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TRUE or FALSE

  1. Accumulated Depreciation is a permanent account.
  2. The dividends account is a temporary account.
  3. The accumulated depreciation is closed to the income summary account.
  4. Office equipment is an example of a current asset account.
  5. The amount of the net income for a period appears on both the income statement and the balance sheet for the period.
  6. Generally accepted accounting principles require accrual-basis accounting.
  7. Unearned revenue is a liability.
  8. The financial statement is prepared from the unadjusted trial balance.
  9. After analyzing transactions, the next step is to post the transaction in the ledger.
  10. Prepaid insurance is an example of a current asset. 

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Egie Boy Cauba
Egie Boy CaubaLv5
22 Jan 2021

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Account Tracking form provided:

Account Title -> copy the name of the accounts from the listbelow

Account Major Classification -> Asset (A), Liability (L),Owner’s Equity (OE), Revenue (R) or Expense (E) or Not Applicable(NA)

Contra account -> place a check mark in this column if theitem is a contra account

Account Sub Classification -> only to be used with Asset andLiability accounts; Current Asset (CA); Property, Plant &Equipment (PPE); Current Liability (CL), Long-term Liability (LTL)or Not Applicable (NA)

Normal Balance -> debit (DR), credit (CR) or Not Applicable(NA)

Financial Statement-> Income Statement (IS), Statement ofOwner’s Equity (SOE), Balance Sheet (BS) or Not Applicable (NA)

Temporary or Permanent -> T for temporary (nominal) accountsand P for permanent (real) accounts

Accounts Payable

Accounts Receivable

Accumulated Depreciation

Advertising Expense

Buildings

Cash

Depreciation Expense

Fees Earned

Income Summary

Insurance Expense

Interest Payable (due in 1 month)

Interest Receivable (due in 2 months)

Joey Bee, Capital

Joey Bee, Drawing

Land

Notes Payable (due in 3 years)

Notes Receivable (due in 2 months)

Office Equipment

Prepaid Insurance

Prepaid Rent

Rent Expense

Notes Payable (due in 2 months)

Store Equipment

Supplies

Supplies Expense

Taxes Payable (due in 4 months)

Unearned Fees

Unearned Rent

Unearned Revenue

Wages Payable


The unadjusted trial balance of PS Music as of July 31, 2016, alongwith the adjustment data for the two months ended July 31, 2016,are shown in Chapter 3. Based upon the adjustment data, thefollowing adjusted trial balance was prepared:
PS Music
ADJUSTED TRIAL BALANCE
July 31, 2016

ACCOUNT TITLE DEBIT CREDIT
1
Cash
9,945.00

2
Accounts Receivable
4,150.00

3
Supplies
275.00

4
Prepaid Insurance
2,475.00

5
Office Equipment
7,500.00

6
Accumulated Depreciation-Office Equipment

50.00
7
Accounts Payable

8,350.00
8
Wages Payable

140.00
9
Unearned Revenue

3,600.00
10
Common Stock

9,000.00
11
Retained Earnings


12
Dividends
1,750.00

13
Income Summary


14
Fees Earned

21,200.00
15
Wages Expense
2,940.00

16
Office Rent Expense
2,550.00

17
Equipment Rent Expense
1,375.00

18
Utilities Expense
1,215.00

19
Music Expense
3,610.00

20
Advertising Expense
1,500.00

21
Supplies Expense
925.00

22
Insurance Expense
225.00

23
Depreciation Expense
50.00

24
Miscellaneous Expense
1,855.00

25
Totals
42,340.00
42,340.00

Required:

1. (Optional) Using the data from Chapter 3, prepare anend-of-period spreadsheet on a sheet of paper or using spreadsheetsoftware.
2. Prepare an income statement, a retained earnings statement, anda balance sheet.*
3.

A. Journalize the closing entries. Refer to the Chart ofAccounts for exact wording of account titles.
B. Post the closing entries. The income summary account is #34 inthe ledger of PS Music. Indicate closed accounts by inserting a 0(zero) in either of the Balance columns opposite the closing entry.No entry is required in the Item column.

4. Prepare a post-closing trial balance.

* For guidance in completing the financial statements, be sureto read the instructions above each statement carefully.


CHART OF ACCOUNTSPS MusicGeneral Ledger

ASSETS
11 Cash
12 Accounts Receivable
14 Supplies
15 Prepaid Insurance
17 Office Equipment
18 Accumulated Depreciation-Office Equipment

LIABILITIES
21 Accounts Payable
22 Wages Payable
23 Unearned Revenue

EQUITY
31 Common Stock
32 Retained Earnings
33 Dividends
34 Income Summary

REVENUE
41 Fees Earned

EXPENSES
50 Wages Expense
51 Office Rent Expense
52 Equipment Rent Expense
53 Utilities Expense
54 Music Expense
55 Advertising Expense
56 Supplies Expense
57 Insurance Expense
58 Depreciation Expense
59 Miscellaneous Expense

LabelsCash flows from financing activitiesCash flows frominvesting activitiesCash flows from operating activitiesCurrentassetsCurrent liabilitiesExpensesFor the Two Months Ended July 31,2016July 31, 2016Property, plant, and equipmentAmountDescriptionsAdd dividendsDecrease in retained earningsIncrease inretained earningsNet decrease in cash during June and JulyNetincrease in cash during June and JulyLess dividendsNet incomeNetlossRetained earnings, June 1, 2016Retained earnings, July 31,2016Total assetsTotal current assetsTotal expensesTotalliabilitiesTotal liabilities and stockholders’ equityTotalproperty, plant, and equipmentTotal stockholders’ equity

QUESTION 1

Accounting is an information and measurement system thatidentifies, records, and communicates relevant, reliable, andcomparable information about an organization's businessactivities.
True
False

QUESTION 2

We use the accounting equation to identify what a company ownsand owes. The accounting equation is:
Assets = Liabilities + Equity
Assets = Liabilities – Equity
Assets = Liabilities + Revenues
Equity = Liabilities + Revenues
QUESTION 3

______ are beliefs that distinguish right from wrong. Thesebeliefs are accepted standards of gauging good and dishonestbehavior.
Accounting Standards
Ethics
Generally Accepted Accounting Principles
FASB
QUESTION 4

The _____ is a collection of all accounts within a company’saccounting system.
General Journal
Chart of Accounts
General Ledger
Balance Sheet
QUESTION 5

We use the accounting equation to identify what a company ownsand owes. _____ are resources a company owns or controls, _____ areclaims creditors have against a company’s assets, and _____ is theowner’s claim on a company’s assets.

QUESTION 6

In double entry accounting a credit to an asset account willrepresent an increase in the asset account balance; and a debitwill represent a decrease in the asset account balance.
True
False
QUESTION 7

The purchase of supplies on credit will ____ assets and ____liabilities.
Increase, decrease
Decrease, increase
Decrease, decrease
Increase, increase
QUESTION 8

During the accounting cycle, we analyze transactions toprepare statements.
True
False
QUESTION 9

The supplies account for a company has a $1,000 debit balanceat the beginning of the year. Supplies of $2,000 were purchasedduring the year and debited to the Supplies account. A December 31physical count shows $500 of supplies remaining at the end of theyear. Assume no other adjusting entries are made during the year.Using the 3-step process for creating adjusting entries, calculatethe adjustment amount for supplies (no journal entry isrequired).
$1,000 adjustment
$2,000 adjustment
$2,500 adjustment
$3,000 adjustment
QUESTION 10

During the accounting cycle, to complete step 7 youwould:
Prepare post-closing trial balance--Test clerical accuracy ofthe closing procedures.
Prepare adjusted trial balance--Summarize adjusted ledgeraccounts and amounts.
Prepare statements--Use adjusted trial balance to preparefinancial statements.
Close--Journalize and post entries to close temporaryaccounts.
QUESTION 11

The three financial statements that should be prepared duringthe accounting cycle are the:
Balance sheet, adjusted trial balance, income statement
Balance sheet, unadjusted trial balance, Statement of Owner’sEquity
Income statement, adjusted trial balance, Statement of Owner’sEquity
Balance sheet, Income statement, Statement of Owner’sEquity

QUESTION 12

An optional working paper, which is not a required report oran accounting record, but is used to prepare a company's unadjustedtrial balance, adjusting entries, adjusted trial balance, andfinancial statements is a(n):
Adjusted trial balance
Worksheet
Post-closing trial balance
Unadjusted trial balance
General ledger
QUESTION 13

The two goals for completing the closing process are:
To identify accounts for closing and record the closingentries
To journalize and post transactions
To post transactions and prepare post-closing trialbalance
To reset revenues, expenses, and withdrawal account balancesto zero at the end of each period, and help summarize an accountingperiod’s revenues and expenses.
QUESTION 14

Fill in the Blank: The _____ describes a company’s financialposition – by the types and amounts of assets, liabilities, andequity -- at a point in time.

QUESTION 15

Return on Assets is useful in evaluating management, analyzingand forecasting profits, and planning activities.
True
False

QUESTION 16

The Income Statement:
Identifies cash inflows (receipts) and cash outflows(payments) over a period-of-time.
Summarize adjusted ledger accounts and amounts
Describes a company’s revenues and expenses along with theresulting net income or net loss -- over a period-of-time due toearnings activities
Resets revenues, expenses, and withdrawal account balances tozero at the end of each period.
QUESTION 17

An internal control system consists of the policies andprocedures used to:
Protect assets and Ensure reliable accounting
Urge adherence to company policies and Promote efficientoperations
All of the above
None of the above.
QUESTION 18

The cost-benefit principle is the second limitation of_______.
Bank reconciliations
Petty cash controls
Voucher system of controls
Internal controls
QUESTION 19

The Unadjusted Trial Balance columns of a company's work sheetshows the Store Supplies account with a balance of $750. TheAdjustments columns shows a credit of $425 for supplies used duringthe period. The amount shown as Store Supplies in the Balance Sheetcolumns of the work sheet is:
$325 debit
$325 credit
$425 debit
$425 credit
QUESTION 20

A company shows a $600 balance in Prepaid Rent in theUnadjusted Trial Balance columns of the work sheet. The Adjustmentscolumns show expired rent of $200. This adjusting entry resultsin:
$200 decrease to net income
$200 increase to net income
$200 different between the debit and credit columns of theUnadjusted Trial Balance
An error in the Balance Sheet

QUESTION 21

This semester we have discussed four major financialstatements. List the 4 financial statements and describe them. Makesure to include how they flow together.

QUESTION 22

Explain the purpose of adjusting entries at the end of aperiod.

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