| 1. | a | |
| 2. | c | The
capital balance to use on the balance sheet is the final balance from the statement
of
owner’s equity. The capital balance showing on the worksheet does
not include the net income
(or loss) and any withdrawals. |
| 3. |
b | Remember that
an owner’s investments are entered directly into the capital account. Therefore,
the capital balance showing on the worksheet—which is taken from the final
ledger balance—
includes these investments. However, an owner’s
investments must be disclosed as a separate
item on the statement of owner’s
equity. Therefore, on the statement of owner’s equity, the
beginning
capital should exclude these investments. |
| 4. | d | Very
often, the totals of the balance sheet columns on the worksheet will not be the
same totals
that appear on the balance sheet. This is because on the balance
sheet certain items are offset or
subtracted resulting in a smaller net amount.
Examples: Accumulated depreciation is offset
against the cost of the assets;
the owner drawings are subtracted from the capital account. This
is not done
on the worksheet. |
| 5. | a | |
| 6. | d | If
the worksheet is correct, then all the adjustments on the worksheet must be correct. |
| 7. | c | The
primary purpose of the worksheet is to organize the financial information to have
the
correct amounts for the income statement and balance sheet. Financial
statements have a time
value and stakeholders usually want to see them as
quickly as possible. The financial statements
have first priority. The adjusting
entries, the closing entries, and then the post-closing trial
balance can
easily be done later. (See Learning Goal 16 for an explanation of closing entries.) |
