Completing the Accounting Cycle

Daniel Repair company net income of $3,500 and withdrawals of $5,500 for the year 20XX. The year ending capital balance on 12/31/20XX was $6,000. What was the company's beginning capital balance on January 1, 20XX?

$8,000

The entry to close the Income Summary account may include which of the following?

A debit to Accounts Payable and a credit to the owner's capital account

In the accounting cycle, the closing entries are directly after which step?

After the financial statements are completed

Income Summary

An account that reflects the balance in expense and revenue accounts when they are closed.

Which of the following accounts are permanent accounts that do not close at the end of the year?

Assets, liabilities, and capital

Which of the following statements is not correct?

At the end of each accounting period, asset and liability account balances are reduced to zero

Which of the following accounts does not close at the end of the period?

Cash

Which of the following entries will be necessary to close the appropriate depreciation account at the end of the year?

Debit Income summary and credit Depreciation expense.

Inroad, Inc. is at the end of the accounting cycle and must make closing entries in the general ledger. Which of the following accounts should be closed and how is that achieved?

Dividends are closed through a credit and then transferred to Retained Earnings

Daniel Repair Company's beginning capital account on January 1, 20XX was $1,500. At the end of the closing cycle on 12/31/0XX the capital balance is $2,600. What would be the closing entry from the income summary account if there were no withdrawals?

Income Summary $1,100 Daniel Capital Account $1,100

Closing Entries

Journal entry made to transfer a balance in revenues or expenses to the income summary, or in dividends to the statement of retained earnings.

Which of the following statements is correct?

Preparation of the post-closing trial balance is the last step in the closing process

Which of the following is one of the last steps in the accounting cycle?

Prepare financial statements

The last step in completing the accounting cycle is Closing Entries. After closing all revenue and expense accounts, Softie Limited Company had a debit balance in its Income Summary account of $16,354. The proper journal entry to record the closing of the Income Summary account would be which of the following?

Retained Earnings 16,354 Income Summary 16,354

One purpose of closing entries is to give zero balances to some accounts and some accounts are not closed during the closing process. Which of the following should have a zero balance and which accounts should not have a zero balance during the closing process?

Revenue/Capital

Which of the following accounts are temporary accounts that must be closed at the end of the year?

Revenues, expenses, and income summary

Reviewing the image, which of the following about completing the accounting cycle is TRUE?

These accounts do not require a closing entry at the end of the accounting cycle

Reviewing the image, which of the following about completing the accounting cycle is false?

These accounts do not require a closing entry at the end of the accounting cycle

Which of the following is not a purpose of closing entries?

To set permanent account balances to zero at the end of the period.