Exam 6: Financial Statements and the Closing Process

Match the terms with the definitions. -A temporary account used in the closing process to summarize the effects of all revenue and expense accounts.

A mortgage on an office building is an example of a property, plant, and equipment asset.

An income statement is an itemized statement that provides information regarding the status of the assets, liabilities, and owner's equity of a business enterprise as of a specified date.

Match the terms with the definitions. -A balance sheet in which the liabilities and the owner's equity sections are shown below the assets section.

(Appendix) The accuracy of the statement of cash flows can be proved by comparing the cash provided by operating activities with the change in the cash balance.

The account to which the drawing account is closed is called

The journal entry to close the income summary account (showing a net loss) includes

The journal entry to close the income summary account (showing a profit) includes

A balance sheet that classifies (or groups) items by similarities is called a unified balance sheet.

(Appendix) A company receives cash from a bank loan. This activity is classified as

To close the income summary account with a credit balance, debit the account for its balance and credit the drawing account.

The income summary account is an account used only during the closing process.

A form of balance sheet that shows the liabilities and owner's equity sections below the assets section is called an account form of balance sheet.

Owner's equity can be increased through

The journal entry to close the drawing account includes

To close a revenue account with a credit balance, debit the account for its balance and credit the income summary account.

The effect of drawing transactions on the capital account is formalized at any time during the accounting period.

After the accounts are closed and the journal entries have been posted, which of the following accounts would have a balance?

(Appendix) A utility bill for $315 was paid. This activity is classified as

Match the terms with the definitions. -Accounts that do not accumulate information across accounting periods but are closed, such as the drawing account and all income statement accounts.