Chapter 8 accounting review

4. When the total revenues are greater than the total expenses, (A) the Income Summary account has a credit balance. (B) the Income Summary account has a debit balance. (C) debits equal credits. (D) none of these.

A

6. After the closing entries are posted, the owner's capital account balance should be the same as shown (A) on the balance sheet for the fiscal period. (B) in the work sheet's Balance Sheet Debit column. (C) in the work sheet's Balance Sheet Credit column. (D) in the work sheet's Income Statement Debit column.

A

The accounts that appear on the post-closing trial balance are (A) assets, liabilities, and owner's capital. (B) revenue, expenses, and owner's drawing. (C) all accounts in the chart of accounts. (D) all temporary accounts.

A

5. Accounts used to accumulate information from one fiscal period to the next are (A) revenue accounts. (B) permanent accounts. (C) temporary accounts. (D) expense accounts.

B

7. After closing entries are posted, the balance in the owner's drawing account should be (A) a debit. (B) zero. (C) a credit. (D) none of these.

B

9. The journal entry to close Income Summary when there is a net loss 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.

B

3. Income Summary is a(n) (A) asset account. (B) liability account. (C) temporary account. (D) permanent account.

C

8. Temporary accounts begin each new fiscal period with a (A) debit balance. (B) credit balance. (C) zero balance. (D) balance equal to the net income.

C

2. The last step in the accounting cycle is to (A) record transactions in a journal. (B) prepare a work sheet. (C) journalize and post closing entries. (D) prepare a post-closing trial balance.

D

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

false

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

false

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

false

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

false

8. The Income Summary account has a normal credit balance.

false

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

false

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

false

10. 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

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

true

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

true

14. The series of accounting activities included in recording financial information for a fiscal period is called an accounting cycle.

true

2. Temporary accounts are also called nominal accounts.

true

6. The drawing account is a temporary account.

true

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

true