Quiz Of The Week: Worksheet Preparation

1. The worksheet is a:

Formal statement issued to potential investors

Working paper often used by accountants to summarize adjusting entries

Replacement for the journal

Replacement for the formal income statement

Working papers are often used by accountants to summarize adjusting entries. This is the longest answer. The worksheet is not a formal statement (A).

Explanation

Working papers are often used by accountants to summarize adjusting entries. This is the longest answer. The worksheet is not a formal statement (A).

2. The salaries payable account appears on the:

Balance sheet

Statement of owners’ equity

Income statement

Statement of cash flows

Salaries payable is a liability and belongs on the balance sheet.

Explanation

Salaries payable is a liability and belongs on the balance sheet.

3. Which of the following accounts appears in the balance sheet columns of the worksheet:

Fees earned

Land

Supplies expense

Service revenue

Land is an asset account and belongs in the balance sheet columns. The other three options are revenue and expense and belong in the income statement.

Explanation

Land is an asset account and belongs in the balance sheet columns. The other three options are revenue and expense and belong in the income statement.

4. A net loss appears on the worksheet:

When revenue exceeds expenses

When expenses exceed revenues

Every time the adjusted trial balance columns do not balance after the initial totaling

Every time the income statement columns do not balance after the initial totaling

When revenue exceeds expenses (A), you have a profit. A difference between the credit and debit columns of the adjusted trial balance columns (C) indicates an error in the preparation of the adjustments, not a profit or a loss. When the income statement columns do not balance (C), this indicates either a profit or a loss, depending upon which is higher, revenues or expense.

Explanation

When revenue exceeds expenses (A), you have a profit. A difference between the credit and debit columns of the adjusted trial balance columns (C) indicates an error in the preparation of the adjustments, not a profit or a loss. When the income statement columns do not balance (C), this indicates either a profit or a loss, depending upon which is higher, revenues or expense.