Accounting chapter 8
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
A source document is prepared for adjusting entries.
F
The drawing account is a permanent account.
F
The income summary account has a normal debit balance.
F
A post-closing trial balance verifies the equality of debits and credits in a general ledger after the closing entries are posted.
T
At the end of a fiscal period, the balances of temporary accounts are summarized and transferred to the owner's capital account.
T
Journal entries used to prepare temporary accounts for a new fiscal period are closing entries.
T
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
T
Temporary accounts must start each fiscal period with a zero balance.
T
The balances of the expense accounts must be reduced to zero to prepare the accounts for the next fiscal period.
T
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.
T
The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.
T
To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance.
T
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 Debit column.
a
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
When the total expenses are greater than the total revenue, 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.
b
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? a. Business Entity b. Accounting Period Cycle c. Adequate Disclosure d. Consistent Reporting
b
Income Summary is a. an asset account. b. a liability account. c. a temporary account. d. a permanent account.
c
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
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
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 account; credit Sales. d. debit Income Summary; credit owner's capital.
d
