ACCT 2301 Chapter 4 – Flashcards
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A worksheet is not a journal, and it cannot be used as a basis for posting to the ledger accounts.
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True
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Closing entries are necessary for
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temporary accounts only
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When Alexander Company purchased supplies for $500, it incorrectly recorded a credit to Supplies for $5,000 and a debit to Cash for $5,000. Before correcting this error
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Cash is overstated and Supplies is understated.
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Patents and copyrights are
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intangible assets
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Use of reversing entries is not a required step in the accounting cycle.
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True
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Under IFRS, current assets are listed in reverse order of liquidity.
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True
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In a worksheet, net income is entered in the
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income statement (Dr) and balance sheet (Cr) columns.
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An account that will have a zero balance after closing entries have been journalized and posted is
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Service Revenue
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Which of the following steps in the accounting cycle may be performed more frequently than annually?
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prepare a trial balance
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The correct order of presentation in a classified balance sheet for the following current assets is
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cash, accounts receivable, inventories, prepaid insurance.
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Which of the following is an optional step in the accounting cycle?
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Reversing entries
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Companies that follow IFRS to prepare a statement of financial position generally use the following order of classification:
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noncurrent assets, current assets, equity, noncurrent liabilities, current liabilities.
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After the adjusting entries are journalized and posted to the accounts in the general ledger, the balance of each account should agree with the balance shown on the
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adjusted trial balance
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The dividends account appears in which column(s) of the worksheet?
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trial balance, adjusted trial balance, and balance sheet columns.
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Income Summary has a credit balance of $12,000 after closing revenues and expenses. The entry to close Income Summary is
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debit Income Summary $12,000, credit the Retained Earnings account $12,000.
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The closing process involves separate entries to close (1) expenses, (2) dividends, (3) revenues, and (4) income summary. The correct sequencing of the entries is
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(3), (1), (4), (2)
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Which one of the following is an optional step in the accounting cycle of a business enterprise?
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prepare a worksheet
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On September 23, Reese Company received a $350 check from Mike Moluf for services to be performed in the future. The bookkeeper for Reese Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should
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debit Accounts Receivable $350 and credit Unearned Service Revenue $350.
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On the balance sheet, companies usually list current assets in the order of largest to smallest.
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False
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A reversing entry
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is the exact opposite of an adjusting entry made in a previous period.
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IFRS generally requires a classified statement of financial position not similar to GAAP.
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False
