Accounting Chapter 5

Dividends declared:
Click the card to flip 👆
1 / 39
Terms in this set (39)
Dividends declared:
Reduce retained earnings.
The normal order in which the financial statements are prepared is:
Income statement, statement of retained earnings, balance sheet.
A statement of retained earnings shows:
The changes in the Retained Earnings account occurring during the accounting period.
If revenues are $255,000, expenses are $210,000 and dividends are $27,500, before it is closed, the Income Summary will have a:
Credit balance of $45,000.
The dividends account should be:
Closed to retained earnings.
Declaring a dividend will:
Not change net income.
Closing entries would be prepared before:
The after-closing trial balance.
The closing entry for an expense account would consist of a:
Debit to Income Summary and a credit to the expense account.
Before it was closed, the Income Summary account has debits of $85,000 and credits of $75,000. The company had which of the following:
Net loss of $10,000.
During the closing process:
All revenue accounts are debited and expense accounts are credited.
A debit balance in the income summary account indicates:A Net Loss.If Income Summary has a net credit balance, it signifies:Net income.The balance in Income Summary:Will equal net income or net loss.Income Summary appears on which financial statement?Income summary does not appear on any financial statement.The purpose of making closing entries is to:Prepare revenue and expense accounts for the recording of the next period's revenue and expenses.When closing the accounts at the end of the period, which of the following is closed directly into the Retained Earnings account?The Income Summary account.Closing entries never involve posting a credit to the:Accumulated Depreciation account.Which of the following account titles would not be debited in the process of preparing closing entries for Andrew's Auto Shop?Dividends.If a business closes its accounts only at year-end:Revenue and expense accounts reflect year-to-date amounts throughout the year.Closing entries should be made:Every year.Which of the following accounts will be closed to Income Summary?Depreciation Expense.Shown below is an adjusted trial balance for Novelty Toys, Incorporated, on December 31, Year 1: Novelty Toys, Incorporated Adjusted Trial Balance December 31, Year 1 Debit Credit Cash$ 7,750 Accounts Receivable6,375 Office Equipment11,250 Accumulated Depreciation $ 3,000Accounts Payable 3,875Capital Stock 11,250Retained Earnings -0-Dividends3,750 Fees Earned 22,750Salaries Expense8,000 Advertising Expense1,625 Depreciation Expense2,125 Totals$ 40,875$ 40,875 The entry to close the Fees Earned account will:Produce a zero balance in that account when posted.Shown below is an adjusted trial balance for Novelty Toys, Incorporated, on December 31, Year 1: Novelty Toys, Incorporated Adjusted Trial Balance December 31, Year 1 Debit Credit Cash$ 15,050 Accounts Receivable12,525 Office Equipment21,600 Accumulated Depreciation $ 5,550Accounts Payable 7,525Capital Stock 22,050Retained Earnings -0-Dividends7,050 Fees Earned 43,250Salaries Expense15,100 Advertising Expense3,025 Depreciation Expense4,025 Totals$ 78,375$ 78,375 Net income for the period equals:$21,100.Shown below is an adjusted trial balance for Novelty Toys, Incorporated, on December 31, Year 1: Novelty Toys, Incorporated Adjusted Trial Balance December 31, Year 1 Debit Credit Cash$ 7,750 Accounts Receivable6,375 Office Equipment11,250 Accumulated Depreciation $ 3,000Accounts Payable 3,875Capital Stock 11,250Retained Earnings -0-Dividends3,750 Fees Earned 22,750Salaries Expense8,000 Advertising Expense1,625 Depreciation Expense2,125 Totals$ 40,875$ 40,875 Net income for the period equals:$11,000.Shown below is an adjusted trial balance for Novelty Toys, Incorporated, on December 31, Year 1: Novelty Toys, Incorporated Adjusted Trial Balance December 31, Year 1 Debit Credit Cash$ 15,700 Accounts Receivable12,850 Office Equipment22,900 Accumulated Depreciation $ 6,200Accounts Payable 7,850Capital Stock 22,700Retained Earnings -0-Dividends7,700 Fees Earned 46,500Salaries Expense16,400 Advertising Expense3,350 Depreciation Expense4,350 Totals$ 83,250$ 83,250 After closing the accounts, Retained Earnings at December 31 equals:$14,700.Shown below is the adjusted Trial Balance for Simon Incorporated, on December 31, after the first year of operations, after adjusting entries: Simon, Incorporated Adjusted Trial Balance December 31 Debit Credit Cash$ 1,600 Accounts Receivable4,000 Office Equipment16,800 Accumulated Depreciation $ 1,600Capital Stock 2,400Retained Earnings 2,720Dividends960 Service Fees Earned 21,920Wages Expense3,200 Supplies Expense1,120 Depreciation Expense960 Totals$ 28,640$ 28,640 The entry to close the Service Fees Earned account will:Produce a zero balance in that account when posted.Which of the following accounts will appear on an After-Closing Trial Balance?Unexpired InsuranceWhich of the following accounts will not appear on an After-Closing Trial Balance?DividendsWhich of the following accounts will appear on the After-Closing Trial Balance?Unearned RevenueReturn on equity measures:Profitability.Return on equity is calculated by:Dividing net income by average stockholders' equity.If current assets are $99,500 and current liabilities are $58,600, the current ratio will be:1.70If current assets are $90,000 and current liabilities are $70,000, the current ratio will be:1.3.If current assets are $115,500 and current liabilities are $43,400, working capital will be:$72,100.If current assets are $110,000 and current liabilities are $50,000, working capital will be:$60,000.The following information is available: Sales$ 400,000Net Income20,000Retained Earnings40,000Average Stockholders' Equity130,000Dividends6,000 What is the return on equity? (Round your answer to the nearest whole number.)15%.Interim financial statements:Cover a period less than one year.Preparation of interim financial statements:Is done monthly or quarterly or in-between the year-end financial statements.The section of the annual report titled "Management Discussion and Analysis" is:Required by the Securities and Exchange Commission (SEC).