RECAP OF THE CLOSING PROCESS - The accounting cycle

TRUE/FALSE

The last step in the accounting cycle is preparing the financial statements.

The adjusted trial balance columns of a worksheet contain the account balances that appear on the financial statements.

If the sum of the worksheet income statement debit column is greater than the income statement credit column, there is net income.

The after closing trial balance contains only balance sheet accounts.

Multiple choice:

1. Which of the following accounts would appear in the balance sheet credit column of the worksheet? a

. Equipment b. Salary payable c. Rent revenue d. Insurance expense

2. Which of the following accounts is not closed out?

a. Accumulated depreciation b. Service revenue c. Depreciation expense d. Dividends

3. What is the measure of how quickly an item can be converted into cash?

a. Contribution margin b. Liquidity c. Profitability d. Leverage

4. What type of asset is expected to be converted to cash, sold, or consumed during the next 12 months or within the businesss normal operating cycle if longer than a year?

a. Permanent assets b. Quick assets c. Current assets d. Cash equivalent assets

5. In what category would Inventory appear on a classified balance sheet?

a. Long term lability b. Plant asset c. Current asset d. Current liability

6. For each of the following accounts, indicate whether it

(a) normally has a debit or credit balance and

(b) appears in the income statement or balance sheet columns of the worksheet.

Normal debit or Income Statement Credit balance or Balance sheet

a. Equipment ____________ ___________

b. Salary Expense ____________ _____________

c. Unearned Revenue ____________ _____________

d. Accumulated Depreciation ____________ ______________

e. Accounts Payable ____________ ______________

f. Service Revenue ___________ ______________