Chapter 4 FA

In the unadjusted trial balance of its worksheet for the year ended December 31, 2020, Kim Company reported Equipment of NT$120,000. The year-end adjusting entries require an adjustment of NT$15,000 for depreciation expense for the equipment. After the adjusted trial balance is completed, what amount should be shown in the financial statement columns?

• a. A debit of NT$105,000 for Equipment in the statement of financial position column.

• b. A credit of NT$15,000 for Depreciation Expense in the income statement column.

• c. A debit of NT$120,000 for Equipment in the statement of financial position column.

• d. A debit of NT$15,000 for Accumulated Depreciation— Equipment in the statement of financial position column.

An account that will have a zero balance after closing entries have been journalized and posted is:

• a. Service Revenue.

• b. Supplies.

• c. Prepaid Insurance.

• d. Accumulated Depreciation—Equipment.

When a net loss has occurred, Income Summary is:

• a. debited and Retained Earnings is credited.

• b. credited and Retained Earnings is debited.

• c. debited and Dividends is credited.

• d. credited and Dividends is debited.

The closing process involves separate entries to close (1) expenses, (2) dividends, (3) revenues, and (4) income summary. The correct sequencing of the entries is:

• a. (4), (3), (2), (1).

• b. (1), (2), (3), (4).

• c. (3), (1), (4), (2).

• d. (3), (2), (1), (4).

Which types of accounts will appear in the post-closing trial balance?

• a. Permanent (real) accounts.

• b. Temporary (nominal) accounts.

• c. Accounts shown in the income statement columns of a worksheet

• d. None of these answer choices is correct.

All of the following are required steps in the accounting cycle except:

• a. journalizing and posting closing entries.

• b. preparing financial statements.

• c. journalizing the transactions.

• d. preparing a worksheet.

The proper order of the following steps in the accounting cycle is:

• a. prepare unadjusted trial balance, journalize transactions, post to ledger accounts, journalize and post adjusting entries.

• b. journalize transactions, prepare unadjusted trial balance, post to ledger accounts, journalize and post adjusting entries.

• c. journalize transactions, post to ledger accounts, prepare unadjusted trial balance, journalize and post adjusting entries.

• d. prepare unadjusted trial balance, journalize and post adjusting entries, journalize transactions, post to ledger accounts.

When Lopez Company purchased supplies worth $600, it incorrectly recorded a credit to Supplies for $6,000 and a debit to Cash for $6,000. Before correcting this error:

• a. Cash is overstated and Supplies is overstated.

• b. Cash is understated and Supplies is understated.

• c. Cash is understated and Supplies is overstated.

• d. Cash is overstated and Supplies is understated.

Cash of €100 received at the time the service was performed was journalized and posted as a debit to Cash €100 and a credit to Accounts Receivable €100. Assuming the incorrect entry is not reversed, the correcting entry is:

• a. debit Service Revenue €100 and credit Accounts Receivable €100.

• b. debit Accounts Receivable €100 and credit Service Revenue €100.

• c. debit Cash €100 and credit Service Revenue €100.

• d. debit Accounts Receivable €100 and credit Cash €100.

The correct order of presentation in a classifi ed statement of fi nancial position for the following current assets is:

• a. accounts receivable, cash, prepaid insurance, inventory.

• b. prepaid insurance, inventory, accounts receivable, cash.

• c. cash, accounts receivable, inventory, prepaid insurance.

• d. inventory, cash, accounts receivable, prepaid insurance.