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Problem 1: What is the impact on the financial statements if an adjusting entry for accrual income is not made?
a. Income understated and profit understated
b. Income overstated
c. Expenses understated and profit understated
d. Expenses understated and profit overstated
Problem 2: In which order do these steps in the accounting cycle occur?
I Prepare closing entries
II Prepare adjusted trial balance
III Enter business transactions in the journal and post to the ledger
IV Prepare adjusting entries
V Prepare financial statements
Select one:
a. IV, II, I, III, V
b. I, II, III, IV, V
c. III, IV, II, I, V
d. III, I, IV, V, II
Financial Statement Analysis and Preparation
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