Accounting Chapter 8
a temporary account
Income Summary is
True
Preparing a work sheet at the end of each fiscal period to summarize the general ledger information needed to prepare financial statements in an application of the accounting concept Accounting Period Cycle.
True
The capital account's new balance after all closing entries are posted is verified by checking it with the amount of capital shown on the balance sheet at the end of the fiscal period.
the income summary account has a debit balance
When the total expenses are greater than the total revenue
True
A post-closing trial balance verifies the equality of debits and credits in a general ledger after the closing entries are posted.
False
A source document is prepared for adjusting entries.
permanent accounts
Accounts used to accumulate information from one fiscal period to the next are
value of supplies 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
shown on the balance sheet for the fiscal period
After the closing entries are posted, the owner's capital account balance should be the same as
True
At the end of a fiscal period, the balances of temporary accounts are summarized and transferred to the owner's capital account.
True
Journal entries used to prepare temporary accounts for a new fiscal period are closing entries.
zero balance
Temporary accounts begin each new fiscal period with a
True
Temporary accounts must start each fiscal period with a zero balance.
True
The balances of the expense accounts must be reduced to zero to prepare the accounts for the next fiscal period.
False
The drawing account is a permanent account.
True
The ending accounting balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.
False
The income summary account has a normal debit balance.
debit Supplies Expense; credit Supplies
The journal entry to adjust Supplies is
debit Income Summary; credit owner's capital
The journal entry to close Income Summary when there is a net income is
True
To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance.
Accounting Period Cycle
Which accounting concept applies when a work sheet is prepared at the end of each fiscal cycle to summarize the general ledger information needed to prepare financial statements?