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College Accounting

John Price, University of North Texas
M. David Haddock, Chattanooga State Technical Comm. College
Horace Brock, University of North Texas
Connie Hahn, Southern Alberta Institute of Technology
Traven Reed, Canadore College

Completing the Accounting Cycle for a Merchandising

True/False Questions


1	Cash, accounts receivable, merchandise inventory, and prepaid expense items appear in the Current Assets section of the classified balance sheet.
		A)	True
		B)	False


2	The gross profit on sales shown on the classified income statement is the difference between the net sales and the operating expenses.
		A)	True
		B)	False


3	Current liabilities are debts that are due for payment after five years.
		A)	True
		B)	False


4	The Cost of Goods Sold section of the classified income statement includes information about the beginning and ending merchandise inventory and the purchases made during the period.
		A)	True
		B)	False


5	The net income from operations shown on the classified income statement is the difference between the gross profit on sales and the total operating expenses.
		A)	True
		B)	False


6	The amortization expense for store equipment would appear in the Plant and Equipment section of the classified balance sheet.
		A)	True
		B)	False


7	Adjustments are posted from the worksheet to the accounts.
		A)	True
		B)	False


8	The ending merchandise inventory is recorded in the accounting records by means of an adjusting entry.
		A)	True
		B)	False


9	The Income Summary is credited for the total of the expenses and the beginning inventory.
		A)	True
		B)	False


10	A separate journal entry is always prepared for each individual adjustment.
		A)	True
		B)	False


11	The Drawing account is closed into the Income Summary account.
		A)	True
		B)	False


12	After completing the worksheet and the financial statements, the accountant enters the adjustments in the general journal.
		A)	True
		B)	False


13	After all adjustments have been journalized and posted, the ledger account balances will be the same as the adjusted trial balance amounts on the worksheet.
		A)	True
		B)	False


14	The information needed to close the revenue and expense accounts is taken directly from the ledger accounts to ensure accuracy.
		A)	True
		B)	False


15	Revenue and expense accounts must be carried forward from one year to the next.
		A)	True
		B)	False


16	The Income Summary account is not closed out.
		A)	True
		B)	False


17	It is desirable to take a postclosing trial balance after the adjusting and closing entries have been journalized and posted.
		A)	True
		B)	False


18	The postclosing trial balance shows essentially the same account balances that appear in the income statement.
		A)	True
		B)	False


19	In closing the Income Summary account, the net income or loss is closed into the owner`s capital account.
		A)	True
		B)	False


20	The adjustments that appear on the worksheet must be entered in the ledger before the financial statements can be made available to management.
		A)	True
		B)	False


21	A readjustment is a correction of an adjusting entry.
		A)	True
		B)	False


22	All accounts adjusted in the Adjustments columns of the worksheet require a reversing entry.
		A)	True
		B)	False


23	Miscellaneous Income and Amortization Expense accounts are typical of accounts that usually require reversing entries.
		A)	True
		B)	False


24	Reversing entries are made before transactions of the new period are recorded.
		A)	True
		B)	False


25	Salaries and Wages Payable would usually be reversed.
		A)	True
		B)	False

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