41. Which account will appear on an after-closing trial balance?
A. Dividends.
B. Prepaid Expenses.
C. Retained Earnings, at the beginning of the period.
D. Sales.
42. Which account will not appear on an after-closing trial balance?
A. Dividends.
B. Prepaid Expenses.
C. Unearned Revenue.
D. Retained Earnings, at the end of the period.
43. Which of the following items will usually not be disclosed in an annual report?
A. Lawsuits pending against the business.
B. Significant events occurring after the balance sheet date but before the financial statements are actually issued.
C. Scheduled plant closings.
D. All three of the above would be disclosed.
44. Return on equity measures:
A. Solvency.
B. Profitability.
C. Leverage.
D. All three of the above.
45. Publicly owned companies are:
A. Managed and owned by the government.
B. Must be not-for-profit companies.
C. Listed on a stock exchange.
D. Not permitted to be owned by individuals.
46. The worksheet:
A. Is one of the basic financial statements.
B. Is prepared throughout the year.
C. Is not a formal step in the accounting cycle.
D. Starts with the first column being the adjusted trial balance.
47. If Income Summary has a net credit balance, it signifies:
A. A net loss.
B. Net income.
C. A reduction of net worth.
D. Dividends have been declared.
48. The balance in Income Summary:
A. Should equal retained earnings.
B. Will always be equal to the increase in retained earnings.
C. Will equal net income less dividends.
D. Will equal net income or net loss.
49. After preparing the financial statements for the current year, the accountant for Exquisite Gems closed the Dividends account at year-end by debiting Income Summary and crediting the Dividends account. What is the effect of this entry on current-year net income and the balance in the Retained Earnings account at year-end?
A. Net income is overstated and the balance in the Retained Earnings account is correct.
B. Net income is correct and the balance in the Retained Earnings account is correct.
C. Net income is understated and the balance in the Retained Earnings account is understated.
D. Net income is understated and the balance in the Retained Earnings account is overstated.
50. The concept of adequate disclosure:
A. Does not apply to information which is immaterial.
B. Grants users of the financial statements access to a company's accounting records.
C. Does not apply to events occurring after the balance sheet date.
D. Specifies which accounting methods must be used in a company's financial statements.