Accounting Final ch 10

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Written in the Description column of the general journal to explain the entries that close out the balances in the temporary capital accounts

"Closing Entries"

A separate closing entry is needed for each expense account

False

If a business has a net income for the period, the journal entry to close the balance of the Income Summary account is...

a debit to Income Summary, a credit to owner's capital

If a business had a net loss for the period, the journal entry to close out the balance of the Income Summary account into the capital account would be...

a debit to the capital account, a credit to Income Summary

Before the closing entries are journalized and posted, there is only one account in the general ledger that shows the revenue and expenses for the fiscal period

False

Closing entries are made for all temporary accounts and all permanent accounts

False

The Income Summary account can be found on the income statement

False

The last step in the accounting cycle is to journalize and post closing entries

False

To close a revenue account, credit it for the amount of its debit balance

False

To close an expense account, debit it for the amount of its credit balance

False

The general ledger account used to accumulate and summarize the revenue and expenses for the period

Income Summary account

Closing the withdrawals account into the capital account is the last closing entry to be made

True

The balances of the revenue and expense accounts apply to only one fiscal period

True

When the revenue account is closed, Income Summary is credited

True

Closing entries are used to transfer the net income or net loss for the period to the...

capital account

To close the withdrawals account, the amount of its balance is debited to the...

capital account

Journal entries that close out the balances in the temporary accounts and transfer net income or net loss for the period to the capital account

closing entries

Two or more debits or credits in the general journal

compound entry

In the accounting cycle, the closing process represent the...

eighth step

Before closing entries are journalized and posted, the Income Summary account in the general ledger has a normal credit balance

false

Closing entries transfer the net income or net loss to the withdrawals account

false

Closing the revenue account is the second closing entry

false

When expense accounts are closed, the income summary is credited

false

The only accounts and balances listen on the post-closing trial balance

permanent accounts

The trial balance prepared after the closing entries have been posted

post-closing trial balance

The first step in journalizing closing entries is to transfer the balance of the...

revenue account to Income Summary

Are used to record transactions involving revenue, expenses, and withdrawals

temporary accounts

In the closing process, the journal entry made to transfer the balance of the Income Summary account into the capital account is the...

third step

After the closing entries have been posted, the balance in the capital account reflects the net income or net loss and the withdrawals for the period

true

If a business reports a net loss for the period, the journal entry to close the Income Summary account would be a debit to capital and a credit to Income Summary

true

Revenue and expense accounts must be closed out because their balances apply only one fiscal period

true

The Income Summary account is a simple income statement in the ledger

true

The Income Summary account is located in the owner's equity section of the general ledger

true

The last step in the accounting cycle is the preparation of the post-closing trial balance

true

To close a revenue account, debit it for the amount of its credit balance

true

To close the withdrawals account, the amount of its balance is debited to the capital account and credited to the withdrawals account

true

The source of information for the closing entries is the...

work sheet

Temporary accounts start each fiscal period with...

zero balances


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