Accounting chapter 8

. Which accounting concept applies when a worksheet is prepared at the end of each fiscal cycle to summarize the general ledger information needed to prepare financial statements?

a. business entity

The series of accounting activities included in recording financial information for a fiscal period. (p. 228)

accounting cycle

. Journal entries used to prepare temporary accounts for a new fiscal period. (p. 214)

closing entries

At the end of a fiscal period, the balances of permanent accounts are summarized and transferred to the owner's capital account.

false

Permanent accounts are used to accumulate information until it is transferred to the owner's capital account.

false

Temporary accounts include assets, expenses, and the owner's drawing account.

false

The Income Summary account has a normal debit balance.

false

The balances of the liability accounts must be reduced to zero to prepare the accounts for the next period.

false

The drawing account is a permanent account.

false

Accounts used to accumulate information from one fiscal period to the next. (p. 214)

permanent accounts

. A trial balance prepared after the closing entries are posted. (p. 227)

post-closing trial balance

Accounts used to accumulate information until it is transferred to the owner's capital account. (p. 214)

temporary accounts

A post-closing trial balance verifies the equality of debits and credits in a general ledger after the closing entries are posted.

true

Journal entries used to prepare temporary accounts for a new fiscal period are closing entries.

true

Temporary accounts are also called nominal accounts.

true

Temporary accounts must start each fiscal period with a zero balance.

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.

true

The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.

true

To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite its balance.

true

The accounts listed on a post-closing trial balance are

(A) general ledger accounts with balances after the closing entries are posted

After the closing entries are posted, the owner's capital account balances should be the same as shown

(A) on the balance sheet for the fiscal period

. When revenue is greater than total expenses, resulting in a net income, the Income Summary account has a

(B) credit balance

Information needed for recording the closing entries is obtained from the

(B) work sheet's Income Statement and Balance Sheet columns

Which accounting concept applies when expenses are reported in the same fiscal period that they are used to produce revenue?

(C) Matching Expenses with Revenue

. Income Summary is

(C) a temporary account

After the closing entries are posted, the Sales account balance should be

(C) zero

Which of the following accounts is a temporary account?

(D) Rent Expense

2. The ending account balances of permanent accounts for one fiscal period are

(D) the beginning account balances for the next fiscal period