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Interactive Quiz B
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1
The worksheet is a formal financial statement which is included in the company's published annual report.
A)True
B)False
2
Every account that is contained in the company's chart of accounts will appear in the worksheet even if the account has a zero balance.
A)True
B)False
3
If an adjusting entry needs to be entered onto the worksheet but the account name is not on the worksheet, the common practice is to omit the adjustment.
A)True
B)False
4
Assume that all of the adjustments have been entered on the worksheet. When the total debits in the adjustments column are added to the total debits in the unadjusted trial balance column, the result will always be equal to the total debits in the adjusted trial balance column.
A)True
B)False
5
A company prepares monthly financial statements and uses a worksheet to assist in the preparation of the monthly statements. On average the company has ten adjusting entries per month. The company does not journalize or post any adjustments except for those arising in the last month of the year. This procedure has allowed the company to avoid the journalization and the posting of 110 journal entries.
A)True
B)False
6
Since the Income Summary account is an account, it will be found on one of the company's annual financial statements.
A)True
B)False
7
As explained in the text, the owner's withdrawals account will be closed to the Income Summary account at the end of the period.
A)True
B)False
8
The post-closing trial balance is a trial balance that should contain only account balances that would be found on the income statement but not the balance sheet.
A)True
B)False
9
When assets are presented on the balance sheet, they are listed in order of increasing liquidity.
A)True
B)False
10
Examples of current assets are cash, accounts receivable, inventory, office supplies, buildings, and office supplies.
A)True
B)False
11
After the accounting cycle is complete for an accounting period, the types of accounts that will still have balances are the temporary owner's equity accounts.
A)True
B)False
12
Accounts that are used to report on activities related to one or more future accounting periods, and whose balances are carried into the next period, are called permanent or real accounts.
A)True
B)False
13
After the accounts are closed, there will still be unearned revenue and prepaid expense accounts with balances.
A)True
B)False
14
The proper procedure for closing a revenue account with a normal balance is to debit the revenue account and credit the Income Summary account.
A)True
B)False
15
If a proprietorship entity sustains a loss for the period, the closing entries will include a debit to the Capital account and a credit to the Income Summary account.
A)True
B)False
16
The owner's withdrawal account will be listed on the post-closing trial balance.
A)True
B)False
17
Preparing the worksheet is not a required part of the accounting cycle.
A)True
B)False
18
In the accounting cycle, posting the entries to the general ledger occurs after the original transactions are analyzed.
A)True
B)False
19
Preparing the post-closing trial balance is performed before the temporary accounts have been closed.
A)True
B)False
20
Within the asset section of a classified balance sheet, current assets are listed first.
A)True
B)False
21
The Income Summary account is an example of a temporary account, which is an account that is closed at the end of the reporting period.
A)True
B)False
22
After revenues and expenses have been closed to Income Summary, the balance of the Income Summary account will be equal to the net income or net loss of the business.
A)True
B)False
23
The net loss sustained by a sole proprietorship is closed to the Capital account.
A)True
B)False
24
The work sheet is not one of the formal financial statements.
A)True
B)False
25
The Capital account balance shown on the work sheet reflects the increase or decrease from net income or net loss.
A)True
B)False
26
When the final totals of the work sheet Income Statement columns are equal and the final totals of the work sheet Statement of Owner's Equity and Balance Sheet columns are equal, it provides proof that no errors occurred in the preparation of the work sheet.
A)True
B)False
27
The operating cycle for a service company is the time span between paying employees for performing services and receiving cash from customers.
A)True
B)False
28
A balance sheet with current asset and plant and equipment sections is a classified balance sheet.
A)True
B)False
29
Current assets include cash, accounts receivable, inventory or other assets expected to be used, collected or sold within the longer of one year or the company's operating cycle.
A)True
B)False
30
Assets such as notes receivable or investments in stocks and bonds, which are held for more than one year or the operating cycle, are called long-term investments.
A)True
B)False
31
Plant and equipment is sometimes referred to as intangible assets.
A)True
B)False
32
Current liabilities are obligations due to be paid or settled within the shorter of one year or the operating cycle.
A)True
B)False
33
Assume a firm purchases a delivery truck at 0% interest and is making monthly payments over a three year period. None of the required payments will be reported in the current liability section of the balance sheet.
A)True
B)False
34
The Income Summary account is a real or permanent account and is closed to the withdrawals account of a sole proprietorship, or closed in an agreed upon basis to the withdrawal accounts of the partners in a partnership.
A)True
B)False
35
A $40,000 note payable will be paid off at the end of three years. Excluding interest, this amount would be shown on the balance sheet as a long-term liability of $40,000.
A)True
B)False
36
Long-lived assets (resources used to produce or sell products or services) that lack physical form and have benefits that are uncertain are called plant assets.
A)True
B)False





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