet would be as follows:
Brock
Morto
n
Servic
es Co.
Balanc
e
Sheet
Decem
ber 31,
2010
Assets
Curren
t
assets:
Cash $ 7,1
70
Acco 10,00
unts 0
receiva
ble
Suppl 2,590
ies
Prepa 8
id 00
insuran
ce
Tota $20,560
l
current
assets
Propert
y,
plant,
and
equipm
ent:
Land $24,0
00
Build $43,700
ing
Less 12,525 31,17
accum. 5
depreci
ation
Equi 29,250
pment
Less 7,340 21,9
accum. 10
depreci
ation
Tota 77,085
l
propert
y,
plant,
and
equipm
ent
Total $97,645
assets
Liabilities
Current liabilities:
Accounts payable $7,50
0
Wages payable 1,500
Total liabilities $ 9,000
Owner's Equity
Brock Morton, Capital 88,645
Total liabilities and owner's equity $97,645
188. The following is the adjusted trial balance for Nadia Company.
Nadia Company
December 31, 2014
Cash 5,130
Equipment 12,400
Notes Payable - Due on June 30, 2011 3,070
Nadia Porter, Capital 13,000
Nadia Porter, Drawing 700
Fees Earned 10,930
Wages Expense 2,450
Rent Expense 1,900
Totals 29,900 29,900
Prepare an Income Statement, Balance Sheet, and Statement of Owner’s Equity. Assume that the capital account started with a beginning balance of
$10,000.
Nadia Company
Income Statement
For Year Ended December 31, 2014
Fees Earned $10,930

Expenses:
Wages Expense $2,450
Rent Expense 1,900
Total Expenses 7,950
Net Income $2,980
Nadia Company
For Year Ended December 31, 2014
Nadia Porter, Capital, January 1, 2014 $10,000

Additional investments during 2014 3,000
Total $13,000
Net Income 2,980
Sub-Total $15,980
Less Withdrawals 700
Nadia Porter, Capital, December 31, 2014 $15,280
Nadia Company
Balance Sheet
December 31, 2014
Assets Liabilities
Current Assets Current Liabilities
Cash $5,130 Accounts Payable $ 700
Accounts Receivable 3,300 Notes Payable 3,070
Prepaid Expenses 420 Total Liabilities $3,770
Total Current Assets $8,850
Property, Plant, & Equip.:

Equipment $12,400 Owner’s Equity
Less: Accum Depre. 2,200 Nadia Porter, Capital $15,280
Total Prop., Plant, & Equip $10,200 Total Liabilities
Total Assets $19,050 and Owner’s Equity $19,050
189. Prepare an income statement and a statement of owner’s equity, for the month ended August 31, 2014,
from the following T-Accounts of Marley Company.

Receiv
able
1,100 5,400 1,400 480
200 800 400
Marley, Marley Income Fees Earned

Capital , Summary
Drawin
g
6,500 3,200 9,775 7,500
2,800 3,200 3,995 2,000
5,780 5,780 275
3,200 9,775
e
2,200 990 285 95
425 990 285 95
2,625
Marley Company
Income Statement
For the Month Ended August 31, 2014
Fees Earned $9,775

Expenses:
Rent Expense 990
Total Expenses $3,995
Net Income $5,780
Marley Company
For the Month Ended August 31, 2014
Marley, Capital, August 1, 2014 $6,500

Add: Additional Investments during August, 2014 2,800
Sub-total $9,300
Add: Net Income Month Ended August 31, 2014 $5,780
Less: withdrawals 3,200
Increase in Owner’s Equity 2,580
Marley, Capital, August 31, 2014 $11,880
190. Prepare an income statement and a statement of owner’s equity for the month ended September 30, 2010
from the T-accounts below of Carson Company.

Receiv
able
1,400 1,600 1,200 435
120 400 200
Carson, Carson Income Fees Earned
Capital , Summary
Drawin
g
6,800 2,400 4,150 3,300
2,500 2400 4,760 500
610 610 350
2,400 4,150

e
3,200 1,130 80 125
225 1,130 80 125
3,425
Carson Company
Income Statement
For the Month Ended September 30, 2010
Fees Earned $4,150

Expenses:
Rent Expense 1,130
Total Expenses $4,760
Net Loss ($610)
Carson Company
For the Month Ended September 30, 2010
Carson, Capital, September 1, 2010 $6,800

Add: Additional Investments during September, 2010 2,500
Sub-total $9,300
Less: Net Loss Month Ended September 30, 2010 $610
Withdrawals 2,400
Decrease in Owner’s Equity 3,010
Carson, Capital, September 30, 2010 $6,290
191. Selected ledger accounts appear below for Fulton Surveying Services for 2014.
Fulton, Fulton,
Capital Drawing
12/31 25,000 1/1 20,000 3/31 12,000 12/31 25,000
12/31 48,000 12/22 13,000
Income
Summary
12/31 19,000 12/31 67,000
12/31 48,000
Prepare a statement of owner's equity.
Fulton Surveying Services

Statement of Owner's Equity
Fulton, Capital, 1/1/2014 $20,000
Net income $ 48,000
Less withdrawals 25,000
Increase in owner’s equity 23,000
Fulton, Capital, 12/31/2014 $43,000
192. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the
year ended March 31 for Boles Athletic Company, journalize the four closing entries.
Cash $ 30,000
Supplies 5,000
Equipment 169,900
Fees Earned 510,000
Rent Expense 48,000
$626,100 $626,100
Mar. 31 Fees Earned 510,000

31 Income Summary 329,000

Rent Expense 48,000

31 Jason Boles, Capital 47,000

193. After all adjustments have been made, but before the accounts have been closed, the following balances
were taken from the ledger of Ramona’s Designs:
Accounts Payable $ 27,600 Rent Expense $ 32,700

Accounts Receivable 64,500 Salary Expense 41,390
Accumulated Depreciation 73,325 Salaries Payable 8,150
Cash 17,150 Service Revenue 186,000
Depreciation Expense 13,500 Supplies 1,500
Equipment 165,000 Supplies Expense 2,500
Insurance Expense 2,510 Ramona Cross, Capital 99,950
Prepaid Insurance 6,275 Ramona Cross, Drawing 48,000
Journalize the entries to close the appropriate accounts.


Rent Expense 32,700

Ramona Cross, Capital 93,400
Ramona Cross, Capital 48,000

Ramona Cross, Drawing 48,000
194. On the basis of the following information taken from the Adjusted Trial Balance columns of the work
sheet for the month ended September 30th, journalize the closing entries for Perez Roofing Company.
Cash $22,500.00
Repair Parts 3,785.00
Machinery 17,750.00
Sam Perez, Capital 2,500.00
Sam Perez, Drawing 1,750.00
Repair Parts Expense 925.00
Depreciation Expense 1,350.00
$60,600.00 $60,600.00
Sep 30 Service 47,200.00
Revenue
Income 47,200.00
Summary
Closing Entry
- Service
Revenue
Sep 30 Income 8,390.00

Summary
Wages 4,840.00
Expense
Office 1,275.00
Supplies
Expense
Repair Parts 925.00
Expense
Depreciation 1,350.00
Expense
Closing
Entry -
Expenses
Sep 30 Income 38,810.0

Summary 0
Sam Perez, 38,810.00
Capital
Closing
Entry -
Income
Summary
Sep 30 Sam Perez, 1,750.00

Capital
Sam Perez, 1,750.00
Drawing
Closing
Entry -
Drawing
195. The following adjusted trial balance is the result of the adjustments made at the end of the month of March
for Erik Martin Company. Utilize these adjusted values to perform the closing entries for Erik Martin Company.
Cash $24,750.00
Machinery 9,750.00
Erik Martin, Capital 19,725.00
Erik Martin, Drawing 6,250.00
Depreciation Expense 1, 575.00 ________
$69,425.00 $69,425.00
March 31 Service 36,500.00

Revenue
Income 36,500.00
Summary
Closing
Entry -
Service
Revenue
March 31 Income 14,615.00

Summary
Wages 6,425.00
Expense
Office 1,465.00
Supplies
Expense
Store 5,150.00
Supplies
Expense
Depreciation 1,575.00
Expense
Closing
Entry -
Expenses
March 31 Income 21,885.00

Summary
Erik 21,885.00
Martin,
Capital
Closing
Entry -
Income
Summary
March 31 Erik 6,250.00
Martin,
Capital
Erik 6,250.00
Martin,
Drawing
Closing
Entry -
Drawing
196. The following adjusted trial balance is the result of the adjustments made at the end of the month of July
for Ladonna Douglas Company. Utilize these adjusted values to perform the closing entries for Ladonna
Douglas Company.
Cash $34,750.00
Machinery 10,750.00
Ladonna Douglas, Capital 53,725.00
Ladonna Douglas, Drawing 13,250.00
Rent Expense 3,000.00
Advertising Expense 2,750.00
Depreciation Expense 575.00 ________
$123,175.00 $123,175.00
July 31 Service 41,500.00

Revenue
Income 41,500.00
Summary
Closing
Entry -
Service
Revenue
July 31 Income 47,365.00
Summary
Wages 37,425.00
Expense
Rent 3,000.00
Expense
Advertising 2,750.00
Expense
Office 1,465.00
Supplies
Expense
Store 2,150.00
Supplies
Expense
Depreciatio 575.00
n Expense
Closing
Entry -
Expenses
July 31 Ladonna 5,865.00

Douglas,
Capital
Income 5,865.00
Summary
Closing
Entry -
Income
Summary
July 31 Ladonna 13,250.00

Douglas,
Capital
Ladonna 13,250.00
Douglas,
Drawing
Closing
Entry -
Drawing
197. Marcus Enterprises was started by Damien Marcus in 2010. During 2010, Damien Marcus invested
$8,000 in the business. Based on the following worksheet, prepare an income statement, statement of owner’s
equity, and balance sheet for Marcus Enterprises for the year ended December 31, 2010.
Marcus Enterprises
Worksheet

Balance
Cash 26,500 26,500
Equipment 18,500 18,500
Damien Marcus, Capital 8,000 8,000
Damien Marcus, Drawing 2,000 2,000
Totals 84,500 84,500 29,500 59,500 55,000 25,000
59,500 59,500 55,000 55,000
Marcus Enterprises
Income Statement
Fees Earned $ 59,500

Expenses:
Wages Expense $ 19,000
Rent Expense 7,000
Net Income $ 30,000
Marcus Enterprises
Damien Marcus, Capital, January 1, 2010 $ 0
Investment during the year $ 8,000
Net income for the Year Ended December 31, 2010 30,000
$38,000
Less Withdrawals 2,000
Damien Marcus, Capital, December 31, 2010 $ 36,000
Marcus Enterprises
Balance Sheet
December 31, 2010
Assets Liabilities
Current Assets: Current Liabilities
Cash $26,500 Accounts Payable $ 11,000
Accounts Receivable 7,000 Wages Payable 1,000
Supplies 1,000 Total Liabilities $12,000
Total current assets $ 34,500
Property, Plant and Equipment
Equipment $18,500
Less accum depr 5,000 Owner’s Equity
Total property, plant and Damien Marcus, Capital $36,000
equipment 13,500
Total Assets $48,000 Total Liabilities and $48,000
Owner’s Equity
198. Prepare closing entries from the following work sheet.
Lakendra Enterprises
Worksheet

Balance
Cash 26,500 26,500
Equipment 18,500 18,500
Lakendra Thomas, Capital 8,000 8,000
Lakendra Thomas, Drawing 2,000 2,000
Totals 84,500 84,500 29,500 59,500 55,000 25,000
59,500 59,500 55,000 55,000
Journal
Post Ref
Date Description Debit Credit
Dec 31 Fees Earned 59,500

Rent Expense 7,000

Lakendra Thomas, Capital 30,000
Dec 31 Lakendra Thomas, Capital 2,000

Lakendra Thomas, Drawing 2,000
199. The following is the adjusted trial balance for Sandeep Company.
Sandeep Company
December 31, 2010
Cash 8,130
Equipment 10,400
Notes Payable 1,000
Fees Earned 36,600
Rent Expense 4,900
Totals 53,700 53,700
Prepare closing entries and the post closing trial balance.
Fees Earned 36,600


Rent Expense 4,900


Sandeep Company
Post Closing Trial Balance
December 31, 2010
Cash 8,130
Equipment 10,400
Notes Payable 1,000
Total $24,580 $24,580
200. Reconstruct the adjusting and closing entries from the following T-Accounts.

Receiv
able.
1,200 6,000 1,350 530
200 1,500 435 530
1,000 7,500 915
Madison Madis Income Fees Earned
Cox, Capital on Summary
Cox,
Drawi
ng
7,000 2,100 9,935 8,000
5,280 2,100 4,655 1,500
2,100 0 5,280 435
10,180 0 9,935
0

e
2,600 1,145 200 180
530 1,145 200 180
3,130 0 0 0
0
Adjusting Entries:
1) Insuranc 200
e
Expense
Prepaid 200
Insuranc
e
2) Account 1,500
s
Receiva
ble
Fees 1,500
Earned
3) Unearne 435
d
Revenue
Fees 435
Earned
4) Wages 530
Expense
Wages 530
Payable
Closing Entries:
1) Fees 9,935
Earned
Income 9,935
Summar
y
2) Income 4,655
Summar
y
Wages 3,130
Expense
Rent 1,145
Expense
Insuranc 200
e
Expense
Utilities 180
Expense
3) Income 5,280
Summar
y
Madison 5,280
Cox,
Capital
4) Madison 2,100
Cox,
Capital
Madison 2,100
Cox,
Drawing
201. Reconstruct adjusting and closing entries for the month ended September 30, 2010 from the T-accounts
below.

Receiv
able.
1,350 1,250 1,050 385
130 275 235 385
1,220 1,525 815
Mai Lui, Mai Income Fees Earned

Capital Lui, Summary
Drawin
g
7,000 2,400 5,510 5,000
580 2,400 6,090 275
2,400 0 580 235
4,020 5,510
e
3,600 1,880 130 95
385 1,880 130 95
3,985 0 0 0
0
Adjusting Entries:
1) Ins 130
ura
nc
e
Ex
pe
nse
Pre 130
pai
d
Ins
ura
nc
e
2) Ac 275
co
unt
s
Re
cei
va
ble
Fe 275
es
Ea
rne
d
3) Un 235
ear
ne
d
Re
ve
nu
e
Fe 235
es
Ea
rne
d
4) W 385
ag
es
Ex
pe
nse
W 385
ag
es
Pa
ya
ble
Closing Entries:
1) Fees 5,510
Earne
d
Inco 5,510
me
Sum
mary
2) Inco 6,090
me
Sum
mary
Wage 3,985
s
Expe
nse
Rent 1,880
Expe
nse
Insura 130
nce
Expe
nse
Utiliti 95
es
Expe
nse
3) Mai 580
Lui,
Capit
al
Inco 580
me
Sum
mary
4) Mai 2,400
Lui,
Capit
al
Mai 2,400
Lui,
Drawi
ng
202.
1) Dana Bowen
Company is
completing its
first year of
operations on
April 30,
2010. Reconstru
ct the entries for
the year ended
April 30, 2010
from the
T-accounts
below. Record
them as follows:
A - L Journal Entries
M- R Adjusting Journal Entries
2) Balance and
prepare the
Income
Statement,
Statement of
Owner’s Equity,
and the Balance
Sheet from the
T-Accounts.
3) Prepare the four

closing entries (S
- V).
4) Prepare the
Post-Closing
Trial Balance.
Cash Accou Supplies Prepaid

nts Insurance
Receiv
able
6,500 1,250 870 1,940
900 385 540 725
400
420
1,940
2,500
50
350
930
Equipment Accum Accounts Wages

ulated Payable Payable
Deprec
iation
2,500 130 870 225
Unearned Dana Dana Income
Revenues Bowen Bowen, Summary
, Drawing
Capital
930 6,500 350
590 2,500
Fees Earned Wages Rent Supplies

Expens Expense Expense
e
900 420 400 540
1,250 225
2,500
385
590
Insurance Deprec Miscellaneo

Expense iation us Expense
Expens
e
725 130 50
1)
Journal Entries:
a) C 6,
a 5
s 0
h 0
Dana Bowen, 6,500
Capital
b) E 2,
q 5
ui 0
p 0
m
e
nt
Dana Bowen, 2,500
Capital
c) R 4
e 0
nt 0
E
x
p
e
n
s
e
Cash 400
d) C 900
a
s
h
Fees Earned 9
0
0
e) A 1,250
c
c
o
u
nt
s
R
e
c
ei
v
a
bl
e
Fees Earned 1,
2
5
0
f) S 870
u
p
pl
ie
s
Accounts 8
Payable 7
0
g) W420
a
g
e
s
E
x
p
e
n
s
e
Cash 4
2
0
h) P 1,940
re
p
ai
d
I
n
s
u
ra
n
c
e
Cash 1,
9
4
0
i) C 2,500
a
s
h
Fees Earned 2,
5
0
0
j) M50
is
c
el
la
n
e
o
u
s
E
x
p
e
n
s
e
Cash 5
0
k) D 350
a
n
a
B
o
w
e
n,
D
ra
w
in
g
Cash 3
5
0
l) C 930
a
s
h
Unearned 9
Revenue 3
0
Adjusting Entries:
m) Supplies 540
Expense
Supplies 540
n) Accounts 385
Receivable
Fees Earned 385
o) Insurance 725
Expense
p) Depreciation 130
Expense
Accumulated Depreciation 130
q) Wages 225
Expense
Wages Payable 225
r) Unearned 590
Revenues
Fees Earned 590
2)
Dana Bowen Company

Income Statement
Fees Earned $5,625

Expenses:
Wages Expense $645
Rent Expense 400
Supplies Expense 540
Net Income $3,135
Dana Bowen Company
Dana Bowen Capital, May 1, 2009 $0

Add: Investments 9,000
Sub-Total 9,000
Net Income for the Period $3,135
Less: withdrawals 350
Dana Bowen, Capital, April 20, 2010 $11,785
Dana Bowen Company

Balance Sheet
April 30, 2010
Assets: Liabilities:
Current Assets:
Cash $7,670 Accounts Payable $870
Accounts Receivable 1,635 Wages Payable 225
Supplies 330 Unearned Revenues 340
Prepaid Insurance 1,215 Total Liabilities 1,435
Total Current Assets $10,850
Property, Plant, & Equipment
Equipment $2,500 Owner’s Equity
Less: Accum Depre 130 2,370 Dana Bowen, Capital 11,785
Total Assets $13,220 Total Liabilities and $13,220
Owner’s Equity
3)
Closing Entries:
s) Fees Earned 5,625

Inc 5,625
om
e
Su
m
ma
ry
t) Income 2,490
Summary
W 645
ag
es
Ex
pe
nse
Re 400
nt
Ex
pe
nse
Su 540
ppl
ies
Ex
pe
nse
Ins 725
ura
nc
e
Ex
pe
nse
De 130
pre
cia
tio
n
Ex
pe
nse
Mi 50
sce
lla
ne
ou
s
Ex
pe
nse
u) Income 3,135
Summary
Da 3,135
na
Bo
we
n,
Ca
pit
al
v) Dana Bowen, 350
Capital
Da 350
na
Bo
we
n,
Dr
aw
ing
4)
Dana Bowen Company
Post-Closing Trial Balance
Cash $7,670
Supplies 330
Equipment 2,500
Accumulated Depreciation $ 130
Wages Payable 225
Unearned Revenues 340
Dana Bowen, Capital 11,785
Total $13,350 $13,350
203. The balances in the ledger of Good Landscape Services as of January 31, 2014 before adjustments, are as
follows:
Cash $ 6,750 Dalton Good, Capital $29,775

Supplies 3,900 Dalton Good, Drawing 3,425
Prepaid Insurance 8,400 Service Revenue 56,300
Equipment 41,750 Salary Expense 24,300
Accumulated Rent Expense 6,000
Depreciation 9,950 Miscellaneous Expense 1,500
Adjustment data are as follows: supplies on hand, January 31, $900; insurance expired for January, $1,100; depreciation on equipment for January,
$1,600; salaries accrued, January 31, $1,650.
(a) Prepare a ten-column work sheet for Good Landscape Services for January, 2014.
(b) On the basis of the work sheet in (a), present the following in good order: (1) income statement, (2) statement of owner's equity
(no additional investments were made during the month), and (3) balance sheet.
(c) On the basis of the work sheet in (a), journalize the closing entries as of January 31, 2014.
(a)
Good Landscape Services )
Work Sheet
For the Month Ended January 31, 2014
)
)
)
)
Trial Balance Adjustm
ents
Account Title Dr. Cr. Dr. Cr. )
Cash 6,750 ..... ..... ..... )

Supplies 3,900 ..... ..... (a) 3,000 )
Prepaid Insurance 8,400 ..... ..... (b) 1,100 )
Equipment 41,750 ..... ..... ..... )
Accumulated Depreciation ..... 9,950 ..... (c) 1,600 )
Dalton Good, Capital ..... 29,775 ..... ..... )
Dalton Good, Drawing 3,425 ..... ..... ..... )
Service Revenue ..... 63,200 ..... ..... )
Salary Expense 24,300 ..... (d) 1,650 ..... )
Rent Expense 6,000 ..... ..... ..... )
Miscellaneous Expense 1,500 ..... ..... ..... )
96,025 96,025 )
)
Supplies Expense ..... ..... (a) 3,000 ..... )
Insurance Expense ..... ..... (b) 1,100 ..... )
Depreciation Expense ..... ..... (c) 1,600 ..... )
Salaries Payable ..... ..... ..... d) 1,650 )
7,350 7,350 )
Net Income )
( Adjusted
( Trial Balance Income Balance Sheet
Stateme
nt
( Dr. Cr. Dr. Cr. Dr. Cr.
(
( 6,750 ..... ..... ..... 6,750 .....
( 900 ..... ..... ..... 900 .....
( 7,300 ..... ..... ..... 7,300 .....
( 41,750 ..... ..... ..... 41,750 .....
( ..... 11,550 ..... ..... ..... 11,550
( ..... 29,775 ..... ..... ..... 29,275
( 3,425 ..... ..... ..... 3,425 .....
( ..... 56,300 ..... 56,300 ..... .....
( 25,950 ..... 25,950 ..... ..... .....
( 6,000 ..... 6,000 ..... ..... .....
( 1,500 ..... 1,500 ..... ..... .....
( 3,000 ..... 3,000 ..... ..... .....
( 1,100 ..... 1,100 ..... ..... .....
( 1,600 ..... 1,600 ..... ..... .....
( ........... 1,650 ........... ........... ........... 1,650
( 99,275 99,275 39,150 56,300 60,125 43,875
( 17,150 ........... ........... 17,150
( 56,,300 56,300 60,125 60,125
(b) (1)
Good Landscape Services
Income Statement
Service revenue $56,300

Operating expenses:
Salary expense $25,950
Rent expense 6,000
Insurance expense 1,100
Miscellaneous expense 1,500
Total operating expenses 39,150
Net income $17,150
(b) (2)
Statement of Owner's Equity
Dalton Good, Capital, January 1, 2014 $29,775

Net income for the month $17,150
Less withdrawals 3,425
Increase in owner's equity 13,725
Dalton Good, Capital, January 31, 2014 $43,500
(b) (3)
Balance Sheet
January 31, 2014
Assets Liabilities
Current assets:
Cash $ 6,750 Current liabilities:
Supplies 1,800 Salaries payable $ 1,650
Total current assets $15,850 Owner's Equity
Dalton Good, Capital 43,500
Property, plant, and Total liabilities and
equipment: owner's equity $45,150
Equipment $41,750
Less accumulated
depreciation 12,450
Total assets $45,150
(c)
Closing Entries
Jan. 31 Service Revenue 56,300

Rent Expense 6,000

Dalton Good, Capital 17,150
31 Dalton Good, Capital 3,425

Dalton Good, Drawing 3,425
204. Complete the following worksheet for Danilo Enterprises.
Danilo Enterprises
Worksheet

Balance a
l
a
n
c
e
S
h
e
e
t
e
b
i
t
Cash 14,500
Supplies 500
Equipment 20,500
Accumulated Depr-Equip 15,000
Wages Payable 3,060
Tony Danilo, Capital 18,240
Tony Danilo, Drawing 1,000
Fees Earned 34,000
Rent Expense 9,300
Totals 79,800 79,800
Net Income (Loss)
Danilo Enterprises
Worksheet
Balance a
l
a
n
c
e
S
h
e
e
t
e
b
i
t
Cash 14,500 14,500
Supplies 500 500
Equipment 20,500 20,500
Tony Danilo, Capital 18,240 18,240
Tony Danilo, Drawing 1,000 1,000
Wages Expense 18,000 1
8
,
0
0
0
Rent Expense 9,300 9
,
3
0
0
Depreciation Expense 8,500 8
,
5
0
0
Totals 79,800 79,800 334,000 44,000 45,800
5
,
8
0
0
Net Loss 1,800 1,800
335,800 45,800 45,800
5
,
8
0
0

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Chapter 4--Completing the Accounting Cycle

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

13. Prepaid Insurance is an example of a current asset.

14. Land is an example of a plant asset.

19. Office Equipment is an example of a current asset account.

28. The drawing account is a temporary account.

33. The drawing account is closed to the income summary account.

38. Closing entries are entered directly on to the work sheet.

45. Balance Sheet accounts are not considered real accounts.

61. A work sheet heading is dated for a period of time.

72. The closing process is sometimes referred to as closing the books.

75. In the accounting cycle, the last step is

81. Notes Receivable due in 350 days appear on the

82. Unearned Fees appear on the

84. Prepaid insurance is reported on the balance sheet as a

85. The income statement is prepared from:

87. The Statement of Owner’s Equity should be prepared

88. The income statement should be prepared

Determine the Owner’s Equity ending balance for the period.

Determine total assets.

Determine the total liabilities for the period.

94. The Balance Sheet should be prepared

96. The Income Statement will include the following accounts

99. Short-term liabilities are those liabilities that

100. Owner’s Equity is

102. On which financial statement will Income Summary be shown?

103. Which of the following is not true about closing entries?

104. The income summary account is also called

109. Closing entries

110. Closing entries are dated in the journal as of

Accumulated Depreciation $ 3,200

Net income for the period is

122. Use the following worksheet to answer the following questions.

The journal entry to close revenues would be:

124. Use the following worksheet to answer the following questions.

125. Use the following worksheet to answer the following questions.

126. Use the following worksheet to answer the following questions.

131. The fiscal year selected by companies

133. The natural business year

134. The worksheet

136. A work sheet includes columns for

139. Net income appears on the work sheet in the

140. A net loss appears on the work sheet in the

A. debit to Income Summary for $37,000

A. a debit to Income Summary for $35,520

1. Taylor Brock, Capital

162. Describe a classified balance sheet.

Hope Taylor, Capital $349,000

Journalize the four entries required to close the accounts

- Closing entries are journalized and posted to the ledger.

Surfer Dude Enterprises

Surfer Dude Enterprises

Transaction Assets Liabilities Owner’s Equity Revenues Expenses Net Income

(1) Salaries Payable (7) Felipe Ramos, Drawing

(1) Supplies (5) Supplies Expense

Accumulated Depreciation $ 32,000

Prepare an income statement.

Depreciation Expense $ 4,950

Accumulated Depreciation-Trucks $42,400

Prepare a classified balance sheet.

Brock Morton Services Co.

Prepaid Accou Unearned Wages

Wages Rent Insurance Utilities