Complete the statement: closing entries ________ A. Reflect the net income for the accounting period B. Are also posted in the subsidiary ledgers C. Involve all ledger accounts D. Are recorded in the special journals
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
ANSWER THE FOLLOWING AND EXPLAIN
1. Complete the statement: closing entries ________
A. Reflect the net income for the accounting period
B. Are also posted in the subsidiary ledgers
C. Involve all ledger accounts
D. Are recorded in the special journals
2. Every adjusting entry affects ____________
A. Both a real and a nominal account
B. Only nominal accounts
C. Only real accounts
D. Neither real or nominal accounts
3. Financial statements must be prepared at least ________
A. Every two years
B. Annually
C. Quarterly
D. Semi-annually
4. In the accounting process, financial statements must be prepared _________
A. After the
B. Before the adjusting entries are made
C. After preparing the post-closing
D. After the adjusting and closing entries
5. The following state ments pertain to a trial balance
1. It is prepared at the end of every accounting period after all the transactions for the period have been recorded and posted to the general ledger.
2. It provides evidence that the total debits in the general ledger equal total credits
3. It is a control device that helps eliminate accounting errors
Which of the above statements is/are correct?
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2 and 3
6. The following pertains to financial statements
1. They are the means by which the information accumulated and processed in financial accounting is periodically communicated to the users
2. They are a structured financial representation of the financial position and financial performance of an entity
Which of the above statement is/are correct?
A. Statement 1 only
B. Both statements 1 and 2
C. Statement 2 ony
D. Neither statement 1 nor statement 2
7. The process wherein transactions are recorded in the journal are transferred to the appropriate accounts in the general ledger and subsildiary ledgers, if appropriate, is called ___________
A. Ledgering
B. Analyzing
C. Posting
D. Journalizing
8. The purpose of the worksheet is to ____________
A. Facilitate the preparation of financial statements
B. Showcase the capability of accountants
C. Generate additional reports to management
D. Have a place for
9. Which of the following errors would not prove the quality of the trial balance debits and credits?
A. A miscellaneous expense for transportation was omitted
B. A debit to supplies was recorded as debit to equipment
C. A debit entry of 11,000 for rent was posted as 10,100
D. A payment for utilities was recorded twice
10. Which of the following statement is correct relative to posting with use of special journals?
A. The general
B. The subsidiary ledger posting has to be ahead of general legder posting.
C. The general ledger has to be coincide with the subsidiary ledger posting
D. No subsidiary ledger posting is necessary
11. Which of the following statement is correct relative to trial balance?
A. The trial balance is usually contains the account balances that should appear in the financial statements
B. The trial balance proves that no errors have been made
C. The trial balance provides information that is helpful when making adjusting entries.
D. The trial balance is a summary taken directly from the genral journal
12. Which of the following statement is not correct?
A. The post reference/folio column serves as cross reference between the journal and the ledger
B. The post reference/folio column of the affected account in the ledger contains the journal and journal page number from where the posting was taken
C. The cross referencing in the post reference/folio column is done even before posting
D. The post reference/folio column of the affected account in the journals contains the account number of the ledger account from where the entry was posted
13. Which statement about the worksheet is not correct?
A. Resulting net income or net loss is reflected in the worksheet
B. The difference betwwen the total debits and total credits in the income statement column has to be the same as the difference between the total debits and total credits in the balance sheet columns
C. The adjusting entries are entered in the worksheet
D. The total debits and total credits in the income and income statements columns are not the same before and after the recognition of the net income or net loss
14. Which of the following statement is not correct as to why an entity must make adjusting entries?
A. To prepare reliable income statement and
B. To ensure that the revenue recognitionand expense recognition principles are followed
C. To prepare for closing and reversing entries
D. To account for accruals and deferrals
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