Session 9 Handout: 9/24/14
Supplemental Instruction
IowaStateUniversity / Leader:
Course:
Instructor:
Date:

True/False

  1. _____ The closing process serves two purposes, the transfer of net income (or loss) and dividends to Retained Earnings and to establish zero balances in all income statement and dividend accounts.
  2. _____Adjusting entries are typically made at the beginning of the period.
  3. _____ You should always calculate income tax expense after taking into account all revenue and expense adjustments.
  4. _____ Adjusting entries never involve cash.
  5. _____ Dividends are expenses of the business.
  6. _____ When closing the income statement accounts the amount credited to Retained Earnings should equal Net Income on the Income Statement.
  7. _____ Prepaid insurance is an example of a contra-account.

Multiple Choice

  1. Which of the following trial balances is used as a source for preparing the income statement?
  2. Unadjusted trial balance
  3. Pre-adjusted trial balance
  4. Adjusted trial balance
  5. Post-closing trial balance
  6. Which of the following accounts would NOT be involved in a deferral adjustment?
  7. Prepaid Rent
  8. Unearned Concessions Revenue
  9. Interest Receivable
  10. None of the above
  11. In the term unearned revenue, what does the term “unearned” mean.
  12. The service has been performed, but no money has been received
  13. Money has been received, but the company has not performed and is therefore liable to do so
  14. Money has not been exchanged, nor has a service been performed
  15. A service has been performed and cash has been received but it doesn’t count as revenue until the end of the period
  16. Which answer best describes the correct way to make the first closing entry?
  17. Credit all revenue accounts and debit all expense accounts
  18. Debit retained earnings and credit dividends declared
  19. Credit retained earnings and debit dividends declared
  20. Debit all revenue accounts and credit all expense accounts
  21. Which of the following is the correct order of the accounting process
  22. Analyze transactions, journal entries, financial statements, unadjusted trial balance, adjusting entries, adjusted trial balance, closing entries, post-closing trial balance
  23. Journal entries, analyze transactions, unadjusted trial balance, adjusting entries, adjusted trial balance, financial statements, closing entries, post-closing entries
  24. Analyze transactions, journal entries, unadjusted trial balance, adjusting entries, adjusted trial balance, financial statements, closing entries, post-closing trial balance
  25. Journal entries, analyze transactions, unadjusted trial balance, financial statements, adjusting entries, adjusted trial balance, closing entries, post-closing trial balance

Prepare journal entries necessary on October 31 for the deferral transactions and adjustments below.

  1. The Rangers hockey team paid $2000 cash on Sept. 30, to rent an arena for the months of October and November.
  1. Stage Shows Inc. received $6000 on Sept. 30, for season tickets that admit patrons to a theatre event that will be held twice (October 31 and November 30).
  1. Sky Diver City paid $3000 on Sept. 30, for insurance coverage for the months of October, November, and December.