Accounting Chapter 8

a temporary account

Income Summary is

True

Preparing a work sheet at the end of each fiscal period to summarize the general ledger information needed to prepare financial statements in an application of the accounting concept Accounting Period Cycle.

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.

the income summary account has a debit balance

When the total expenses are greater than the total revenue

True

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

False

A source document is prepared for adjusting entries.

permanent accounts

Accounts used to accumulate information from one fiscal period to the next are

value of supplies used during the fiscal period

After the adjusting entry for Supplies has been posted, Supplies Expense has an up-to-date balance, which is the

shown on the balance sheet for the fiscal period

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

True

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

True

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

zero balance

Temporary accounts begin each new fiscal period with a

True

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

True

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

False

The drawing account is a permanent account.

True

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

False

The income summary account has a normal debit balance.

debit Supplies Expense; credit Supplies

The journal entry to adjust Supplies is

debit Income Summary; credit owner's capital

The journal entry to close Income Summary when there is a net income is

True

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

Accounting Period Cycle

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?