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Exam 13: Financial Statements and Closing Procedures

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Question 1

Multiple Choice

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An income statement that has one total for all revenues and one total for all expenses is known as a

A) categorized income statement.
B) multiple-step income statement.
C) classified income statement.
D) single-step income statement.

E) None of the above
F) All of the above

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Question 2

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The adjusting entry to record depreciation should be reversed at the start of a new fiscal period to make subsequent financial record keeping easier.

A) True
B) False

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Question 3

Short Answer

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A classified income statement showed net sales of $1,160,000, cost of goods sold of $545,000, and total operating expenses of $416,000 for the fiscal year ended December 31, 2019. 1. What was the gross profit on sales? 2. What was the net income from operations?

Current assets provide the funds needed to pay bills and meet expenses.

A total of $8,000 in supplies was purchased during the year. By the end of the year, the company had used up $5,300 of the supplies. The adjusting entry needed at the end of the year is:

When a firm experiences a net loss, the owner's capital is decreased.

Use the following account balances from the adjusted trial balance columns of Goody Chocolate's Worksheet to answer below question. - Using the adjusted trial balance above, select the correct closing entry that Goody Chocolate would make to close the expense accounts (and cost of goods sold accounts with debit balances) at the end of the accounting period.

Allyse Petry is the owner of a boutique. During the year she made withdrawals of cash totaling $25,000. What accounts are debited and credited to close the owner's drawing account?

Which of the following accounts is not closed at the end of the accounting period?

A company reported gross profit of $72,000, total operating expenses of $41,000 and interest income of $3,600. What is the income from operations?

Inventory turnover is calculated by

For the current fiscal year, Purchases were $245,000, Purchase Returns and Allowances were $8,600, Purchase Discounts were $2,200 and Freight In was $32,000. If the beginning merchandise inventory was $60,000 and the ending merchandise inventory was $75,000, the Cost of Goods Sold is:

A firm had merchandise inventory of $30,000 on January 1, 2019. During the year the firm had purchases of $54,000, freight in of $1,200, purchases returns and allowances of $2,700, and purchases discounts of $900. The firm had merchandise inventory of $27,000 on December 31, 2019. 1. What net delivered cost of purchases was reported for the year ended December 31, 2019, on the classified income statement? 2. What was the cost of goods sold?

The accountant of Randy's Flooring has closed all of the temporary income statement accounts. The accountant is now ready to close the Income Summary account. The owner of the company is R. Car. Using the Income Summary T-account below, determine the correct closing entry the accountant needs to make in order to close the account. Income Summary

The adjusted trial balance data given below is from Cameron White Company's worksheet for the year ended December 31, 2019. The balance of the Notes Payable account consists of notes that are due within a year. The mortgage extends for more than a year. Prepare a classified balance sheet as of December 31, 2019. The ending capital for the period from the statement of owner's equity is $56,150.

The total of the operating expenses for the period is added to the gross profit on sales to determine the net income or net loss from operations.

The beginning capital balance shown on a statement of owner's equity is $80,000. Net income for the period is $35,000. The owner withdrew $18,000 cash from the business and made no additional investments during the period. The owner's capital balance at the end of the period is

A gross profit percentage of 45 percent means that for every $1 of net sales, gross profit amounts to$________.

The adjusted trial balance data given below is from the Hampton Company's worksheet for the year ended December 31, 2019. The firm had net income of $47,000 for the year. Prepare a statement of owner's equity for the year. No additional investments were made during the period.

The adjusted trial balance data given below is from the Saugatuck Craft's worksheet for the year ended December 31, 2019. The firm had a net loss of $30,000 for the year. Prepare a statement of owner's equity for the year. No additional investments were made during the period.