In the closing process of the accounting cycle, the accountant closed the dividends account at year-end by debiting Income Summary and crediting the dividends account. The balance of Income Summary after closing revenue, expenses and dividends are closed to Retained Earnings. What is the effect of these entries on current-year profit and the balance in the equity account(s) at year-end? A. Profit is overstated; balance in the retained earnings account is correct. B. Profit is correct; balance in the retained earnings account is overstated. C. Profit is understated; balance in the share capital account is correct. D. Profit is correct; balance in the share capital account is correct.

In the closing process of the accounting cycle, the accountant closed the dividends account at year-end by debiting Income Summary and crediting the dividends account. The balance of Income Summary after closing revenue, expenses and dividends are closed to Retained Earnings. What is the effect of these entries on current-year profit and the balance in the equity account(s) at year-end? A. Profit is overstated; balance in the retained earnings account is correct. B. Profit is correct; balance in the retained earnings account is overstated. C. Profit is understated; balance in the share capital account is correct. D. Profit is correct; balance in the share capital account is correct.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 11P: A review of Anderson Corporations books indicates that the errors and omissions pertaining to the...

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For each of the following accounts, identify whether it would be closed at year-end (yes or no) and on which financial statement the account would be reported (Balance Sheet, Income Statement, or Retained Earnings Statement). A. Accounts Payable B. Accounts Receivable C. Cash D. Dividends E. Fees Earned Revenue F. Insurance Expense G. Prepaid Insurance H. Supplies
On which of the following would the year-end Retained Earnings balance be stated correctly? A. Unadjusted Trial Balance B. Adjusted Trial Balance C. Post-Closing Trial Balance D. The Worksheet
After the first two closing entries are made, Income Summary has a debit balance of $22,750. What does this indicate about the companys net income or loss?
After all revenue and expenses have been closed at the end of the fiscal period ended December 31, Income Summary has a debit of 45,550 and a credit of 36,520. On the same date, D. Mau, Drawing has a debit balance of 12,000 and D. Mau, Capital had a beginning credit balance of 63,410. a. Journalize the entries to close the remaining temporary accounts. b. What is the new balance of D. Mau, Capital after closing the remaining temporary accounts? Show your calculations.
Which of these accounts is included in the post-closing trial balance? A. Sales Revenue B. Salaries Expense C. Retained Earnings D. Dividends
Identify which of the following accounts would be listed on the companys Post-Closing Trial Balance. A. Accounts Receivable B. Accumulated Depreciation C. Cash D. Office Expense E. Note Payable F. Rent Revenue G. Retained Earnings H. Unearned Rent Revenue
Considering the following events, determine which month the revenue or expenses would be recorded using the accounting method specified. a. Gerber Company uses the cash basis of accounting. Gerber prepays cash in May for insurance that only covers the following month, (June). b. Matthews and Dudley Attorneys uses the accrual basis of accounting. Matthews and Dudley Attorneys receives cash from customers in June for services to be performed in July. c. Eckstein Company uses the accrual basis of accounting. Eckstein prepays cash in October for rent that covers the following month, (October). d. Gerbino Company uses the cash basis of accounting. Gerbino makes a sale to a customer in February but does not expect payment until March.
A review of Anderson Corporations books indicates that the errors and omissions pertaining to the balance sheet accounts shown as follows had not been corrected during the applicable years. The net income per the books is: 2017, 10,000; 2018, 12,000; 2019, 15,000; and 2020, 20,000. No dividends were declared during these years and no adjustments were made to retained earnings. The Retained Earnings balance on December 31, 2020, is 50,000. Omissions Required: Determine the correct net income for the years 2017, 2018, 2019, and 2020, and the adjusted balance sheet accounts as of December 31, 2020. Ignore possible income tax effects.
Net Income (or Loss) and Retained Earnings The following information is available from the records of Prestige Landscape Design Inc. at the end of the year: Required Use the previous information to answer the following questions. What is Prestiges net income for the year? What is Prestiges Retained Earnings balance at the end of the year? What is the total amount of Prestiges assets at the end of the year? What is the total amount of Prestiges liabilities at the end of the year? How much owners equity does Prestige have at the end of the year? What is Prestiges accounting equation at the end of the year?
Qusetion In the closing process of the accounting cycle, the accountant closed the dividends account at year-end by debiting Income Summary and crediting the dividends account. The balance of Income Summary after closing revenue, expenses and dividends are closed to Retained Earnings. What is the effect of these entries on current-year profit and the balance in the equity account(s) at year-end? A: Profit is overstated; balance in the retained earnings account is correct. B: Profit is correct; balance in the retained earnings account is overstated. C: Profit is understated; balance in the share capital account is correct. D: Profit is correct; balance in the share capital account is correct.
The adjusted trialbalance prepared as of December 31, for Phyllis Howell & Company, Consultant, contains the following revenue and expense accounts: Debit Credit Service Fees Earned $80,400 Rent Expense $20,900 Salaries Expense 45,800 Supplies Expense 5,700 Depreciation Expense 10,300 Retained Earnings 67,100 Dividends 9,100 Prepare journal entries to close the accounts directly to Retained Earnings. After these entries are posted, what is the balance in the Retained Earnings account? ASS Finis
Once closing entries have been entered in the general journal and posted to the ledger, what is the effect on the owner’s capital (or retained earnings) account? Explain the purpose of a post-closing trial balance in your own words and answer this question: Is the post-closing trial balance mandatory as a step in the accounting cycle? Reflect on this question: Assuming a company’s first year-end, would financial statements be affected if the closing process were not completed? Explain.