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Questions and Answers
What is the primary source of financing for assets?
What is the primary source of financing for assets?
What is the primary role of accounting in business?
What is the primary role of accounting in business?
Who are the primary stakeholders that receive information from accounting?
Who are the primary stakeholders that receive information from accounting?
What is the main difference between assets and expenses?
What is the main difference between assets and expenses?
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What is not a role of accounting in business?
What is not a role of accounting in business?
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What is the main purpose of a trial balance?
What is the main purpose of a trial balance?
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How many times is the trial balance normally prepared in the accounting cycle?
How many times is the trial balance normally prepared in the accounting cycle?
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When is the adjusted trial balance prepared?
When is the adjusted trial balance prepared?
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What can a trial balance prove?
What can a trial balance prove?
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What does a credit signify?
What does a credit signify?
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Which type of account is always debited during the closing process?
Which type of account is always debited during the closing process?
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What is another name for nominal accounts?
What is another name for nominal accounts?
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What is a potential error that a trial balance may not detect?
What is a potential error that a trial balance may not detect?
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What is the description of a prepaid expense?
What is the description of a prepaid expense?
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What is the correct sequence of events during end-of-period processing?
What is the correct sequence of events during end-of-period processing?
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What must be considered in estimating depreciation on an asset for an accounting period?
What must be considered in estimating depreciation on an asset for an accounting period?
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What is the status of the cash in the scenario 'not earned but the cash has been received'?
What is the status of the cash in the scenario 'not earned but the cash has been received'?
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What is the grade achieved in the quiz 'Completing the Accounting Cycle'?
What is the grade achieved in the quiz 'Completing the Accounting Cycle'?
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How much time was taken to complete the quiz 'Completing the Accounting Cycle'?
How much time was taken to complete the quiz 'Completing the Accounting Cycle'?
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What is the status of the quiz 'Completing the Accounting Cycle'?
What is the status of the quiz 'Completing the Accounting Cycle'?
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When was the quiz 'Completing the Accounting Cycle' completed?
When was the quiz 'Completing the Accounting Cycle' completed?
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What is the duration of a fiscal year?
What is the duration of a fiscal year?
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What is the last step in the accounting cycle?
What is the last step in the accounting cycle?
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Where are notes receivable due in 345 days reported on the balance sheet?
Where are notes receivable due in 345 days reported on the balance sheet?
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What is a characteristic of balance sheet accounts?
What is a characteristic of balance sheet accounts?
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What is not an essential part of the accounting records?
What is not an essential part of the accounting records?
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On which financial statement is Income Summary reported?
On which financial statement is Income Summary reported?
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What is the correct order of preparing the trial balances?
What is the correct order of preparing the trial balances?
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When should the income statement be prepared?
When should the income statement be prepared?
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Which financial statement will Income Summary be shown on?
Which financial statement will Income Summary be shown on?
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In which order should the financial statements be prepared?
In which order should the financial statements be prepared?
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What type of accounts are reported on the Balance Sheet?
What type of accounts are reported on the Balance Sheet?
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Which statement is prepared after the Income Statement but before the Statement of Changes in Equity?
Which statement is prepared after the Income Statement but before the Statement of Changes in Equity?
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What is the purpose of the Income Summary account?
What is the purpose of the Income Summary account?
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In which sequence should the following steps be performed: preparing the adjusted trial balance, preparing the financial statements, and closing the revenue and expense accounts?
In which sequence should the following steps be performed: preparing the adjusted trial balance, preparing the financial statements, and closing the revenue and expense accounts?
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Study Notes
Accounting Cycle
- A trial balance is a list of open accounts and their balances used in preparing financial statements.
- It is normally prepared three times in the accounting cycle.
Adjusted Trial Balance
- The adjusted trial balance is prepared after adjusting journal entries are posted.
Debits and Credits
- A credit may signify a decrease in assets.
- A trial balance may prove that debits and credits are equal, but an amount could be entered in the wrong account, a transaction could have been entered twice, or a transaction could have been omitted.
Closing Process
- During the closing process, revenue accounts are debited and retained earnings is credited.
Nominal Accounts
- Nominal accounts are also called temporary accounts.
Accounting Records
- The ledger, journal, and chart of accounts are essential parts of the accounting records.
- A worksheet is not an essential part of the accounting records.
Financial Statements
- Income Summary is not shown on any financial statement.
- The income statement should be prepared before the statement of changes in equity and balance sheet.
- Balance sheet accounts are real accounts.
- Balance sheet accounts have zero balances after the closing entries have been posted.
Accounting's Role in Business
- Accounting provides information to managers to operate the business and to other stakeholders to make decisions regarding the economic condition of the company.
Prepaid Expense
- A prepaid expense can be described as an amount paid and not currently matched with revenues.
Depreciation
- Both the original cost of the asset and its useful life must be considered when estimating depreciation on an asset for an accounting period.
End-of-Period Processing
- The logical order of end-of-period processing is: preparation of adjustments, adjusted trial balance, financial statements.
Financial Statements Preparation
- The income statement should be prepared before the statement of changes in equity and balance sheet.
- The balance sheet should be prepared after the income statement and before the statement of changes in equity.
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Description
Learn about the different stages of the accounting cycle, including preparing financial statements and trial balances. Understand when and how to prepare an adjusted trial balance.
