In the closing process of the accounting cycle, the accountant closed the dividends accountat year-end by debiting Income Summary and crediting the dividends account. The balanceof Income Summary after closing revenue, expenses and dividends are closed to RetainedEarnings. What is the effect of these entries on current-year profit and the balance in theequity account(s) at year-end?A. Profit is overstated; balance in the retained earnings account is correct.B. Profit is correct; balance in the retained earnings account is overstated.C. Profit is understated; balance in the share capital account is correct.D. Profit is correct; balance in the share capital account is correct.

Dividends:This is the amount of cash distributed to stockholders by a company out its earnings,…

Answered: In the closing process of the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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After closing entries are posted, the ending balance of Retained Earnings on the general ledger should: agree with the retained earnings balance in the income statement. be zero. agree with the retained earnings balance in the balance sheet. agree with the retained earnings balance in the statement of cash flows.
Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year. True O False The owner's drawing account is closed to the Income Summary account in order to properly determine net income (or loss) for the period. * O True False
The balance in the Retained Earnings account represents: Select one: a. Accumulated revenues from all prior years of operations b. Accumulated earnings that have not been distributed to stockholders c. The amount of cash available for dividends d. Cash in the bank
8. The closing entry process consists of closing a. all asset and liability accounts. b. out the Owner's Capital account. C. all permanent accounts. d. all temporary accounts. 9. The final step in the accounting cycle is to prepare a. closing entries. b. financial statements. C. a post-closing trial balance. d. reversing entries. 10. The current ratio is expressed as a. current assets divided by current liabilities. b. current assets minus current liabilities. c. current liabilities divided by non-current liabilities. d. current assets minus owner's equity. ish (Canada)
Accrued salaries are Salaries that have been neither earned by employees nor paid. Salaries that have been earned by employees but not paid. Salaries that have been paid but not earned by employees. Salaries that were earned by employees and have been paid. Which types of adjusting entries are natural opposites Profit and loss O Prepaids and depreciation O Expenses and revenues Prepaids and accruals
If the company reports a net loss for the period, then the closing entries will result in an overall ____ to Retained Earnings. A. Debit B. Credit
Which statement is false about reversing entries? a. Reversing entries are required as part of the closing process. b. Recording reversing entries simplifies the recording of next period's transactions. C. Reversing entries are recorded on the first day of the subsequent accounting period. O d. A reversing entry is the opposite of the adjusting entry to which it relates.
What of the following is an incorrect statement? a) The final step in the accounting cycle is to close the temporary accounts. TESTER D Ob) A primary goal of accrual accounting is to appropriately match expenses with revenues. d) All of the statements are correct. c) Conservatism guides accountants to select the alternative that produces the highest amount of net income.
Which of the following accounts will be closed to Income Summary? Prepaid Expenses. Unearned Revenue. Dividends. Depreciation Expense.
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GIVE A DETAILED ANSWER Describe the effect on the financial statements when an adjustment is prepared that records (a) unrecorded revenue and (b) unrecorded expense. On the basis of what you have learned about adjustments, why do you think that adjusting entries are made on the last day of the accounting period rather than at several times during the accounting period?

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