Question

1. In the completed work sheet, which of the following sets of columns would contain the two balances in the Income Summary account representing beginning and ending inventory when using the periodic inventory system?

a. Adjustments and Balance Sheet columns

b. Trial Balance and Adjustments columns

c. Trial Balance and Income Statement columns

d. Adjustments and Income Statement columns

e. Trial Balance and Balance Sheet columns

2. If the trial balance amount of Unearned Pest Spray Revenue is $50,000, and $40,000 has been earned by the end of the fiscal period, the adjustment would be

a. debit Pest Spray Revenue; credit Unearned Pest Spray Revenue.

b. debit Unearned Pest Spray Revenue; credit Cash.

c. debit Cash; credit Unearned Pest Spray Revenue.

d. debit Accounts Payable; credit Unearned Pest Spray Revenue.

e. debit Unearned Pest Spray Revenue; credit Pest Spray Revenue.

3. Adjusting entries are journalized and posted in a noncomputerized system

a. after the closing entries have been journalized.

b. after the trial balance is prepared but before the work sheet is completed.

c. after the adjustments are entered in the work sheet but before the work sheet is completed.

d. after the worksheet is completed but before the financial statements are prepared.

e. at none of these times.

4. Which of the following account type is NOT located on the worksheet's balance sheet?

a. Assets

b. Purchase Discounts

c. Drawing

d. Liabilities

5. Net income appears on the work sheet in the

a. Balance Sheet Debit column.

b. Income Statement Debit column.

c. Adjustments Debit column.

d. Income Statement Credit column.

e. Adjusted Trial Balance Debit column.

Answer 1

1. c. Trial Balance and Income Statement columns.

• Trial Balance and Income Statement columns represents beginning and ending inventory when company used periodic inventory system.

2. e.  debit Unearned Pest Spray Revenue; credit Pest Spray Revenue.

• Since service of $40,000 has been provided, to that extent revenue will be released from unearned revenue to Pest Spray revenue.

3. d.  after the worksheet is completed but before the financial statements are prepared.

• Before Preparing the financial statements, Adjusting entries are posted to finalized financials.

4. b.  Purchase Discounts.

• Since it is part of income statement.

5. b.  Income Statement Debit column.

• Since Net income is surplus of Credit over Debit, so balance left will be on Debit side of income statement.