Acounting Chapter 9-10
compound entry
A(n) ____ is a journal entry with two or more debits or two or more credits.
post-closing trial balance
A(n) ____ is prepared to prove that debits in the ledger accounts are equal to the credits after the closing entries have been posted.
temporary capital accounts
Accounts that start an accounting period with zero balances are called ____.
Closing entries transfer the net income or net loss to the withdrawals account.
False
When expense accounts are closed, the Income Summary account is credited.
False
report form
In the ____, the classifications of balance sheet accounts are shown one under the other.
Which of the following accounts is not closed at the end of the accounting period?
Klaus Braun, Capital
Balance sheet section of the work sheet
One source of information for completing the balance sheet is the ____.
permanent accounts
Only ____ and their balances are listed on the post-closing trial balance.
Which of the following statements is true?
The Income Summary account is located in the owner's equity section of the general ledger.
Income Summary Account
The ____ is a general ledger account used to accumulate and summarize the revenue and expenses for a period
statement of changes in owner's equity
The ____ is completed as a support document for the balance sheet.
on a specific date
The balance sheet reports financial information ____.
Closing entries are used to transfer the net income or net loss for the accounting period to the ____.
capital account
Financial reports are often prepared in pencil.
false
A net income will increase the owner's capital account
true
balance sheet
A(n) ____ is the financial statement that reports the final balances in all asset, liability, and owner's equity accounts at the end of the accounting period.
Income Statement section of the work sheet
The information needed to prepare the income statement comes from the____.
Current liabilities
____ are debts of the business that must be paid within the next accounting period..
closing entries
____ are made to close out or reduce to zero the balance of certain general ledger accounts
return on sales
____ indicates what percentage of net sales represents profit.
ratio analysis
____ is a comparison of two items on a financial statement, resulting in a percentage that is used to evaluate the relationship between the two items. ratio analysis
net income or net loss
____ is reported on the income statement.
financial statements
____ summarize the changes resulting from business transactions that have occurred during an accounting period
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
The balance of the revenue account is transferred to the ____.
credit side of the Income Summary account
Before closing entries are journalized and posted, the Income Summary account in the general ledger has a normal credit balance.
false
Closing the revenue account is the second closing entry.
false
Return on sales is calculated by dividing net sales by net income.
false
The Trial Balance section of the work sheet provides the information used in preparing the income statement.
false
The balance sheet is prepared before the statement of changes in owner's equity.
false
The changes in the Cash in Bank account are reported in the statement of changes in owner's equity.
false
The heading is the same on all three financial statements.
false
The income statement represents the basic accounting equation.
false
The information on the statement of changes in owner's equity is used in preparing the income statement.
false
The revenue, expense, and the Income Summary accounts are included on the statement of changes in owner's equity.
false
Transferring the expense account balances to the Income Summary account is the
second closing entry
Accounts that start each new accounting period with zero balances are ____.
temporary accounts
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
Current assets are those used up or converted to cash during the normal operating cycle of a business.
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
Net income or net loss is the difference between total revenue and total expenses over a specific period of time.
true
Revenue and expense accounts must be closed out because their balances apply to only one accounting 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 balance sheet reports the final balances of the permanent accounts at the end of the fiscal period.
true
The last step in the accounting cycle is the preparation of the post-closing trial balance.
true
The net income or net loss reported on the income statement must be the same as the net income or net loss calculated on the work sheet.
true
The primary financial statements prepared for a sole proprietorship are the income statement and the balance sheet.
true
The statement of changes in owner's equity summarizes the effects on the capital account of the various business transactions that occurred during the period.
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