Chapter 4 - College Accounting: A Practical Approach

Question 1

What is a worksheet?

Answer 1

A tool accountants use to organize and check data before preparing formal financial statements

Question 2

Is a worksheet a formal statement?

Answer 2

NO

Question 3

How many sections does the worksheet have?

Answer 3

5

Question 4

What are the sections of the worksheet?

Answer 4

1. Trial Balance
2. Adjustments
3. Adjusted Trial Balance
4. Income Statement
5. Balance Sheet

Question 5

What are the purpose of adjusting entries?

Answer 5

Bring accounts up to date and recognize the revenue & expenses in the proper accounting period

Question 6

What are some examples of items you need to adjust on the worksheet?

Answer 6

• supplies
• Prepaids
• Equipment (depreciation)
• expense (salaries, rent and supplies)

Question 7

What is depreciation?

Answer 7

The allocation of the cost of an asset over its useful life

Question 8

What is the most simple method of depreciation?

Answer 8

Straight line method

Question 9

What does the below equation represent?

(Cost - Residual Value) / Estimated Years of Usefulness

Answer 9

Straight line depreciation

Question 10

Are dollar signs and commas used on worksheets?

Answer 10

NO

Question 11

Does a trial balance have to be completed separately from the worksheet?

Answer 11

NO it can be prepared right in the work sheet or if you prefer separate

Question 12

Should adjustments on the work sheet still follow the rules of double entry accounting?

Answer 12

YES

Question 13

What is the original cost considered in accounting? The Term for it..

Answer 13

Historical Cost

Question 14

Which reports reflect the historical cost?

Answer 14

Balance sheet and ledger

Question 15

What determines the used up amount of equipment over a set period of time?

Answer 15

Depreciation

Question 16

What rules are set forth by the CRA for reporting depreciation for tax purposes?

Answer 16

CCA / Capital Cost Allowance

Question 17

What is the definition of the straight line depreciation method?

Answer 17

Equal amounts are take over a successive period of time

Question 18

What is residual value?

Answer 18

The value of an item at the end of its useful life

Question 19

Depreciation is what kind of account?

Answer 19

Expense

Question 20

Accumulated Depreciation is what type of account?

Answer 20

Contra-Asset

Question 21

What is the purpose of the accumulated depreciation account?

Answer 21

Keep a running total of depreciation apart from the historical cost

Question 22

Do Contra-Asset accounts work the same as asset accounts in terms of debits and credits?

Answer 22

NO

Question 23

What is a book value?

Answer 23

Remaining portion of the historical cost after depreciation is deducted that can be further reduced

Question 24

What is another name for book value?

Answer 24

Carrying Value

Question 25

Are book value and market value the same?

Answer 25

NO

Question 26

What would cause the historical cost to change?

Answer 26

If it is sold, retired or improved

Question 27

What rules do you want to think of when dealing with accrued salaries?

Answer 27

That revenue and expenses are recorded when they occurred not when the exchange of cash happens

Question 28

What is an accrued salary?

Answer 28

Unrecorded or unpaid salary’s that are not yet due

Question 29

What is another name for accrued salaries?

Answer 29

Salaries Payable

Question 30

What type of accounts is accrued salaries?

Answer 30

Liability

Question 31

When doe the accrued salaries liability account get reduced?

Answer 31

When the salary is paid

Question 32

What information does the adjusted trial balance show?

Answer 32

Summarizes the previous two sections of the worksheet

Question 33

To get the adjusted trial balance, what do you do?

Answer 33

Add the two previous columns and transfer the totals to the side with the larger figure

Question 34

What rule should you keep in mind when calculating the adjusted trial balance?

Answer 34

Debits and credits must balance

Question 35

What information doe the income statement on the worksheet show?

Answer 35

The adjusted revenue and expenses from the adjusted trial balance

Question 36

What two accounts are not listed on the income statement that we have added to the worksheet?

Answer 36

Accrued salaries and accumulated deprecation

Question 37

What are the three steps of preparing the income statement on the worksheet?

Answer 37

1. Total the debits and credits 2. Calculate the difference and place in the correct columns 3. Total the 2 columns

Question 38

What accounts transfer from the adjust trial balance to the balance sheet on the worksheet?

Answer 38

- assets - contra assets - liabilities - capital - withdrawals

Question 39

Which column does the net income carry over to?

Answer 39

Credit column

Question 40

What should you do with your finished worksheet before preparing the formal statements?

Answer 40

Double check your work

Question 41

For the formal income statement, will all the figures be listed in the worksheet?

Answer 41

YES

Question 42

Are there debit and credit columns on the formal income statement?

Answer 42

NO

Question 43

What is the inside column of the formal income statement used for?

Answer 43

Subtotalling

Question 44

What does not go on the formal income statement ?

Answer 44

Withdrawals

Question 45

Which is the first formal statement to be prepared after the worksheet?

Answer 45

Income Statement

Question 46

What will not be potentially portrayed on the worksheet you may need for preparing the formal statement of owners equity?

Answer 46

Beginning capital

Question 47

Where can you find the beginning capital for the formal statement of owners equity?

Answer 47

The Ledger

Question 48

What often doesn’t matche between the worksheet and the formal balance sheet?

Answer 48

The accounts

Question 49

Why do the accounts not match on the worksheet and the formal balance sheet?

Answer 49

They are grouped differently

Question 50

What account reduces the equipment on the formal balance sheet from the worksheet?

Answer 50

Accumulated deprecation

Question 51

What account reduces the owners equity on the formal balance sheet from the worksheet?

Answer 51

Withdrawals

Question 52

Why must you make the adjustments from the worksheet?

Answer 52

To ensure the ledger accounts correspond with the reports

Question 53

What do you use to adjust the journal with the adjustments from the worksheet?

Answer 53

Adjusting journal

Question 54

When must you make adjustments from worksheet by?

Answer 54

The start of the next accounting period