Chapter 4

Question 1

Worksheet

Answer 1

Multiple column form used in the adjustment process and in preparing financial statements

Question 2

Closing entries

Answer 2

Journal entries posted at the end of an accounting period to reset temporary accounts to zero
Recorded in the general journal

Question 3

What accounts are closed in closing entries?

Answer 3

Temporary accounts
- Revenue
- Expense
- Dividends

Question 4

Reversing entry

Answer 4

Exact opposite of the adjusting entry made in the previous period
It is done at the start of an accounting period to reverse the adjusting entry
The use of reversing entries is an optional bookkeeping procedure

Question 5

Classified statement of financial position

Answer 5

Groups together similar assets and liabilities using a number of standard classifications + sections

Question 6

Intangible assets

Answer 6

Assets
Long lived assets that don’t have physical substance yet often are very valuable

Question 7

Property plant and Equipment

Answer 7

Assets
Assets with relatively long useful lives that a company is currently using in operating the business

Question 8

Long term investments

Answer 8

Assets a company plans to hold for an extended period, usually longer than one year, to generate income or gain value over time
- Investment in shares and bonds
- Non current assts
- Long term notes receivables

Question 9

Current assets

Answer 9

Assets
Assets that a company expects to convert to cash or use up within one year

Question 10

Non current liabilities

Answer 10

Equity and liabilities
Obligations that a company expects to pay after one year
- Notes, mortgages, bonds payable

Question 11

Current liabilities

Answer 11

Equity and liabilities
Obligations that the company is to pay within the coming year or its operating cycle, whichever is longer

Question 12

Long term liabilities

Answer 12

Obligations that a company expects to pay after one year
- Bonds payable