Chapter 4

Question 1

Worksheet

Answer 1

1. multiple column form used in preparing financial statement
2. not a permanent accounting record

Question 2

steps in preparing a worksheet

Answer 2

1. prepare a trial balance on the worksheet
2. enter the adjustments in the adjustments columns
3. complete the adjusted trial balance columns
4. extend amounts to financial statement columns
5. total columns,compute net income or loss

Question 3

closing the books

Answer 3

only temporary accounts are closed

eg. all revenue /expense/dividends accounts

Question 4

post closing trial balance

Answer 4

1. all temporary accounts will have zero balance

2. only contains balances for permanent (statement of financial position) accounts

Question 5

the accounting cycle

Answer 5

1. Analyze business transactions
2. Journalize the transactions
3. post to ledger accounts
4. prepare a trial balance
5. journalize and post adjusting entries
6. prepare an adjusted trial balance
7. prepare financial statements
8. journalize and post closing entries
9. prepare a post-closing trial balance

Question 6

correcting entries

Answer 6

1. unnecessary if accounting records are free of errors
2. made whenever an error is discovered.
3. must be posted before closing entries

Question 7

standard classifications

Answer 7

assets :

Intangible assets
property,plant and equipment
long term investment
current assets

equity and liability :
Equity
Non-current liabilities
Current liabilities

Question 8

Intangible assets

Answer 8

Goodwill

Capitalized development costs

Question 9

property,plant and equipment

Answer 9

long use lives
currently use in operations
Depreciation
Accumulated depreciation

Question 10

long term investment

Answer 10

investments in ordinary shares and bonds of other companies

non-current assets

Question 11

current assets

Answer 11

inventory
trade and other receviables
short-term investment
current tax assets
receivables ( notes accounts interest)
cash

Question 12

Equity

Answer 12

retained earnings
share capital- ordinary
share premium
other reserves

Question 13

Non-current liabilities

Answer 13

Long term debt
Deferred tax liabilities
Provisions
Bonds payable
mortgages payable
long term notes payable
pension liabilities

Question 14

current liabilities

Answer 14

notes payable
accounts payable
unearned service earning
income taxes payable
trade payable
current provisions

Question 15

correct order of presentation in a classified statement of financial position for ca

Answer 15

prepaid insurance
inventories
accounts receivable
cash