Accounting

A source document is prepared for adjusting entries.

False

All accounts in a general ledger are listed on a post-closing trial balance.

False

Permanent accounts are also referred to as temporary accounts.

False

The drawing account is a permanent account.

False

The income summary account has a normal debit balance

False

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

Matching Expenses with Revenue

Accounts used to accumulate information until it is transferred to owner's capital accounts are ____ accounts

Temporary

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

True

Adjusting entries are recorded on the next journal page following the page on which the last daily transactions for the month are recorded.

True

Adjustments are first analyzed and planned on a work sheet before the adjusting entries are journalized.

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.

True

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

Temporary accounts are not listed on a post-closing trial balance.

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.

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

The income summary account balance must be reduced to zero to prepare the account 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 to its balance.

True

The journal entry to close the expense accounts is ____.

debit Income Summary for the total expenses; credit each expense account

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

debit Income Summary; credit owner's capital

The journal entry to adjust Prepaid Insurance is ____.

debit Insurance Expense; credit Prepaid Insurance

The journal entry to close Sales is ____.

debit Sales; credit Income Summary

The journal entry to adjust Supplies is ____.

debit Supplies Expense; credit Supplies

The journal entry to close the drawing account is ____.

debit owner's capital account; credit owner's drawing account

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

debit owner's capital; credit Income Summary

Adjustments are analyzed and planned ____.

on a work sheet

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

on the balance sheet for the fiscal period

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

permanent

When the revenue is greater than the total expenses, ____.

the income summary account has a credit balance

When the total expenses are greater than the total revenue, ____.

the income summary account has a debit balance

After the adjusting entry for Prepaid Insurance has been posted, Insurance Expense has an up-to-date balance, which is the ____.

value of insurance premiums 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 ____.

value of supplies used during the fiscal period

Temporary accounts begin each new fiscal period with a ____.

zero balance