Chapter 4 Practice Test Answers – Flashcards
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Which one of the fixed asset accounts listed below will not have a related contra asset account?
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land
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Prepaid insurance is reported on the balance sheet as a
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current asset
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The income statement is prepared from
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either the adjusted trial balance or the Income Statement columns of the end-of-period spreadsheet
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The first item appearing on the statement of retained earnings is
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the beginning balance of retained earnings
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The statement of retained earnings should be prepared
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after the income statement and before the balance sheet
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The income statement should be prepared
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before the retained earnings statement and balance sheet
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The balance sheet should be prepared
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after the income statement and the retained earnings statement
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The retained earnings statement begins with the beginning balance followed by
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adding investments plus net income less dividends
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The income statement will present
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revenues less expenses (ordered largest to smallest amount) with miscellaneous expense listed last
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The classified balance sheet will show which asset subsections?
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current assets and property, plant, and equipment
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The classified balance sheet will show which liability subsections?
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current liabilities and long-term liabilities
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Debts listed as current liabilities are those that
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will be paid in less than one year
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Stockholders' equity is
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added to liabilities and the two are equal to assets
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Balance sheet accounts
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are called real accounts
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On which financial statement will Income Summary be shown?
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no financial statement
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The income summary account is also called
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the clearing account
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After posting the second closing entry to the income summary account, the balance will be equal to
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the net income or net loss for the period
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Which of the following account groups are nominal accounts?
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Rent Revenue, Fees Earned, Miscellaneous Expense
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Which of the accounts below would be closed by posting a debit to the account?
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fees earned
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Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
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service revenue
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Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?
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prepaid insurance
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Which of the following accounts will be closed to the retained earnings account at the end of the fiscal year?
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income summary
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The entry to close the appropriate insurance account at the end of the accounting period is
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debit Income Summary; credit Insurance Expense
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The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts during the year-end closing process would be:
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Dec. 31 Fees Earned 750 Rent Revenue 175 Income Summary 925
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Which of the accounts below would not appear in the balance sheet columns of the end-of-period spreadsheet?
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Service Revenue
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Which of these accounts would appear in the Balance Sheet columns of the end-of-period spreadsheet?
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Prepaid Insurance
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Which of the items below does not appear on the end-of-period spreadsheet?
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the closing enteries
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Which of the following is not an essential part of the accounting records?
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the end-of-period spreadsheet
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An end-of-period spreadsheet includes columns for
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adjusting entries
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The end-of-period spreadsheet
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is used to summarize account balances and adjustments for the financial statements
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The natural business year is a
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fiscal year that ends when business activities are at their lowest point
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Of the following steps of the accounting cycle, which step should be completed last?
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an adjusted trial balance is prepared
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The accounting cycle requires three trial balances be done. In what order should they be prepared?
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un-adjusted, adjusted, postclosing
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