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Exam 4: Completing the Accounting Cycle

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Question 31

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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.

E) C) and D)
F) B) and D)

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Question 32

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Selected ledger accounts appear below for Fulton Surveying Services for 2014. Prepare a retained earnings statement.

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Question 33

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In the accounting cycle, the last step is

Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow. Determine the Retained Earnings ending balance.

The work sheet is not considered a part of the formal accounting records.

Tracy Roberts, the sole stockholder of Surfer Dude Supplies, is requesting a $75,000 loan from the bank where you work as a loan officer. He brings to you the following trial balance (or statement of accounts) as of the end of his first year of operations. What three accounts do you think should be relabeled for greater clarity?

Marcus Enterprises began in 2011 when Damien Marcus invested $8,000 in exchange for capital stock. The following is the work sheet for the company at the end of the first year in business. Marcus Enterprises Work Sheet For the Year Ended December 31, 2011 Prepare an income statement, retained earnings statement, and classified balance sheet for Marcus Enterprises for the year ended December 31, 2011.

It is not necessary to post the closing entries to the general ledger.

A work sheet includes columns for

Beachside Realty rents condominiums and furnishings. It's adjusted trial balance at December 31, 2011, is as follows: Prepare the closing entry required to transfer the income or loss at the end of the period.

Which of the items below does not appear on the work sheet?

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 ____.

The income statement is prepared from the adjusted trial balance or the income statement columns on the work sheet.

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 following: (1) Accrued salaries as of August 31. (2) Closing of Salary Expense as of August 31.

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.

The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements.

On which financial statement will Income Summary be shown?

Which of the following accounts will be closed to the retained earnings account at the end of the fiscal year?

After analyzing transactions, the next step would be to post the transactions in the ledger.

Explain how net income or loss is determined by using the work sheet.