Accounting Review

MC - Income Summary is: a) an asset account b) a liability account c) a temporary account d) a permanent account

C

MC - The journal entry to close Income Summary when there is a net income is: a) Debit Sales; credit Income Summary b) Debit Owner's Capital; credit Income Summary c) Debit Owner's Capital; credit Sales d) Debit Income Summary; credit Owner's Capital

D

T/F - A source document is prepared for adjusting entries.

False

T/F - All accounts in a general ledger are listed on a post-closing 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

T/F - The income summary account has a normal debit balance.

False

T/F - Adjusting entries are recorded on the next journal page following the page on which the last daily transactions for each month are recorded.

True

T/F - At the end of a fiscal period, the balances of temporary accounts are summarized and transferred to the owner's capital account.

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 of each fiscal period to summarize the general ledger information needed to prepare financial statements is an application of the accounting concept Accounting Period Cycle.

True

T/F - Temporary accounts must start each fiscal period with a zero balance.

True

T/F - The balances of the expense accounts must be reduced to zero to prepare the accounts for the next fiscal period.

True

T/F - 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.

True

MC - After the closing entries are posted, the owner's capital account balance should be the same as: a) shown on the balance sheet for the fiscal period b) shown in the work sheet's Balance Sheet Debit column c) shown in the work sheet's Balance Sheet Credit column d) shown in the work sheet's Income Statement column

A

MC - Information needed for closing entries is found in the: a) Income Statement and Balance Sheet columns of the work sheet b) Income Statement and Adjustments columns of the work sheet c) Trial Balance and Adjustments columns of the worksheet d) Trial Balance and Balance Sheet columns of the work sheet

A

MC - Accounts used to accumulate information from one fiscal period to the nest are: a) revenue accounts b) permanent accounts c) temporary accounts d) expense accounts

B

MC - The journal entry to adjust Prepaid Insurance is: a) Debit Prepaid Insurance; credit Insurance Expense b) Debit Insurance Expense; credit Prepaid Insurance c) Debit Income Summary; credit Prepaid Insurance d) Debit Insurance Expense: credit Income Summary

B

MC - The journal entry to adjust Supplies is: a) Debit Supplies; credit Supplies Expense b) Debit Supplies Expense; credit Supplies c) Debit Income Summary; credit Supplies d) Debit Supplies Expense; credit Income Summary

B

MC - The journal entry to close the expense account is: a) Debit Income Summary; credit Owner's Capital b) Debit Income Summary for the total expenses; credit each expense accounts c) Debit each expense account; credit Income Summary d) None of these

B

MC - When the total expenses is greater than the total revenue: a) The Income Summary accounts has a credit balance b) The Income Summary has a debit balance c) Debits equal credits d) None of these

B

MC - Adjustments are analyzed and planned: a) in the ledgers b) on the financial statements c) on a work sheet d) none of these

C

MC - Temporary accounts begin each new fiscal period with a a) debit balance b) credit balance c) zero balance d) balance equal to net income

C

MC - Which accounting concept applies when expenses are reported in the same fiscal period that they are used to produce revenue: a) Business Entity b) Going Concern c) Matching Expenses with Revenue d) Adequate Disclosure

C

MC - After the adjusting entry for Supplies has been posted, Supplies Expense has an up-to-date balance, which is the: a) Same as the beginning balance for Supplies b) Same as the ending balance for Supplies c) Value of supplies bought during the fiscal period d) Value of supplies used during the fiscal period

D

MC - The last step in the accounting cycle is to : a) Journalize and post the closing entries b) Prepare a work sheet and financial statements c) Analyze transactions and journalize and post them d) none of these

D

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 - The ending account balances of permanent accounts are summarized and transferred to the owner's capital account.

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 recorded in the account on the side opposite to its balance.

True