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After posting the entries to close all revenue and expense accounts,the Income Summary account of Cleaver Auto Services has a $4,000 debit balance.This result implies that Cleaver earned a net income of $4,000.

A) True
B) False

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Trapper Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows: Trapper Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows: Present the four adjusting journal entries that were recorded by Trapper Company. Present the four adjusting journal entries that were recorded by Trapper Company.

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Dec.31 Insurance Expense ………………………..300
...

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The Income Summary account is a permanent account that will be carried forward period after period.

A) True
B) False

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Each adjusting entry will affect a balance sheet account.

A) True
B) False

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Classified balance sheets commonly include the following categories: A. Current assets B. Long-term investments C. Plant assets D. Intangible assets E. Current liabilities F. Long-term liabilities G. Equity. Match the typical classification of each item below with its correct balance sheet category (A through G) . -Cash


A) G
B) B
C) A
D) C
E) F
F) D
G) E

H) All of the above
I) A) and F)

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Match the following types of adjustments with the appropriate transactions. -Prepaid expense


A) Used to record wages owed, but not yet paid.
B) Used to record revenue earned for which cash was received in advance.
C) Used to record revenue earned for which cash has not been received.
D) Used to record expiration or use of prepaid insurance.

E) A) and D)
F) None of the above

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Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________ year.

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It is obvious that an error occurred in the preparation and/or posting of closing entries if:


A) all revenue and expense accounts have zero balances.
B) the Retained earnings account is debited for the amount of the net loss for the period.
C) the income summary account is debited for the amount of net income for the period.
D) all balance sheet accounts have zero balances.
E) only permanent accounts appear on the post-closing trial balance.

F) B) and C)
G) B) and D)

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Tiptoe Shoes had annual revenues of $185,000,expenses of $103,700,and dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000.The entry to close the Income Summary account at the end of the year,after revenue and expense accounts have been closed,is:


A) Debit Retained earnings $297,000; credit Income Summary $297,000
B) Debit Retained earnings $63,300; credit Income Summary $63,300
C) Debit Income Summary $63,300; credit Retained earnings $63,300
D) Debit Income Summary $81,300, credit Retained earnings $81,300
E) Debit Retained earnings $81,300; credit Income Summary $81,300

F) A) and C)
G) A) and B)

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An expense account is normally closed by debiting Income Summary and crediting the expense account.

A) True
B) False

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Current assets and current liabilities are expected to be used up or come due within one year or the company's operating cycle whichever is longer.

A) True
B) False

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When there is a net loss,the Income Summary account would have a credit balance.

A) True
B) False

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Classified balance sheets commonly include the following categories: A. Current assets B. Long-term investments C. Plant assets D. Intangible assets E. Current liabilities F. Long-term liabilities G. Equity. Match the typical classification of each item below with its correct balance sheet category (A through G) . -Equipment used in business operations


A) G
B) B
C) A
D) C
E) F
F) D
G) E

H) B) and C)
I) E) and F)

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A company paid Jen Rogers,its sole stockholder,a total of $35,000 in dividends during the current year.The entry needed to close the dividends account is:


A) Debit Income Summary and credit Cash for $35,000.
B) Debit Dividends and credit Cash for $35,000.
C) Debit Income Summary and credit Dividends for $35,000.
D) Debit Retained earnings and credit Dividends for $35,000.
E) Debit Dividends and credit Retained earnings for $35,000.

F) A) and B)
G) A) and C)

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Under the alternative method for accounting for unearned revenue,which of the following pairs of journal entry formats is correct?


A)  Initial Entry  Adjusting Entry  Cash  Unearned Consulting Revenue  Unearned Consulting Revenue  Consulting Revenue \begin{array} { | l | l | } \hline{ \text { Initial Entry } } & { \text { Adjusting Entry } } \\\hline \text { Cash } & \text { Unearned Consulting Revenue } \\\hline \text { Unearned Consulting Revenue } & \text { Consulting Revenue } \\\hline\end{array}
B)  Initial Entry  Adjusting Entry  Cash  Consulting Revenue  Consulting Revenue  Unearned Revenue \begin{array} { | l | l | } \hline\text { Initial Entry } & \text { Adjusting Entry } \\\hline \text { Cash } & \text { Consulting Revenue } \\\hline \text { Consulting Revenue } & \text { Unearned Revenue } \\\hline\end{array}
C)  Initial Entry  Adjusting Entry  Cash  Unearned Revenue  Unearned Revenue  Cash \begin{array} { | l | l | } \hline { \text { Initial Entry } } & { \text { Adjusting Entry } } \\\hline \text { Cash } & \text { Unearned Revenue } \\\hline \text { Unearned Revenue } & \text { Cash } \\\hline\end{array}
D)  Initial Entry  Adjusting Entry  Consulting Revenue  Unearned Revenue  Cash  Consulting Revenue \begin{array} { | l | l | } \hline { \text { Initial Entry } } & { \text { Adjusting Entry } } \\\hline \text { Consulting Revenue } & \text { Unearned Revenue } \\\hline \text { Cash } & \text { Consulting Revenue } \\\hline\end{array}
E)  Initial Entry  Adjusting Entry  Cash  Consulting Revenue  Unearned Revenue  Unearned Reverue \begin{array} { | l | l | } \hline { \text { Initial Entry } } &{ \text { Adjusting Entry } } \\\hline \text { Cash } & \text { Consulting Revenue } \\\hline \text { Unearned Revenue } & \text { Unearned Reverue } \\\hline\end{array}

F) C) and D)
G) A) and B)

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On July 1,a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date.What will be the insurance expense on the annual income statement for the first year ended December 31?


A) $1,200.
B) $2,400.
C) $1,000.
D) $400.
E) $1,400.

F) B) and D)
G) D) and E)

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The first five steps in the accounting cycle include analyzing transactions,journalizing,posting,preparing an unadjusted trial balance,and recording adjusting entries.

A) True
B) False

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Using the information presented below,prepare a statement of retained earnings and balance sheet from the adjusted trial balance of Dodson Containers. Using the information presented below,prepare a statement of retained earnings and balance sheet from the adjusted trial balance of Dodson Containers.

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If a company has current assets of $15,000 and current liabilities of $9,500,its current ratio is 1.6

A) True
B) False

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On April 1,Griffith Publishing Company received $1,548 from Santa Fe,Inc.for 36-month subscriptions to several different magazines.The company credited Unearned Fees for the amount received and the subscriptions started immediately.Assuming adjustments are only made at year-end,What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the first year?


A) debit Unearned Fees, $1,548; credit Fees Earned, $1,548.
B) debit Unearned Fees, $516; credit Fees Earned, $516.
C) debit Unearned Fees, $1,161; credit Fees Earned, $1,161.
D) debit Unearned Fees, $129; credit Fees Earned, $129.
E) debit Unearned Fees, $387; credit Fees Earned, $387.

F) A) and B)
G) A) and C)

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