Accounting Worksheets Flashcards

Questions and Answers

What are accounted for in a worksheet?

Account titles

Trial balance

Adjusted trial balance

All of the above (correct)

What are the steps to do a worksheet?

Trial balance

Net income

Owner's equity statement

All of the above (correct)

Always balance at the end of each step.

True

Where does net income go into?

The balance sheet as owner's equity Signup and view all the answers

Is owner's equity statement included in the worksheet?

False Signup and view all the answers

What happens after you're done with the worksheet?

Prepare the income statement, owner's equity statement, and the balance sheet. Signup and view all the answers

What is owner's capital?

Investments minus drawings minus net income Signup and view all the answers

Can the worksheet be distributed to the company?

False Signup and view all the answers

To adjust the accounts, the company must do what?

Journalize the adjustments and post them to the ledger. Signup and view all the answers

From where are the adjusting entries prepared?

From the adjustment columns of the worksheet. Signup and view all the answers

What is making the accounts ready for the next period called?

Closing the books. Signup and view all the answers

What distinguishes temporary accounts?

They are closed at the end of the period. Signup and view all the answers

What do permanent accounts consist of?

Assets, liabilities, and owner's capital. Signup and view all the answers

What do closing entries formally recognize?

Transfer of net income and dividends to owner's capital. Signup and view all the answers

What do closing entries produce?

A zero balance in each temporary account. Signup and view all the answers

Instead of closing revenues and expenses to owner's capital, companies transfer them to?

Income summary. Signup and view all the answers

Where are closing entries recorded?

General journal. Signup and view all the answers

What does the first closing entry involve?

Debit each revenue account for its balance, credit income summary for total revenue. Signup and view all the answers

What does the second closing entry entail?

Debit income summary for total expenses, credit each expense account. Signup and view all the answers

What does the third closing entry do?

Debit income summary and credit owner's capital with the net income. Signup and view all the answers

What does the fourth closing entry involve?

Debit owner's capital for the balance in drawings and credit drawings for the same amount. Signup and view all the answers

If there is a net loss, what should be done?

Credit income summary and debit owner's capital. Signup and view all the answers

Post all the closing entries in the?

Ledger. Signup and view all the answers

What is the post-closing trial balance composed of?

Only permanent accounts. Signup and view all the answers

What is the summary of the accounting cycle?

Analyze -> journalize -> post to the ledger -> prepare trial balance -> adjust entries -> adjusted trial balance -> income statement -> balance sheet -> owner's equity statement -> journalize and post closing entries -> post-closing trial balance. Signup and view all the answers

What are reversing entries?

An optional step that reverses exact adjusting entries. Signup and view all the answers

What are correcting entries?

Unnecessary entries that must be posted before closing. Signup and view all the answers

What consists of a classified balance sheet?

Assets and liabilities. Signup and view all the answers

What constitutes current assets?

Cash, debt investments, accounts receivable, notes receivable, inventory, supplies, prepaid insurance. Signup and view all the answers

What are long-term investments?

Stock investments and investments in real estate. Signup and view all the answers

What does property, plant, and equipment consist of?

Land, equipment, less accumulated depreciation. Signup and view all the answers

What are intangible assets?

Patents and goodwill. Signup and view all the answers

What are considered current liabilities?

Notes payable, accounts payable, unearned service revenue, salaries/wages payable, interest payable. Signup and view all the answers

What constitutes long-term liabilities?

Mortgage payable and notes payable. Signup and view all the answers

What does owner's equity represent?

Owner's capital. Signup and view all the answers

Study Notes

Worksheet Fundamentals

A worksheet includes account titles, trial balance, adjusting entries, adjusted trial balance, net income, and balance sheet.
Steps in creating a worksheet: account titles, trial balance, adjusting entries, adjusted trial balance, net income, and balance sheet.
Each step must balance to ensure accuracy.

Financial Statement Preparation

Net income is calculated by subtracting total expenses from total revenues, then recorded before new totals.
Net income affects the balance sheet as it is included in owner's equity.
After completing the worksheet, prepare the income statement, owner's equity statement, and balance sheet.

Owner's Capital and Worksheet Limitations

Owner's capital is calculated as investments minus drawings minus net income.
The worksheet is a working tool for accountants and is not distributed company-wide, nor is it a journal.

Adjusting Accounts and Entries

Adjusting accounts require journalizing adjustments and posting them to the ledger; clarifications on adjusting entries are provided at the bottom of the worksheet.
Adjusting entries are based on the adjustment columns within the worksheet.

Closing the Books

"Closing the books" refers to preparing accounts for the next period by distinguishing between temporary and permanent accounts.
Temporary accounts, including owner’s drawings, revenues, and expenses, are closed at period-end.
Permanent accounts, such as assets, liabilities, and owner's capital, remain open across periods.

Closing Entries and Their Effects

Closing entries officially transfer net income and dividends to owner's capital, as reflected in the owner's equity statement and are necessary at the end of the accounting period.
Closing entries result in zero balances for each temporary account.

Income Summary and Closing Procedures

Companies may choose to transfer revenues and expenses to an income summary instead of directly to owner's capital.
Closing entries are recorded in the general journal and posted to the ledger, forming the post-closing trial balance consisting solely of permanent accounts.

Accounting Cycle Summary

The accounting cycle includes analyzing transactions, journalizing, posting to the ledger, preparing trial balances, adjusting entries, preparing financial statements, and closing entries.

Optional and Necessary Entries

Reversing entries are optional and undo specific adjusting entries made, while correcting entries—made whenever necessary—should precede closing entries.

Classified Balance Sheet

A classified balance sheet organizes assets and liabilities into current and long-term categories.
Current assets encompass cash, receivables, inventory, and supplies, expected to be utilized within one year.
Long-term investments include stocks and real estate, while property, plant, and equipment represent long-lived assets subject to depreciation.

Liability and Equity Components

Current liabilities consist of short-term obligations like accounts payable and interest payable.
Long-term liabilities include mortgages and notes payable due beyond one year.
Owner's equity reflects capital invested by the owner, adjusted for withdrawals and net income.

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Description

Test your knowledge on accounting worksheets with these flashcards. Each card covers key terms such as account titles, trial balance, adjusting entries, and more. Perfect for students looking to master the essentials of worksheet preparation.