Reference no: EM131815785

true or false

1. An accounting cycle is always equal to one calendar period.

2. A one year accounting period may be a calendar year or a fiscal year.

3. The accounting cycle is observed primarily to evaluate performance from period to period.

4. An accounting period is always comprised of one year or twelve months.

5. Formal financial statements can be prepared even if there are no working papers.

6. The primarily objective of the accounting activity is to state an opinion regarding the fairness of financial statements.

7. The basic procedure in making a trial balance is to check the accuracy of the debit and credit.

8. The debit balance of a closed account is equal to its credit balance.

9. When the trial balance is balanced, it proves the accuracy of the bookkeeping records.

10. Adjusting entries should be made at the beginning of an accounting record.

11. Closing entries are made at the end of the accounting period.

12. Not all of the adjusting entries need a reversal.

13. A worksheet is not part of formal accounting records.

14. Reversing entries are done at the start of a new accounting period.

15. In a one-year accounting period, the closing entries are done ahead of the reversing entries.

16. A trial balance is just one of the basic financial statements.

17. When the total debit of an account is equal to its total credits, the account is said to be an open account.

18. After closing entries, the debit side of an expense account is equal to its credit side.

19. After closing entries, the credit side of a revenue account is greater than its debit side.

20. A fiscal year always starts in January.

21. Transferring nominal accounts to the capital account is done at the start of the accounting period.

22. When an account's total debits are more than its total credits, the account is said to be an open account with a debit balance.

23. To accrue means to pay the expenses when this became due.

24. To record the expenses incurred for the current year, even if these are to be paid in the following year, in accordance to accrual accounting.

25. The nominal accounts are extended to the Statement of Com[rehensive Income columns of the worksheet.

26. Only real accounts are extended to the Statement of Financial Position columns of the worksheets.

27. All asset accounts are nominal accounts.

Multiple choice:

1. All of the following do not come first in the accounting proccess except,

a. the preparation of an unadjusted trial balance

b. the worksheet preparation

c. the journalizing external transactions

d. the preparation of an adjusted trial balance.

2. All of the following statements are correct concerning the worksheet, except one,

a. a worksheet is essentially a working tool of the accountant.

b. a worksheet is distributed to management and other intersted parties.

c. a worksheet cannot be used as a basis for posting to ledger accounts

d. financial statements can be prepared directly from the worksheet before the adjusting entries are journalized and posted.

3. Which of the following describe the correct effect of closing entries?

a. only nominal and temporary accounts are closed with closing entries.

b. owners drawing is the only real account that is being closed with closing entries.

c. closing entries will also reduce the contra asset accunt to zero.

d. the income summary account is a real account with the same nature as capital.

4. A series of recurring accounting activities from the beginning to the end of a given accounting period is called,

a. accounting cycle

b. accounting period

c. accounting time line

d. accounting entries

5. Which of the following is correct?

a. it is during the accounting period that the accounting cycle takes place.

b. an accounting period is the duration of time the transactions are recorded, and at the end of which the financial statements are prepared

c. the accounting period is always a one-year period

d. the accounting cycle is the group of steps and procedures followed in recording the transactions and preparing the finanacial statements.

6. In the second year of an accounting period, which of the following steps come first?

a. journalizing underlying transactions

b. adjusting entries

c. closing entries

d. reversing entries

7. Which of the following is equal to the SFP?

a. unadjusted trial balance

b. adjusted trial balance

c. post-closing trial balance

d. unbalance trial balance

8. Which of the following is incorrect?

a. accrual means to accumulate over a period of time

b. deferral means to postpone until some future time

c. accrual is a record of income earned regardless of collection

d. deferral is a record of expense incurred regardless of when it is paid

9. Which of the following is to be extended to the SCI columns of the worksheet?

a. unearned income

b. unused supplies

c. expired insurance premium

d. accumulated depreciation

10. Which of the following is not to be extended to the SFP columns of the worksheet?

a. unearned income

b. unused supplies

c. expired insurance premium

d. accumulated depreciation

11. If a trial balance were to be prepared on the first day of the new year, and the account salaries expense had a credit balance, you would know that

a. the trial balance is a post-closing trial balance

b. the adjusting entries have been recorded

c. a reversing entry has been made

d. the trial balance is an adjusted trial balance

12. Reversing entries are

a. optional

b. made by generally accepted accounting principles

c. required by generally accepted accounting principles

d. made prior to preparing a post-closing trial balance

13. Which of the following will have an open account in the post-closing trial balance?

a. used supplies

b. unearned interest income

c. interest expense

d. rent income

14. Which general ledger account will need footing?

a. general ledger account with more than one entry on each side

b. general ledger account with only one entry on each side

c. general ledger account with no entry in both sides

d. general ledger account with one entry on one side

15. Which of the following statements is correct?

a. when the debit total and the credit total of an account are equal, the account is said to be an open accpont

b. when the debit total and the credit total of an account are not equal, the account is said to be a closed account

c. the difference between the debit and credit total of an account is said to be the account balance

d. if the debit total of an account is greater than its credit total, the account is said to be a deficit.

16. Which of the following is a justification for the necessity of a year-end adjustments?

a. some accounts have temporary balances

b. some are mixed accounts

c. error in valuation was incurred

d. all of the choices

17. Which of the following is not normally done at the ned of the accounting period?

a. journalizing underlying transactions

b. adjusting entries

c. closing entries

d. reversing entries

18. Which of the following is not part of the heading of a trial balance?

a. name of the business entity

b. title of financial statement

c. title of accounting work

d. date of the trial balance

19. All of the following are required steps in the accounting cycle except

a. journalizing and posting closing entries

b. preparing an adjusted trial balance

c. preparing a post-closing trial balance

d. preparing a worksheet

20. Worksheets are prepared beacause they

a. are required by generally accepted accounting principles

b. aid in the preparation of the financial statements, adjusting entries, and closing entries

c. constitute a permanent record of all adjusting entries made for the period

d. are necessary for the preparation of financial statements

21. If the initial sum of the SFP credit column on a worksheet is greater than its debit column,

a. the sum of the Statement of Comprehensive Income credit column must be exceed the sum of the Statement of Comprehensive Income debit column

b. a loss occured during the period

c. an error was made on the worksheet

d. all of the above

22. Some firms adjust their accounts and close their books only on an annual basis. For this firms,

a. worksheets may be prepared on an interim basis

b. worksheets are not needed

c. worksheets are prepared only on annual basis

d. none of the above

25. On an adjusted trial balance, the capital account reflects the

a. results of the udjusting entries

b. increase to revenue and expense

c. period end balance

d. beginning of the period balance

26. The types of accounts which closing entries reduce to a zero balance at the end of the accounting period is

a. revenue

b. expenses

c. drawings

d. all of the above

27. A final check on the adjusting and closing process is provided by the

a. worksheet

b. financial statements

c. post closing trial balance

d. adjusted trial balance