35 Questions
What is the primary source of financing for assets?
Creditors and company funds
What is the primary role of accounting in business?
To operate the business and make decisions
Who are the primary stakeholders that receive information from accounting?
Managers, stockholders, creditors, and other stakeholders
What is the main difference between assets and expenses?
Assets are acquired with cash, while expenses are not
What is not a role of accounting in business?
Managing information systems for stakeholders
What is the main purpose of a trial balance?
To list open accounts and their balances
How many times is the trial balance normally prepared in the accounting cycle?
Three times
When is the adjusted trial balance prepared?
After adjusting journal entries are posted
What can a trial balance prove?
That debits and credits are equal
What does a credit signify?
A decrease in assets
Which type of account is always debited during the closing process?
Revenue
What is another name for nominal accounts?
Temporary accounts
What is a potential error that a trial balance may not detect?
All of the above
What is the description of a prepaid expense?
Paid and not currently matched with revenues
What is the correct sequence of events during end-of-period processing?
Preparation of adjustments, adjusted trial balance, posting
What must be considered in estimating depreciation on an asset for an accounting period?
Both the original cost of the asset and its useful life
What is the status of the cash in the scenario 'not earned but the cash has been received'?
Not earned but the cash has been received
What is the grade achieved in the quiz 'Completing the Accounting Cycle'?
10.00 out of 10.00
How much time was taken to complete the quiz 'Completing the Accounting Cycle'?
6 mins 54 secs
What is the status of the quiz 'Completing the Accounting Cycle'?
Complete
When was the quiz 'Completing the Accounting Cycle' completed?
Wednesday, 22 May 2024
What is the duration of a fiscal year?
A year that begins with the first day of the month and ends on the last day of the twelfth month
What is the last step in the accounting cycle?
Preparing a post-closing trial balance
Where are notes receivable due in 345 days reported on the balance sheet?
Current liabilities section
What is a characteristic of balance sheet accounts?
They have zero balances after the closing entries have been posted
What is not an essential part of the accounting records?
The work sheet
On which financial statement is Income Summary reported?
No financial statement
What is the correct order of preparing the trial balances?
Unadjusted, adjusted, post-closing
When should the income statement be prepared?
Before the statement of changes in equity and balance sheet
Which financial statement will Income Summary be shown on?
Statement of Retained Earnings
In which order should the financial statements be prepared?
Income Statement, Balance Sheet, Statement of Changes in Equity
What type of accounts are reported on the Balance Sheet?
Asset and Equity Accounts
Which statement is prepared after the Income Statement but before the Statement of Changes in Equity?
Balance Sheet
What is the purpose of the Income Summary account?
To close 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?
Adjusted trial balance, closing revenue and expense accounts, financial statements
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.
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.
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