A current asset may be cash or must be capable of being converted into cash with a relatively short period of time, usually less than five years.
The adjusted trial balance contains income statement accounts and balance sheet accounts while the after-closing trial balance will only have balance sheet accounts.
The purpose of the after-closing trial balance is to give assurance that the accounts are in balance and ready for the new accounting period.
In regard to disclosures that are required to be contained in annual reports, the FASB has no well- defined list of items that must be included.
IFRS 1 requires that management and auditors should depart from compliance with GAAP if it is necessary to achieve a fair presentation when reporting financial results.
An annual report filed with the Securities and Exchange Commission must include a section called "Management's Predictions of Future Earnings".
Statement of Financial Position
Of the following, which is not an alternative title for the income statement?
Retained Earnings + Net Income - Dividends
The Retained Earnings statement is based upon which of the following relationships?
The optimism of the CFO regarding future profits.
In the notes to financial statements, adequate disclosure would typically not include:
When a worksheet is prepared which account would not be entered into the income statement columns?
Debit to Income Summary and a credit to the expense account.
The closing entry for an expense account would consist of a
Net loss of $10,000
The income summary account has debits of $85,000 and credits of $75,000. The company had which of the following:
Non-financial information that is not included in the basic financial statements.
What types of information must be disclosed in the financial statements?
All three of the above would be disclosed.
Which of the following items will usually not be disclosed in an annual report?
Net income is correct and the balance in the Retained Earnings account is correct.
After preparing the financial statements for the current year, the accountant for Exquisite Gems closed the Dividends account at year-end by debiting Income Summary and crediting the Dividends account. What is the effect of this entry on current-year net income and the balance in the Retained Earnings account at year-end?
Income projections for the next five years based upon anticipated market share of a new product; the . new product was introduced a few days before the balance sheet date.
The concept of adequate disclosure requires a company to inform financial statement users of each of the following, except:
Income summary does not appear on any financial statement.
Income Summary appears on which financial statement:
The changes in the Retained Earnings account occurring during the accounting period.
A statement of retained earnings shows:
Income statement, statement of retained earnings, balance sheet.
The normal order in which the financial statements are prepared is:
Prepare revenue and expense accounts for the recording of the next period's revenue and expenses.
The purpose of making closing entries is to:
The Income Summary account
In the closing of the accounts at the end of the period, which of the following is closed directly into the Retained Earnings account?
Which of the following account titles could not be debited in the process of preparing closing entries for Andrew's Auto Shop?
Revenue and expense accounts reflect year-to-date amounts throughout the year.
If a business closes its accounts only at year-end:
Within a year or less
Assets are considered current assets if they are cash or will usually be converted into cash:
Which of the following amounts appears in both the Income Statement debit column and the Balance Sheet credit column of a worksheet?
A tool to assist accountants in making end-of-period adjustments and in preparing financial
A worksheet should be viewed as:
Revenue exceeds total expenses for the period.
The amount of net income (or loss) will appear on the debit side of the Income Statement columns in a worksheet if:
The number of account titles applicable to the Adjusted Trial Balance columns is usually greater than . the number of account titles applicable to the Trial Balance columns.
Which of the following is true regarding a worksheet prepared at year-end?
Financial statements may be prepared before recording adjusting and closing entries in the
When a worksheet is used:
Is done monthly or quarterly, in-between the year-end financial statements.
Preparation of interim financial statements:
Monthly financial statements can be prepared from worksheets; adjustments and closing entries need not be entered in the accounting records.
If monthly financial statements are desired by management:
Both A & B
Which of the following items should not be disclosed in the body of the financial statements, but rather in the notes to the financial statements?
The generally accepted accounting principle of providing with financial statements any information that users need to interpret those statements properly.
After-closing trial balance
A trial balance prepared after all closing entries have been posted. This trial balance consists only of accounts for assets, liabilities, and owners' equity.
Journal entries made at the end of the period for the purpose of closing temporary accounts (revenue, expense, and dividend accounts) and transferring balances to the Retained Earnings account.
General ledger software
Computer software used for recording transactions, maintaining journals and ledgers, and preparing financial statements. Also includes spreadsheet capabilities for showing the effects of proposed adjusting entries or transactions on the financial statements without actually recording these entries in the accounting records.
The summary account in the ledger to which revenue and expense accounts are closed at the end of the period. The balance (credit balance for a net income, debit balance for a net loss) is transferred to the Retained Earnings account.
Interim financial statements
Financial statements prepared for periods of less than one year (includes monthly and quarterly statements).
Notes to financial statements
Supplemental disclosures that accompany financial statements. These notes provide users with various types of information considered necessary for the proper interpretation of the statements.
A multicolumn schedule showing the relationships among the current account balances (a trial balance), proposed or actual adjusting entries or transactions, and the financial statements that would result if these adjusting entries or transactions were recorded. Used both at the end of the accounting period as an aid to preparing financial statements and for planning purposes.