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Chapters 1-4 The Accounting Cycle
Chapters 5-8 Current Assets
Chapters 9-11 Long-Term Assets
Chapters 12-14 Liabilities/Equities
Chapters 15-16 Using Information
- Chapter 15: Financial Reporting and Concepts
- Chapter 16: Financial Analysis and the Statement of Cash Flows
Chapters 17-20 Managerial/Cost
Chapters 21-24 Budgeting/Decisions

Chapter 4 - Multiple Choice

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Chapter 4 – Multiple Choice

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Question 1 of 8

1. Question
The accountant’s worksheet:
- lays the groundwork for formal financial statement preparation.
- is a fundamental financial statement.
- provides details necessary for full disclosure and the preparation of footnotes.
- is prepared at the end of each operating cycle.
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Question 2 of 8

2. Question
In preparing a worksheet, a net loss would be computed and entered in the:
- debit column of the income statement columns of the worksheet.
- credit column of the income statement columns of the worksheet.
- in the debit column of the adjusted trial balance.
- in the credit column of the balance sheet columns of the worksheet.
Correct

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Question 3 of 8

3. Question
Which of the following accounts would not be closed at the end of an accounting period?
- Income Summary
- Dividends
- Revenue
- Capital Stock
Correct

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Question 4 of 8

4. Question
After closing all revenue and expense accounts, Norris Company had a debit balance in its Income Summary account of $10,000. The proper entry to record the closing of the Income Summary account would be:
- Revenue 10,000
  
  Income Summary 10,000
- Retained Earnings 10,000
  
  Income Summary 10,000
- Income Summary 10,000
  
  Retained Earnings 10,000
- Income Summary 10,000
  
  Expenses 10,000
Correct

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Question 5 of 8

5. Question
The following statements all pertain to the accounting cycle. Which of these statements is wrong?
- A post-closing trial balance is prepared prior to closing temporary accounts.
- Formal financial statements may be produced from the worksheet.
- Adjusting entries are recorded in the journal and posted to the ledger.
- The post-closing trial balance is prepared by examining ledger balances subsequent to the closing of accounts.
Correct

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Question 6 of 8

6. Question
Which of the following statements about reversing entries is true?
- Identical account balances are achieved in the subsequent accounting period whether reversing entries are utilized or not.
- Reversing entries may not be used with accrued revenues.
- Reversals are generally applied to those adjusting items that do not involve future cash flow.
- Reversing entries would not be prepared if a company also utilized closing entries.
Correct

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Question 7 of 8

7. Question
Shipman Company had accrued salaries of $300 on December 31. The company recorded reversing entries on the following January 1. On the next payday, January 7, the appropriate entry to record the payment of $1,000 in salaries should include:
- a debit to Salaries Expense of $1,000.
- a debit to Salaries Expense of $700.
- a debit to Salaries Expense of $1,300.
- a debit to Salaries Payable for $300.
Correct

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Question 8 of 8

8. Question
Current assets are those assets which management intends to convert into cash or consume within:
- The operating cycle
- One year
- The longer of (a) or (b)
- The shorter of (a) or (b)
Correct

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Illustrative Entries

Examples of journal entries for numerous sample transactions

Account Types

Typical financial statement accounts with debit/credit rules and disclosure conventions

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Chapters 1-4
Chapters 5-8
Chapters 9-11
Chapters 12-14
Chapters 15-16
- Chapter 15: Financial Reporting and Concepts
- Chapter 16: Financial Analysis and the Statement of Cash Flows
Chapters 17-20
Chapters 21-24
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