Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.

Stockton Company

Adjusted Trial Balance

For the Year Ended December 31, 20XX

Cash $ 6,530

Accounts Receivable 2,100

Prepaid Expenses 700

Equipment 13,700

Accumulated Depreciation $ 1,100

Accounts Payable 1,900

Notes Payable 4,300

Capital Stock 2,000

Retained Earnings 10,940

Dividends 790

Fees Earned 9,250

Wages Expense 2,500

Rent Expense 1,960

Utilities Expense 775

Depreciation Expense 250

Miscellaneous Expense 185

Totals $29,490 $29,490

Determine the net income (loss) for the period.

A. Net Loss $790

B. Net Income $3,580

C. Net Income $9,250

D. Net Loss $5,670

B. Net Income $3,580

Fees Earned - Expenses = Net Income

Fees Earned 9,250 - Wages Expense 2,500 - Rent Expense 1,960 - Utilities Expense 775 - Depreciation Expense 250 - Miscellaneous Expense 185 = 3,580

Use the information in the adjusted trial balance for Stockton Company to answer the questions that follow.

Stockton Company

Adjusted Trial Balance

For the Year Ended December 31, 20XX

Cash $ 6,530

Accounts Receivable 2,100

Prepaid Expenses 700

Equipment 13,700

Accumulated Depreciation $ 1,100

Accounts Payable 1,900

Notes Payable 4,300

Capital Stock 2,000

Retained Earnings 10,940

Dividends 790

Fees Earned 9,250

Wages Expense 2,500

Rent Expense 1,960

Utilities Expense 775

Depreciation Expense 250

Miscellaneous Expense 185

Totals $29,490 $29,490

Determine total assets.

A. $23,030

B. $21,930

C. $15,830

D. $24,130

B. $21,930

Cash $ 6,530 + Accounts Receivable 2,100 + Prepaid Expenses 700 + Equipment 13,700 - Accumulated Depreciation $ 1,100 = 21,930

The following are steps to the accounting cycle. Of the following, which step should be done first?

A. Adjusting entries are journalized and posted to the ledger.

B. Financial statements are prepared.

C. Transactions are posted to the ledger.

D. Closing entries are journalized and posted to the ledger.

A net loss appears on the work sheet in the

A. credit column of the Adjustments columns

B. debit column of the Balance Sheet columns

C. credit column of the Balance Sheet columns

D. debit column of the Income Statement columns

The retained earnings statement begins with the beginning balance followed by

A. net income (loss) and issuances of capital stock

B. issuances of capital stock, net income (loss), and dividends

C. issuances of capital stock and dividends 

D. net income (loss) and dividends

An indication that the work sheet columns are in balance and the work sheet is completed is

A. the word "Total" is written at the bottom of each pair of columns

B. each pair of columns is double underlined

C. the final figures are written in ink

D. each pair of columns has the totals circled

The classified balance sheet will have liabilities divided into the following subsections

A. Present Liabilities and Tomorrow’s Liabilities

B. Current Liabilities and Long-Term Liabilities

C. Current Liabilities and Other Liabilities

D. Other Liabilities and Long-Term Liabilities

A fiscal year

A. always begins on January 1 and ends on December 31 of the same year.

B. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month.

C. should end at the height of the business's annual operating cycle.

D. for a business is determined by the federal government.

The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:

Accumulated Depreciation $ 3,200

Fees Earned 17,400

Depreciation Expense 1,300

Insurance Expense 200

Prepaid Insurance 4,800

Supplies 900

Supplies Expense 3,800

Net income for the period is

A. $8,900

B. $3,200

C. $12,100 

D. $17,400

C. $12,100

Fees Earned 17,400 - Depreciation Expense 1,300 -

Insurance Expense 200 - Supplies Expense 3,800 = 12,100

The dividends account is a temporary account.

True

False

Accrued taxes payable are generally reported on the balance sheet as a current liability.

True

False

The most important output of the accounting cycle is the financial statements.

True

False

The unadjusted, adjusted, and post-closing trial balances are the three types of trial balances prepared in an accounting cycle.

True

False

Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting period.

True

False

At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses.

True

False

It is not necessary to post the closing entries to the general ledger.

True

False

Unearned Fees appear on the

A. balance sheet as a current liability

B. balance sheet in the stockholders’ equity section

C. balance sheet in the current assets section

D. income statement as revenue

When a work sheet is complete, the adjustment columns should have

A. total debits greater than total credits if a net income was earned

B. total credits greater than total debits if a net income was earned

C. total debits equal total credits

D. total debits greater than total credits if a net loss was incurred

Which of the following is not an essential part of the accounting records?

A. work sheet

B. chart of accounts

C. ledger

D. journal

After posting the second closing entry to the income summary account, the balance will be equal to

A. zero

B. revenues for the period

C. the net income or (loss) for the period

D. retained earnings

What is the last account that should be listed in the post-closing trial balance?

A. Income Summary

B. Fees Earned

C. Cash

D. Retained Earnings

Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

A. Supplies Expense

B. Accumulated Depreciation

C. Unearned Rent

D. Prepaid Insurance

The balance in the retained earnings account on the work sheet will equal the amount presented in the balance sheet.

True

False

A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the Balance

Sheet columns.

True

False

After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet, the difference between the initial totals of the Balance Sheet debit and credit columns is net income or net loss.

True

False