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Financial and Managerial Accounting: The Basis for Business Decisions, 12/e

Jan R. Williams, University of Tennessee
Susan F. Haka, Michigan State University
Mark S. Bettner, Bucknell University
Robert F. Meigs

The Accounting Cycle: Reporting Financial Results

Multiple Choice Quiz

Please answer all questions


1	The concept of adequate disclosure:
		A)	Does not apply to information which is immaterial.
		B)	Grants users of the financial statements access to a company's accounting records.
		C)	Does not apply to events occurring after the balance sheet date.
		D)	Specifies which accounting methods must be used in a company's financial statements.


2	The concept of adequate disclosure requires a company to inform financial statement users of each of the following, except:
		A)	The accounting methods in use.
		B)	The due dates of major liabilities.
		C)	Destruction of a large portion of the company's inventory on January 20, three weeks after the balance sheet date, but prior to issuance of the financial statements.
		D)	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.


3	When a business closes its accounts only at year-end:
		A)	Financial statements are prepared only at year-end.
		B)	Adjusting entries are made only at year-end.
		C)	Revenue and expense accounts reflect year-to-date amounts throughout the year.
		D)	Monthly and quarterly financial statements cannot be prepared.


4	When a business adjusts its records monthly, but closes its accounts only at year-end:
		A)	Interim financial statements are prepared using the amounts shown in an adjusted trial balance at the end of the interim period desired.
		B)	Only annual financial statements can be prepared.
		C)	Interim financial statements are prepared by subtracting prior balances from current balances for all accounts.
		D)	The revenue and expense accounts in an adjusted trial balance reflect year-to-date amounts.


5	Which of the following amounts appears in both the Income Statement debit column and the Balance Sheet credit column of a worksheet?
		A)	Net income.
		B)	Net loss.
		C)	Dividends.
		D)	Retained earnings.


6	Which of the following is not included in an end-of-period worksheet?
		A)	Information for adjusting entries.
		B)	Financial statement information.
		C)	Trial balance.
		D)	Closing entries.


7	Preparation of interim financial statements:
		A)	Makes the preparation of year-end financial statements unnecessary.
		B)	Requires the journalizing and posting of adjusting entries.
		C)	Requires the journalizing and posting of closing entries.
		D)	Is done monthly or quarterly-in between the year-end financial statements.


8	If monthly financial statements are desired by management:
		A)	Journalizing and posting adjusting entries must be done each month.
		B)	Journalizing and posting closing entries must be done each month.
		C)	Monthly financial statements can be prepared from worksheets; adjustments and closing entries need not be entered in the accounting records.
		D)	Adjusting and closing entries must be entered in the accounting records before preparation of interim financial statements.

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