Accounting chapter 4 Study Guide

True or False. After the closing entries are posted to the ledge, the owner's capital account should have a zero balance.

False

True or False. All accounts in the ledger appear on the post-closing trial balance

False

True or False. All expense accounts must be debited in the closing process.

False

True or False. Closing entries are journalized before adjusting entries in the accounting process.

False

True or False. Permanent accounts include assets, liabilities, the owner's drawing account, and the owner's capital account.

False

True or False. The Income Summary account is used on a daily basis throughout the accounting period.

False

True or False. The balance in the owner's drawing account is closed to the Income Summary account.

False

True or False. The balance of each expense account is closed to each revenue account

False

True or False. The balances in the temporary accounts are summarized and transferred to the appropriate asset accounts.

False

True or False. The process of transferring the balances of the temporary accounts to the owner's capital account is called the adjusting process.

False

True or False. When the owner's drawing account is closed, the Income Summary account will be credited.

False

True or False. A debit balance in the Income Summary account after closing the revenue and expense accounts represents a net loss.

True

True or False. A net income would require a credit to the owner's capital account during the closing process.

True

True or False. A net income would require a debit to the Income Summary account during the closing process.

True

True or False. A net loss would require a credit to the Income Summary account during the closing process.

True

True or False. A net loss would require a debit to the owner's capital account during the closing process.

True

True or False. All revenue accounts must be debited in the closing process.

True

True or False. Closing entries in the journal are dated as of the last day of the accounting period.

True

True or False. Closing entries must be posted to the ledger in the same fashion as any other journal entries.

True

True or False. One objective of the closing process is to update the owner's capital account

True

True or False. Permanent accounts appear on a balance sheet at the end of the accounting period.

True

True or False. The Income Summary account is known as a clearing account.

True

True or False. The Income Summary account is used at the end of an accounting period to summarize and close the balances of the revenue, expense, and drawing accounts.

True

True or False. The Income Summary account will be credited when closing revenue accounts.

True

True or False. The Income Summary account will be debited when closing the expense accounts.

True

True or False. The balance in the Income Summary account, after closing revenue and expenses, is closed to the owner's capital account.

True

True or False. The balance in the Income Summary account, after closing revenue and expenses, represents either a net income or a net loss for the period.

True

True or False. The balance of the revenue account is closed to the Income Summary account.

True

True or False. The purpose of the post-closing trial balance is to make sure that the ledger will be in balance at the start of the next accounting period.

True

True or False. When the owner's drawing account is closed, the owner's capital account will be debited.

True