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CHAPTER 5 General Accounting and End-of-Period Procedures 307 END-OF-CHAPTER QUESTIONS TRUE/FALSE ANSWER THE FOLLOWING QUESTIONS IN THE SPACE PROVIDED BEFORE THE QUESTION NUMBER. 1. You record the amount of supplies on hand as the amount of the adjusting entry for supplies used. 2. Once a report has been customized, it may be accessed in Accountant Reports. 3. Additional investments made by an owner may be cash or non-cash items. 4. An owner’s withdrawal is recorded as a payroll expense. 5. Accrual-basis accounting matches the income from the period and the expenses for the period in order to determine the net income or net loss for the period. 6. Depreciation is recorded for the decrease in value of a fixed asset. 7. A Statement of Cash Flows organizes information regarding cash activities and projects the amount of cash at the end of a period. 8. A Balance Sheet is prepared to prove the equality of debits and credits. 9. You cannot record an automatic loan payment when you reconcile a bank statement. 10. A Reconciliation Report prints the last two bank reconciliation reports automatically MULTIPLE CHOICE WRITE THE LETTER OF THE CORRECT ANSWER IN THE SPACE PROVIDED BEFORE THE QUESTION NUMBER. The report that proves Assets = Liabilities + Owner’s Equity is the- A. Trial Balance B. Income Statement C. Profit & Loss Report D. Balance Sheet 1. If the adjusting entry to transfer Net Income and Retained Earnings into the owner’s capital account is made prior to the end of the year, the Balance Sheet shows A. Retained Earnings B. Net Income C. Both Net Income and Retained Earnings D. None of the above because the Net Income and Retained Earnings have been 2. transferred into capital
Expert Answer
Solution:
True or false:
1. True, When we buy supplies then we record the expense in our supplies account. Once the supplies used they become an expenses for this we need adjustment entry to reflect the supplies used in current period.
2. True, Accounting reports can be accessed after customized as a preference for a company. Generally theses reports will automatically use the customized format.
3. True, Owner can make an investment in any form like cash or non-cash. There is no restriction on investment by owner.
4. False, Owner’s withdrawal should be shown in separate account i.e., debited to drawings account.
5. True, As per accrual concept the income is calculated by recording the income and expenses in the period in which they occur.
6. True, Depreciation is nothing for recovering the cost of the fixed asset. Depreciation will be shown as an expense in income statement and reduced from the asset in balance sheet.
7. True, A cash flow statement shows the net changes in cash from all the three activities like operating activity, financing activity and investing activity and projects at the end of the period.
8. False, Balance sheet is a financial statement prepared to show the worth of the business. We van also say it explains the financial condition of the company.
9. False, we can reconcile the transactions relating to automatic errors and transactions which occur in their bank accounts.
10. False, A Reconciliation Detail Report is the reconciliation summary i.e., list of outstanding’s, it can be taken print as per our requirements.
Multiple choice:
1. D. Balance sheet, that proves: Assets = Liabilities + Owner’s Equity.
2. C. both Net Income and Retained Earnings.
