problem: Which of the following steps in the accounting cycle is performed immediately before preparing adjusting entries?
a) Analyzing transactions
b) Preparing a trial balance
c) Preparing the financial statements
d) Recording and posting closing entries
problem: The accounting cycle step that involves summarizing the ledger accounts to prove the equality of debits and credits is called:
a) Preparing a trial balance.
b) Posting adjusting entries.
c) Preparing the financial statements.
d) Analyzing transactions.
problem: Which of the following serves as the link between the income statement and the balance sheet?
a) The statement of owners' equity.
b) The post-closing trial balance.
c) The adjusted trial balance.
d) The statement of cash flows.
problem: Trish is preparing a financial statement for which she needs the balances of the owners' capital and drawing accounts. Which statement is Trish most likely preparing?
a) An income statement.
b) An adjusted trial balance.
c) A statement of owners' equity.
d) A statement of cash flows.
problem: Ivan is making several entries into the general journal at the restaurant where he serves as an accountant. The main difference between entries for routine business transactions and adjusting entries is that:
a) Entries for business transactions usually affect fewer kinds of accounts than adjusting entries.
b) Entries for business transactions are made more often than adjusting entries.
c) Adjusting entries are usually higher than entries for routine business transactions.
d) Adjusting entries are usually lower than entries for routine business transactions.
problem: Why do accountants close accounts?
a) To consolidate revenues and expenses into one net figure.
b) To test the balance of debits and credits.
c) To ensure that the general ledger is the only remaining ledger account.
d) To obtain more detailed information on revenues and expenses.
problem: Closing the Interest Income account usually involves:
a) Crediting an expense account.
b) Crediting an asset account.
c) Debiting a liabilities account.
d) Crediting the Owners' Equity account.
problem: All of the following are exs of accounts that would be listed on a worksheet except:
a) Depreciation Expense.
b) Interest Expense.
c) Income Summary.
d) Rooms Revenue.
problem: Which of the following items do accountants neither publish nor give to managers?
a) The income statement.
b) The worksheet
c) The statement of owner's equity
d) The balance of the owner's capital account
problem: Accountants should not reverse the adjustment of prepaid insurance to recognize insurance expense at the end of the accounting period because:
a) Doing so results in a change from accrual basis accounting to cash basis accounting.
b) Prepaid Insurance is a liability account.
c) Prepaid Insurance should never be adjusted.
d) There is no transaction in the following accounting period to offset a reversing entry as there is for the accrual of assets and liabilities.