Financial Accounting Fundamentals - BAF 3MI - Home



Chapter 8: Completing the Accounting CycleKnow the following terms & how to perform the necessary tasks:Accumulated DepreciationNet book valueAdjusting EntriesNominal account (temporary)AuditPost-closing trial balanceClosing an accountPrepaid ExpenseContra accountReal accountDeclining-balance method of depreciationSalvage ValueDepreciationStraight-line method of depreciationIncome Summary accountValuation account8.1 Why do adjusting entries? Supplies Late bills Prepaid Expense (eg. Insurance)8.2 Adjustments & the Work Sheet (page 287)8.3 Closing Entries Accounting Cycle Journalizing & Posting Closing Entries Post-closing Trial Balance8.4 Depreciation Straight-line Declining Balance Financial Statements page 307Test Outline – Tuesday November 18, 2014Fill-in-the-blanks 7 marksShort Answers 9 marks Work Sheet with Adjustments 14 marksJournalizing Closing Entries 10 marks 40 marks TOTALBAF 3MI: Chapter 8 – Test ReviewCompleting the accounting cycleThe nine steps of the accounting cycle are listed below in random order. Number the steps in the order in which they occur in the accounting cycle.Accounting entries are recorded in the journal.An income statement and a balance sheet are prepared.Adjusting entries are journalized and posted.Transactions occur.The ledger is balanced by means of a trial balance.A post-closing trial balance is prepared.A worksheet is prepared.Closing entries are journalized and posted.Journal entries are posted to the ledger accounts.The trial balance figures for Dennison Delivery Service appear on the following worksheet. Using the additional information below, complete the eight-column worksheet for the fiscal year ended June 30, 20–4. HST accounts are not to be considered.Additional Information1.Purchase invoices received in July, 20–4, pertaining to goods and services received in June 20–4, are for the following:Supplies$280.00Miscellaneous Expense140.00Utilities Expense210.202.The supplies inventory taken on June 30, 20–4, amounted to $625.00.3.The Prepaid Licences account showed that the value of unexpired licences on June 30, 20–4, amounted to $412.00.4.The prepaid insurance schedule as of June 30, 20–4, showed a total of $215 in unexpired insurance.B.Prepare the four closing entries for Dennison Delivery Service as of June 30, 20–4.C.Assuming all entries have been posted, calculate the ending Capital balance for Dennison Delivery Service as of June 30, 20–4. Use the account provided below. D.Prepare a post-closing trial balance for Dennison Delivery Service.3.A company purchases equipment costing $24 000, which it expects to last 6 years and to have a salvage value of $3000.A.Prepare a schedule of depreciation for the first five years using the straight-line method.YearStraight-line DepreciationDepreciationBalance$24 00012345B.For the same equipment, prepare a schedule of depreciation for the first five years using the true declining-balance method. Canada Revenue Agency’s prescribed rate for depreciation is 30%.YearDeclining BalanceDepreciationBalance$24 000.00123454. Indicate which of the accounts below are nominal accounts by placing a checkmark (?) in the space provided.A.Accounts ReceivableF.SalariesB.Bank ChargesG.Chris Vella, CapitalC.Miscellaneous ExpenseH.Fees EarnedD.AutomobilesI.Chris Vella, DrawingsE.Accounts PayableJ.Bank Loan5. Calculate the value of the unexpired insurance on the following policies as of June 30, 20–panyPolicy DateTermPremiumUnexpired Insurancea.BristolJuly 31, 20–31 year$ 420b.MaineOctober 31, 20–31 year$1 080c.IpswichJanuary 31, 20–41 year$ 5766. For each account, which worksheet column would be extended? Place a checkmark (?) in the appropriate column.Trial BalanceIncome StatementBalance SheetDrCrDrCrDrCrExample: Commission Earned??A.Accounts PayableB.Miscellaneous ExpenseC.Advertising ExpenseD.EquipmentE.G. Rojek, CapitalF.HST RecoverableG.HST Payable H.G. Rojek, DrawingsI.Bank ChargesJ.Supplies ................
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