2024Preparation of financial statements

These are the means by which the information accumulated and processed in financial accounting is periodically communicated to the users.

• financial statements

• worksheet

• trial balance

• management reports

Based on which of the following concepts, is share capital account shown on the liability side of statement of financial position?

• Dual-side concept

• Cost concept

• Money measurement concept

• Business entity concept

While preparing the worksheet, the accountant made the following entry: Debit Income Summary Account and Credit Inventory – beginning. This entry can be properly termed as a(n)

• Adjusting entry

• Reclassification entry

• Closing entry

• Correcting entry

While preparing the worksheet, the accountant made the following entry: Debit Inventory – ending and Credit Income Summary. This entry can be properly termed as a(n)

• Adjusting entry

• Reclassification entry

• Closing entry

• Correcting entry

Which of the following statements is true? I. Another name for the balance sheet is statement of changes in financial position. II. The balance sheet heading will specify a Period of time. III. An acceptable heading for a balance sheet is: ABC Corporation Statement of financial position For the Year Ended December 31, 20x1 IV. In a manual bookkeeping system, transactions are first recorded in a trial balance. V. A journal entry includes the date, account titles, and amounts

• I and V

• I , IV and V

• V only

• I, II and V

After the revenues for an accounting period have been determined, the costs directly or indirectly associated with these revenues must be deducted to measure net income. This is called

• Income statement preparation

• Profit and loss preparation

• Matching process

• Bookkeeping process

Totaling the columns of a columnar journal and proving the equality of the totals is called

• totaling and balancing

• footing and cross footing

• totaling and cross footing

• footing and balancing

These are entries prepared at the end of the accounting period to “zero out” all temporary accounts in the ledger.

• adjusting entries

• closing entries

• reversing entries

• reclassification entries

Which of the following statements is true?

• Equity is reduced by outside borrowings

• When there is no change in equity, it is an indication of loss in the business

• Nominal account refers to the exchange transactions

• Real accounts relate to the accounts found in the post-closing trial balance

Which of the following statements is correct? I. The formal process by which all nominal accounts are reduced to zero and the profit or loss is determined and transferred to an equity account is called closing entries II. Post-closing is the process of transferring the essential facts and figures from the book of original entry to the ledger accounts. III. A trial balance taken immediately after reversing entries have been posted is designated as a post-closing trial balance. IV. Adjusting entries are made at the beginning of an accounting period to bring all accounts up to date on an accrual accounting basis so that correct financial statements can be prepared. V. The chart of accounts is a list of all open accounts in the ledger and their balances. VI. Various amounts are transferred to the ledger from the book of original entry

• vi

• i, iv

• I, III, V, VI

• all of the statements are correct