Testing Your Knowledge Matching Match each term with its definition by writing a

Question

Testing Your Knowledge Matching Match each term with its definition by writing a. An account used only during closing entries b. Add a column c. The means of transferring net income or the appropriate letter in the blank laccounting system) 2. Working papers 3. Work sheet d. The sequence from transaction analysis to e. A final proof that the accounts are in f. The opposite of an adjusting entry, jour- loss to the owner's capital account dosing entries balance nalized to facilitate routine bookkeeping 4. Foot 6. Reversing entry 7. Closing (clearing) entries entries 8. Income summary 9, Post-closing trial balance s Documents that help accountants organize h. Adding from left to right i. A working paper that facilitates the prep- their work aration of financial statements Completion Use the lines provided to complete each item. 1. What four accounts or kinds of accounts 4. The six steps in the accounting cycle are presented here in the wrong order. Place the numbers 1 through 6 in the spaces pro- are closed out each accounting period? vided to indicate the correct order -The journal entries are posted to the ledger The nominal accounts are closed 2. List the five columnar headings sheet in their proper order. of a work The transactions are analyzed from the The accounts are adjusted, usually with The transactions are recorded in the -Financial statements are prepared from S. Briefly, explain the purpose of reversing source documents. the aid of a work sheet. journal the work sheet. 3. In general, what accounts will appear in the post-closing trial balance? What ac- counts will not appear? entries. Completing the Accounting Cycle 45

Explanation / Answer

Matching:

1.

a. Revenue/Income , b. Gains. c. Expenses d. Losses.

2.

a. Unadjusted,

b. Adjustments

c. Adjustments

d. Income Sheet

e. Balance Sheet

3.

Accounts that will appear : Personal and Real -- (Long-term accounts -- which carry on over a period of time)

Accounts that will not appear : Nominal (Short term accounts -- which are not relevant beyond the period of accounting)

4.

5.

The purpose of revesrign entries, is to correct a mistake/wrong recording or to record the latest status. regarding an earlier entry.

For example, if rent paid in advance is debited to Rent expense account instead of Prepaid rent account , we reverse the first entry and record the correct entry by debiting the Prepaid rent account.

Second example : When a check issued by a customer is returend unpaid (NSF check), we need to reverse the original entry recorded when we have sent the check for collection.

d 1. Accounting Cycle g 2.Working papers i 3.Workshet b 4.Foot h 5. Crossfooting f 6.Revesring Entry c 7.Closing (clearing) entries a 8.Income Summary e 9.Post-closing trial balance

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