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Exam 4: Completion of the Accounting Cycle

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Question 41

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If errors occur in the recording process, they

A) should be corrected as adjustments at the end of the period.
B) should be corrected as soon as they are discovered.
C) should be corrected when preparing annual financial statements.
D) cannot be corrected until the next accounting period.

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Question 42

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Common Canadian practice shows current assets as the first items listed on a classified balance sheet.

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Question 43

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If a work sheet is used, financial statements can be prepared before adjusting entries are journalized.

A reversing entry

Transaction and adjustment data for Portiski Company for the year ended September 30 is as follows: 1. September 24 (initial salary entry): $12,000 of salaries earned between September 1 and September 24 are paid. 2. September 30 (adjusting entry): Salaries earned between September 25 and September 30 are $5,000. These will be paid in the October 8 payroll. 3. October 8 (subsequent salary entry): Total salary payroll amounting to $9,000 was paid. Instructions Prepare two sets of journal entries as specified below. The first set of journal entries should assume that the company does not use reversing entries, and the second set should assume that reversing entries are utilized by the company.

The Saint John River Company received $630 on account from a customer. The transaction was erroneously recorded as a debit to Cash of $360 and a credit to Accounts Payable, $360. The correcting entry is

After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.

The following information is available for Juxton Company for the year ended December 31, 2013: Instructions Use the above information to prepare a classified balance sheet for the year ended December 31, 2013.

Closing entries

The owner's drawings account is closed to the Income Summary account in order to properly determine Profit (or loss) for the period.

Reversing Entries are more relevant in corporations.

At March 31, 2014, account balances after adjustments for Maddux Cinema are as follows: Instructions a. Prepare the closing journal entries for Maddux Cinema. b. Prepare a post-closing trial balance.

Current assets are normally listed in the balance sheet in order of permanency.

The balances that appear on the post-closing trial balance will match the

The following items are taken from the financial statements of Maxon Service for 2013: Instructions a. Prepare an income statement and a classified balance sheet for Maxon Sales. b. Calculate the following ratios and values: 1. Current ratio 2. Working capital 3. Acid-test ratio a. Prepare an income statement and a classified balance sheet for Maxon Sales. b. Calculate the following ratios and values:

The final step in the accounting cycle is the pre-closing trial balance.

The most important information needed to determine if companies can pay their current obligations is the

The acid-test ratio is a measure of a company's long term liquidity.

Jasmine Company received a $350 cheque from a customer for the balance due on an accounts receivable. The transaction was erroneously recorded as a debit to cash of $530 and a credit to service revenue of $530. The correcting entry is

The purpose of the post-closing trial balance is to