Accounting Final ch 10
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
