Chapter 8
income summary is
a temporary account
Information needed to jounralize a closing entry for the income summary account is obtained from
a work sheet's net inome or net loss line
Income summary account
account used to summarize clsing entries for the revenue and expense accounts
permanent account
accounts used to accumulate information from one fiscal period to the next
temporary accounts
accounts used to show changes in owner's capital for a single fiscal period
the journel entry to close the expense accounts is
debit income summary for the total expense; credit each expense account
the journal entry to close income summary when there is a net income is
debit income summary; credit owner's capital
the jounral entry to adjust prepaid insurance is
debit insurance expense; credit prepaid insurance
the journal entry to close the drawing account is
debit owner's capital account; credit owner's drawing account
the journal entry to close income summary when there is a net loss is
debit owner's capital; credit income summary
the journel entry to close sales is
debit sales; credit income summary
the jounral entry to adjust supplies is
debit supplies expense;credit supples
T/F The income summary account has a noraml debit balance
false
T/F a course document is prepared for adjusting entries
false
T/F a source document is prepared for closing entries
false
T/F all accounts in a general ledger are listed on a post cloisng trial balance
false
T/F permanent accounts are also referred to as temporary accounts
false
T/F the drawing account is a permanent account
false
information needed for closing entries is found in the
income statement and balance sheet columns of the work sheet
adjusting entries
journal entries recored to update general ledger accounts at the end of a fiscal period
closing entries
journal entries to prepare temporary accounts for a new fiscal period
which accounting concept applies when expenses are reported in the same fiscal period that they are used to produce revenue?
matching expenses with revenue
the last step in the accounting cycle is
none of the above
Adjustments are analyzed and planned
on a work sheet
after the cloisntg entries are posted, the owner's capital account balance should be the same as shown
on the balance sheet for the fiscqal [eriod
after the closing entries are posted, the only accounts with balances are
permanent accounts
accounts used to accumulate information from one fiscal period to the next are
permant accounts
Accounting cycle
series of accounting activited involved in recording financial information for a fiscal period
accounts used to accumulate information until it is transferred to owner's capital accounts are
temporary accounts
when the revenus is greater than the toal expenses,
the income summary account has a credit balance
when the total expenses are greater than the toal revenue,
the income summary account has a debit balance
the accounts listed on a post-closing trial are
those that have balances after the closing entries are posted
post-closing trial balance
trial balance prepared after the closing entries are posted
T/F Adjustments are first analyzed and planned on a work sheet before the adjusting entries are journalized
true
T/F Journal entries used to prepare temporary accounts for a new fiscal period are closing entries
true
T/F Preparing a work sheet at the end fo each fiscal period to summarize the general ledge information needed to prepare financial statements is an application of the accounting concept accoutning period cycle
true
T/F a post-closing trial balance verifies the equality of debits and credits in a general ledger after the closing entries are posted
true
T/F adjusting entreis are recorded on the next journal page following the page on which the lst daily transactions for the month are recorded
true
T/F at the end of a fiscal period, the balances of temporary account are summarized and transferred to the owner's capital account
true
T/F information needed to record closing entries is found in the income statement and balance sheet columns of the work sheet
true
T/F temporary accounts are not listed on a post-closing trial balance
true
T/F temporary accounts must start each fiscal period with a zero balance
true
T/F the balacnes of the expense accounts must be reduced to zero to prepare the accounts for the next fiscal period
true
T/F the ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period
true
T/F the income summary account balance must be reduced to zero to prepare the account for the next fiscal period
true
T/F to close a temporary account, an amount equal to its balance is recored in the account on the side opposite to its balance
true
After the adjusting entry for prepaid insurance has been posted, insurance expense has an up-do-date balance, which is the
value of insurance premiums used during the fiscal period
after the adjusting entry for supplies has been posted, supplies expense has an up-to-date balance, which is the
value of supplies used during the fiscal period
information needed for journalizing the adjusting entries is obtained from the
work sheet's adjustment columns
information needed to jounralize a closing entry for the owner's drawing account is obtained from the
work sheet's balance sheet debit column
which accounting concepty aplies when a work sheet is prepared at the end of each fiscal cycle to summarize the genreal ledger accounts' debit balance columns
work sheet's income statement and balance sheet columns
information needed to journalize a closing entry for revenue is obtained from the
work sheet's income statement credit column
information need to journal a closing entry for revenue is obtained from the
work sheet's income statment credit column
information needed to jounralize a cloisng entry for expenses is obtained from the
work sheet's income statment debit column
temporary accounts begin each new fiscal period with
zero balance
