Name: __________________________________

Section: ________________________________
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
____ 1. The work sheet is a:
a
.
formal statement issued to creditors
b
.
working paper often used by accountants to summarize adjusting entries
c
.
replacement for the ledger
d
.
replacement for a set of financial statements
____ 2. The difference between the totals of the debit and credit columns of the Adjusted Trial alance columns on a
work sheet:
a
.
is the amount of net income or loss
b
.
indicates there is an error on the work sheet
c
.
is not unusual for preparing the work sheet
d
.
is the net difference between re!enue" e#penses" and drawing
____ $. %et income appears on the work sheet in the:
a
.
debit column of the alance &heet columns
b
.
debit column of the Adjustments columns
c
.
debit column of the 'ncome &tatement columns
d
.
credit column of the 'ncome &tatement columns
____ (. A net loss appears on the work sheet in the:
a
.
debit column of the alance &heet columns
b
.
debit column of the Trial alance columns
c
.
debit column of the 'ncome &tatement columns
d
.
credit column of the Adjustments columns
____ ). A net loss appears on the work sheet:
a
.
when re!enue e#ceeds e#penses
b
.
when e#penses e#ceed re!enues
c
.
e!ery time the Adjusted Trial alance columns do not balance on the initial totaling
d
.
e!ery time the 'ncome &tatement columns do not balance on the initial totaling
1
____ *. After net income is entered on the work sheet" the alance &heet debit and credit columns must:
a
.
be the same amount as the total amount of the 'ncome &tatement debit and credit
columns
b
.
e+ual each other
c
.
be the same amount as the total amount in the Adjusted Trial alance debit and credit
columns
d
.
not be e+ual to each other and need not be the same total amounts as any other pair of
columns on the work sheet
____ ,. 'f the work sheet does not contain a pair of columns for the -etained .arnings &tatement" the capital stock and
di!idends amounts are:
a
.
omitted
b
.
e#tended to the alance &heet columns
c
.
e#tended to the 'ncome &tatement columns
d
.
e#tended to the Adjustments columns
____ /. 0hich of the following appears in the alance &heet columns of the work sheet1
a
.
.+uipment
b
.
2ees .arned
c
.
3epreciation .#pense
d
.
&upplies .#pense
____ 4. 0hich of the following appears in the alance &heet columns of the work sheet1
a
.
5nearned 2ees
b
.
-ent .#pense
c
.
&alaries .#pense
d
.
&er!ice -e!enue
____ 16. 0hich of the following appears in the alance &heet columns of the work sheet1
a
.
Accounts -ecei!able
b
.
-ent e#pense
c
.
&upplies .#pense
d
.
&er!ice -e!enue
____ 11. 0hich of the following appears in the alance &heet columns of the work sheet1
a
.
7repaid 'nsurance
b
.
0ages .#penses
c -ent -e!enue
2
.
d
.
&er!ice -e!enue
____ 12. An indication that the work sheet columns are in balance and the work sheet is completed is:
a
.
the word 8Total8 is written at the bottom of each pair of columns
b
.
each pair of columns is double underlined
c
.
each pair of columns has the totals circled
d
.
the final figures are written in ink
____ 1$. After all of the account balances ha!e been e#tended to the alance &heet columns of the work sheet" the totals of
the 3ebit and 9redit columns are 7$4",)6 and 721",)6" respecti!ely. 0hat is the amount of net income or net
loss for the period1
a
.
71/"666 net income
b
.
71/"666 net loss
c
.
7$4",)6 net income
d
.
721",)6 net income
____ 1(. After all of the account balances ha!e been e#tended to the alance &heet columns of the work sheet" the totals of
the 3ebit and 9redit columns are 7$6",)6 and 7*4",)6" respecti!ely. 0hat is the amount of net income or net
loss for the period1
a
.
7$4"666 net income
b
.
7$4"666 net loss
c
.
7$6",)6 net income
d
.
7*4",)6 net income
____ 1). After all of the account balances ha!e been e#tended to the 'ncome &tatement columns of the work sheet" the
totals of the debit and credit columns are 7/4"466 and 7*,"*66" respecti!ely. 0hat is the amount of the net
income or net loss for the period1
a
.
722"$66 net income
b
.
722"$66 net loss
c
.
7/4"466 net income
d
.
7*,"*66 net loss
____ 1*. After all of the account balances ha!e been e#tended to the 'ncome &tatement columns of the work sheet" the
totals of the debit and credit columns are 742"$66 and 7*,"*66" respecti!ely. 0hat is the amount of the net
income or net loss for the period1
a
.
72(",66 net income
b
.
72(",66 net loss
$
c
.
742"$66 net income
d
.
742"$66 net loss
____ 1,. 0hen preparing the -etained .arnings &tatement" the beginning capital balance can always be found:
a
.
in the 'ncome &tatement columns of the work sheet
b
.
in the statement of cash flows
c
.
in the general ledger
d
.
in the general journal
____ 1/. 5nearned 2ees appears on the:
a
.
balance sheet
b
.
-etained .arnings &tatement
c
.
income statement
d
.
statement of cash flows
____ 14. Accumulated 3epreciation appears on the:
a
.
balance sheet
b
.
-etained .arnings &tatement
c
.
income statement
d
.
statement of cash flows
____ 26. &alaries 7ayable appears on the:
a
.
balance sheet
b
.
-etained .arnings &tatement
c
.
income statement
d
.
statement of cash flows
____ 21. 3epreciation .#pense appears on the:
a
.
balance sheet
b
.
-etained .arnings &tatement
c
.
income statement
d
.
statement of cash flows
(
____ 22. :ong;term :iabilities appears on the:
a
.
balance sheet
b
.
-etained .arnings &tatement
c
.
income statement
d
.
statement of cash flows
____ 2$. Accounts -ecei!able appears on the:
a
.
balance sheet
b
.
-etained .arnings &tatement
c
.
income statement
d
.
statement of cash flows
____ 2(. Accumulated 3epreciation appears on the:
a
.
balance sheet in the current assets section
b
.
balance sheet in the fi#ed assets section
c
.
balance sheet in the long;term liabilities section
d
.
income statement as an operating e#pense
____ 2). %otes -ecei!able due in $)6 days appears on the:
a
.
balance sheet in the current assets section
b
.
balance sheet in the fi#ed assets section
c
.
balance sheet in the current liabilities section
d
.
income statement as an e#pense
____ 2*. 5nearned 2ees appears on the:
a
.
balance sheet in the current assets section
b
.
balance sheet as a current liability
c
.
balance sheet in the &tockholders< e+uity section
d
.
income statement as re!enue
____ 2,. 0hich one of the fi#ed asset accounts listed below will not ha!e a related contra asset account1
a
.
=ffice .+uipment
b
.
:and
c
.
3eli!ery .+uipment
)
d
.
uilding
____ 2/. The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a:
a
.
fi#ed asset
b
.
current asset
c
.
contra asset
d
.
current liability
____ 24. 7repaid insurance is reported on the balance sheet as a:
a
.
current asset
b
.
fi#ed asset
c
.
current liability
d
.
long;term liability
____ $6. At the end of an accounting year" in what statement would a balance in the prepaid insurance account appear1
a
.
balance sheet
b
.
income statement
c
.
statement of cash flows
d
.
-etained .arnings &tatement
____ $1. 0hich of the following is reported on the -etained .arnings &tatement for the current year1
a
.
Accumulated depreciation
b
.
&tockholders< additional in!estment made during the current period
c
.
-ent e#pense
d
.
0ages payable
____ $2. Adjusting entries are dated in the journal as of:
a
.
the date they are actually journalized.
b
.
the last day of the accounting period.
c
.
the first day of the accounting period.3. the middle of the accounting period.
____ $$. Adjusting entries:
a
.
need not be journalized since they appear on the work sheet and the ledger accounts need
not be adjusted.
b need not be posted if the financial statements are prepared from the work sheet
*
.
c
.
are not needed if re!ersing entries are prepared
d
.
must be journalized and posted
____ $(. 9losing entries:
a
.
need not be journalized if re!ersing entries are prepared
b
.
need not be posted if the financial statements are prepared from the work sheet
c
.
are not needed if adjusting entries are prepared
d
.
must be journalized and posted
____ $). 9losing entries are dated in the journal as of:
a
.
the date they are actually journalized" although they are generally prepared after the end
of the accounting period
b
.
the last day of the accounting period" although they are actually journalized after the end
of the accounting period
c
.
the first day of the accounting period" although they are actually journalized after the end
of the accounting period
d
.
the first day of the subse+uent accounting period
____ $*. 0hich of the following accounts should be closed to 'ncome &ummary at the end of the fiscal year1
a
.
&upplies .#pense
b
.
Accumulated 3epreciation
c
.
7repaid .#penses
d
.
5nearned re!enues
____ $,. 0hich of the following accounts will not be closed to 'ncome &ummary at the end of the fiscal year1
a
.
&alaries .#pense
b
.
2ees .arned
c
.
5nearned -ent
d
.
3epreciation .#pense
____ $/. 0hich of the following accounts will be closed to -etained .arnings at the end of the fiscal year1
a
.
-ent .#pense
b
.
2ees .arned
c
.
'ncome &ummary
d
.
3epreciation .#pense
,
____ $4. 0hich of the following accounts ordinarily appears in the post;closing trial balance1
a
.
3i!idends
b
.
&upplies .#pense
c
.
2ees .arned
d
.
5nearned -ent
____ (6. The entry to close the appropriate insurance account at the end of the accounting period is debit:
a
.
'ncome &ummary> credit 7repaid 'nsurance
b
.
7repaid 'nsurance> credit 'ncome &ummary
c
.
'nsurance .#pense> credit 'ncome &ummary
d
.
'ncome &ummary> credit 'nsurance .#pense
____ (1. 0hich of the following accounts appears on a post;closing trial balance1
a
.
'nsurance .#pense
b
.
7repaid 'nsurance
c
.
3i!idends
d
.
2ees .arned
____ (2. 0hich of the following accounts appears on a post;closing trial balance1
a
.
'nsurance .#pense
b
.
2ees .arned
c
.
3i!idends
d
.
5nearned 2ees
____ ($. The following accounts were taken from the Adjusted Trial alance columns of the work sheet:
Accumulated 3epreciation
P 3,000
2ees .arned
20,000
3epreciation .#pense
3,500
'nsurance .#pense
1,000
7repaid -ent
4,000
&upplies
500
%et income for the period is:
a
.
71)")66
b
.
7 /"666
c
.
71)"666
/
d
.
711"666
____ ((. The following accounts were taken from the Adjusted Trial alance columns of the work sheet:
Accumulated 3epreciation
P 6,000
2ees .arned
25,000
3epreciation .#pense
1,500
'nsurance .#pense
1,000
7repaid 'nsurance
4,000
&upplies
500
&upplies .#penses
4,500
%et income for the period is:
a
.
71/"666
b
.
7,")66
c
.
7/"666
d
.
714"666
____ (). A fiscal year:
a
.
ordinarily begins on the first day of a month and ends on the last day of the following
twelfth month
b
.
for a business is determined by the federal go!ernment
c
.
always begins on ?anuary 1 and ends on 3ecember $1 of the same year
d
.
should end at the height of the business<s annual operating cycle
____ (*. 'n the normal accounting cycle the:
a
.
financial statements are prepared after the adjusting entries are posted
b
.
financial statements are prepared before the closing entries are posted
c
.
adjusting and closing entries are journalized after the financial statements are prepared
d
.
post;closing trial balance is prepared before the closing entries are posted
____ (,. 'n the accounting cycle of a manual accounting system" the last step is:
a
.
preparing the financial statements
b
.
journalizing the adjusting entries
c
.
posting the closing entries
d
.
preparing a post;closing trial balance
____ (/. 0ork sheets are not usually prepared:
a
.
during the accounting cycle of a manual accounting system
4
b
.
during the accounting cycle of a computerized system
c
.
unless they must be present to the bank when applying for a loan
d
.
if the financial statements are going to be prepared by an e#perienced accountant
____ (4. -e!ersing entries are:
a
.
used by all entities
b
.
simply the analysis and recording of entries in the subse+uent period
c
.
needed to correct closing entries
d
.
not used by all entities
____ )6. A re!ersing entry re!erses a@nA:
a
.
closing entry
b
.
transaction entry
c
.
adjusting entry
d
.
correcting entry
T.&T '' B 7-=:.C
1. :ist the errors in the following trial balance. All accounts ha!e normal balances.
Dondo Auto &er!ices" 'nc.
Trial alance
2or Conth .nding" &eptember $6" 26;;
9ash
19,475
Accounts -ecei!able
?
&upplies
1,000
.+uipment
15,000
7repaid 'nsurance
500
Accounts 7ayable
2,500
9apital &tock
17,000
3i!idends
1,000
2ees .arned
49,600
&alary .#pense
14,500
-ent .#pense
9,000
5tilities .#pense
1,400
&upplies .#pense
3,900
Ciscellaneous .#pense
250
55,000 81,575
@AA 0hat would be the new balance of the trial balance after errors are corrected1 Accounts recei!able1
2. After all adjustments ha!e been made" but before the accounts ha!e been closed" the following balances were
taken from the ledger:
Accounts payable
P 40,000
'nsurance e#pense
P 8,600
Accounts recei!able
54,500
7repaid insurance
5,275
Accumulated depreciation
83,325
-ent e#pense
21,400
9apital &tock
20,000
-etained earnings
80,950
9ash
7,150
&alary e#pense
66,000
16
3epreciation e#pense
23,500
&alaries payable
150
3i!idends
28,000
&er!ice re!enue
151,000
.+uipment
155,000
&upplies
2,500
&upplies e#pense
3,500
?ournalize the entries to close the appropriate accounts.
$. 7resented below are a number of adjusting entries:
1.A 3ec $1 7rinting supplies e#pense 26"666
7rinting supplies 26"666
2.A &ubscription re!enues 1)"666
5nearned subscription re!enues 1)"666
$.A 'nsurance e#pense 12"666
7repaid insurance 12"666
(.A 'nterest recei!able )66
'nterest income )66
).A ad debt e#pense )"666
Allowance for bad debt )"666
*.A &alaries e#pense 2)"666.
&alaries payable 2)"666
,.A -ent re!enues $6"666
5nearned rent re!enues $6"666
/.A 3epreciation e#pense;.+uipment 16"666
Accumulated depreciation;.+uipment 16"666
4.A 'nterest e#pense *66
'nterest payable *66
16.A -ent e#pense 26"666
7repaid rent 26"666
-e+uired:
7repare the re!ersing entries. @'ndicate Eno re!ersing entryF if not applicable.A
11