Which of the following describes the purpose(s) of closing entries?

A) Adjust the balances of asset and liability accounts for unrecorded activity during the period.

B) Transfer the balances of temporary accounts to common stock.

C) Reduce the balances of the temporary accounts to zero to prepare them for measuring activity in the next period.

D) Transfer the balances of temporary accounts to common stock; reduce the balances of the temporary accounts to zero to prepare them for measuring activity in the next period.

Answer: C

The primary purpose of closing entries is to:

A) Prove the equality of the debit and credit entries in the general journal.

B) Ensure that all assets and liabilities are recognized in the appropriate period.

C) Update the balance of Retained Earnings and prepare revenue, expense, and dividend accounts for next period's transactions.

D) Assure that adjusting entries balance.

Answer: C

The closing process includes which of the following?

A) Closing the balance of the retained earnings account to zero.

B) Closing the balance of only the dividends account to zero.

C) Closing the balances of only revenue and expense accounts to zero.

D) Closing the balances of revenue, expense and dividend accounts to zero.

Answer: D

When a company owes employee salaries at the end of the period but fails to make an adjusting entry for that amount owed, which of the following is true?

A) Net income in the income statement is overstated.

B) Retained earnings in the statement of stockholders' equity is overstated.

C) Total stockholders' equity in the balance sheet is overstated.

D) All of the other answers are correct.

Answer: D

Current assets in a classified balance sheet are typically listed in order of:

A) Operational functionality.

B) Lowest to highest amount.

C) Importance to the company's profitability.

D) Liquidity.

Answer: D

The liquidity of an asset in a classified balance sheet refers to:

A) The dollar magnitude of the asset.

B) How quickly the asset will be converted to cash.

C) The length of time for which the company has owned the asset.

D) The likelihood that the asset will help to increase the company's profitability.

Answer: B

If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue, how will this error affect total assets for the current period?

A) Total assets will be too low.

B) Total assets will be correct.

C) Total assets will be too high.

D) Not possible to determine.

Answer: B

If a company incorrectly records Service Revenue too high, which of the following is true?

A) Net income in the income statement is overstated.

B) Retained earnings in the statement of stockholders' equity is overstated.

C) Total stockholders' equity in the balance sheet is overstated.

D) All of the other answers are correct.

Answer: D

Providing services to customers on account would affect the balances reported in which financial statement(s)?

A) Income statement.

B) Statement of stockholders' equity.

C) Balance sheet.

D) All of the financial statements in the other answers would be affected.

Answer: D

The following table contains financial information for Trumpeter Inc. before closing entries:

The following table contains financial information for Trumpeter Inc. before closing entries:

Cash $ 12,000

Supplies 4,500

Prepaid Rent 2,000

Salaries Expense 4,500

Equipment 65,000

Service Revenue 30,000

Miscellaneous Expense 20,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 68,000

Retained Earnings 8,000

What is the amount of Trumpeter's total stockholders' equity?

A) $5,000.

B) $78,500.

C) $68,500.

D) $83,500.

Answer: B

The following table contains financial information for Trumpeter Inc. before closing entries:

Cash $ 12,000

Supplies 4,500

Prepaid Rent 2,000

Salaries Expense 4,500

Equipment 65,000

Service Revenue 30,000

Miscellaneous Expense 20,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 68,000

Retained Earnings 8,000

What is the amount of Trumpeter's total liabilities?

A) $5,000.

B) $78,500.

C) $68,500.

D) $83,500.

Answer: A

The following table contains financial information for Trumpter Inc. before closing entries:

The following table contains financial information for Trumpter Inc. before closing entries:

Cash $ 12,000

Supplies 4,500

Prepaid Rent 2,000

Salaries Expense 4,500

Equipment 65,000

Service Revenue 30,000

Miscellaneous Expense 20,000

Dividends 3,000

Accounts Payable 5,000

Common Stock 68,000

Retained Earnings 8,000

What is the amount of Trumpter's total assets?

A) $81,500.

B) $82,500.

C) $68,500.

D) $83,500.

Answer: D

Which of the following are reported as stockholders' equity in a classified balance sheet?

A) Debits and Credits.

B) Revenues and Expenses.

C) Common Stock and Retained Earnings.

D) Assets and Liabilities.

Answer: C

The following financial information is from Bronco Company. All debt is due within one year unless

The following financial information is from Bronco Company. All debt is due within one year unless stated otherwise.

Retained Earnings $ 52,000

Supplies 37,000

Equipment 72,000

Accounts Receivable 8,600

Deferred Revenue 6,000

Accounts Payable 15,000

Common Stock 25,000

Notes Payable (due in 18 months) 35,000

Interest Payable 7,000

Cash 22,400

What is the amount of current liabilities?

A) $63,000.

B) $28,000.

C) $45,600.

D) $22,000.

Answer: B

The Deferred Revenue account is shown in which statement?

A) Income statement.

B) Statement of cash flows.

C) Balance sheet.

D) Statement of stockholders' equity.

Answer: C

Which of the following current liabilities does not involve the future payment of cash?

A) Interest Payable.

B) Deferred Revenue.

C) Accounts Payable.

D) Salaries Payable.

Answer: B