Deck 5: The Accounting Cycle Completed: Closing and Post-Closing Trial Balance

Question 1

Which of the following accounts will be directly closed to Capital at the end of the fiscal year?

A) Salaries Expense
B) Fees Revenue
C) Withdrawals
D) Depreciation Expense

Answer 1

C

Question 2

Which of the following accounts should NOT be closed to Income Summary at the end of the fiscal year?

A) Salaries Expense
B) Fees Earned
C) Utilities Expense
D) Withdrawals

Answer 2

D

Question 3

After posting the closing entries, which of the following accounts is most likely NOT to have a zero balance?

A) Prepaid Insurance
B) Advertising Expense
C) J. Smith, Withdrawals
D) Medical Fees

Answer 3

A

Question 4

Closing entries will affect

A) total Assets.
B) Cash.
C) Owner's Capital.
D) total Liabilities.

Question 5

Which of the following accounts is NOT a temporary account?

A) Withdrawals
B) Fees Earned
C) Cash
D) Income Summary

Question 6

An account in which the balance is not carried over from one accounting period to the next is called a

A) permanent account.
B) real account.
C) temporary account.
D) zero account.

Question 7

Closing entries

A) need not be journalized since they appear on the worksheet.
B) need not be posted if the financial statements are prepared from the worksheet.
C) are not needed if adjusting entries are prepared.
D) must be journalized and posted.

Question 8

When the balance in the Income Summary account is a credit, the company has

A) incurred a net loss.
B) incurred a net income.
C) had more expenses than revenue.
D) made an error in their closing entries.

Question 9

Which of the following accounts would NOT be considered a permanent account?

A) Accounts Receivable
B) Salaries Expense
C) Accounts Payable
D) Office Supplies

Question 10

When the balance of the Income Summary account is a credit, the entry to close this account is

A) debit Capital, credit Income Summary.
B) debit Income Summary; credit Revenue.
C) debit Income Summary; credit Capital.
D) debit Revenue; credit Income Summary.

Question 11

Income Summary

A) is a temporary account.
B) is a permanent account.
C) summarizes revenue and expenses and transfers the balance to Capital.
D) Both A and C are correct.

Question 12

To close the Fees Earned account,

A) debit Income Summary; credit Fees Earned.
B) debit Fees Earned; credit Capital.
C) debit Fees Earned; credit Income Summary.
D) debit Capital; credit Fees Earned.

Question 13

To close the Withdrawals account,

A) debit Withdrawals; credit Capital.
B) debit Capital; credit Withdrawals.
C) debit Withdrawals; credit Income Summary.
D) debit Income Summary; credit Withdrawals.

Question 14

When the balance in the Income Summary account is a debit, the company has

A) incurred a net loss.
B) incurred a net income.
C) had more revenue than expenses.
D) made an error in their closing entries.

Question 15

Accounts in which the balances are carried over from one accounting period to the next are called

A) real accounts.
B) nominal accounts.
C) temporary accounts.
D) zero accounts.

Question 16

Closing entries are prepared

A) to clear all temporary accounts to zero.
B) to update the Capital balance.
C) at the end of the accounting period.
D) All of the above are correct.

Question 17

How do you close a revenue account?

A) Debit Capital; credit Revenue
B) Credit Capital; debit Revenue
C) Credit Income Summary; debit Revenue
D) Debit Income Summary; credit Revenue

Question 18

When the balance of the Income Summary account is a debit, the entry to close this account is

A) debit Capital; credit Income Summary.
B) debit Income Summary; credit Revenue.
C) debit Revenue; credit Income Summary.
D) debit Income Summary; credit Capital.

Question 19

The correct order for closing accounts is

A) revenue, expenses, income summary, withdrawals.
B) revenue, income summary, expenses, withdrawals.
C) revenue, expenses, capital, withdrawals.
D) revenue, capital, expenses, withdrawals.

Question 20

Which of the following columns of the worksheet are referred to when preparing closing entries to the Income Summary?

A) Adjusted trial balance columns
B) Balance sheet columns
C) Adjustments columns
D) Income statement columns

Question 21

The business failed to close any of the revenue accounts. The result of this error is that

A) revenues will be understated.
B) capital will be understated.
C) the assets will be overstated.
D) the liabilities will be overstated.

Question 22

The following normal account balances were found on the general ledger before closing entries were prepared: $$\begin{array} { l r l r } \text { Revenue } & \$ 700 & \text { Cash } & \$ 500 \\\text { Expenses } & \$ 400 & \text { Accounts Receivable } & \$ 350 \\\text { Capital } & \$ 7,500 & \text { Withdrawals } & \$ 1,000\end{array}$$
After closing entries are posted, what is the balance in the Capital account?

A) $7,800
B) $7,500
C) $6,800
D) Closing entries do not affect the Capital account.

Question 23

On Flex Company's worksheet the revenue account had a normal balance of $4,100. The entry to close the account would include a

A) debit to Income Summary for $4,100.
B) credit to Income Summary for $4,100.
C) debit to Flex, Capital for $4,100.
D) credit to Revenue for $4,100.

Question 24

The balance in the J. Higgins, Withdrawals account was $4,700. The entry to close the account would include a

A) debit to Income Summary, $4,700.
B) credit to Income Summary, $4,700.
C) debit to J. Higgins, Capital, $4,700.
D) debit to J. Higgins, Withdrawals, $4,700.

Question 25

After closing the revenue, expense, and withdrawal accounts, the capital increased by $3,000. Which of the following situations could have occurred?

A) The company had a net income.
B) The owner invested an additional amount.
C) The owner made a withdrawal.
D) All of these answers are correct.

Question 26

The following normal account balances were found on the general ledger before closing entries were prepared: $$\begin{array} { l r l r } \text { Revenue } & \$ 700 & \text { Cash } & \$ 500 \\\text { Expenses } & \$ 400 & \text { Accounts Receivable } & \$ 350 \\\text { Capital } & \$ 7,500 & \text { Withdrawals } & \$ 1,000\end{array}$$
After closing entries are posted, what is the balance in the Revenue account?

A) $700
B) $0
C) $300
D) Closing entries do not affect Revenue.

Question 27

The balance in the Rent Expense account on the worksheet was $725. The journal entry to close the Rent Expense account is

A) Rent Expense 725 Prepaid Rent 725
B) Rent Expense 725 Income Summary 725
C) Rent Expense 725 Capital 725
D) Income Summary 725 Rent Expense 725

Question 28

The Rent Expense account had a normal balance of $2,725. The entry to close the account would include a

A) debit to Rent Expense, $2,725.
B) debit to Income Summary, $2,725.
C) debit to Capital, $2,725.
D) credit to Income Summary, $2,725.

Question 29

B. Benson's worksheet showed the revenue account, Rental Fees, $1,250. The journal entry to close the account is

A) Rental Fees 1,250 Income Summary 1,250
B) Benson, Capital 1,250 Rental Fees 1,250
C) Rental Fees 1,250 Benson, Capital 1,250
D) Income Summary 1,250 Rental Fees 1,250

Question 30

The Income Summary account shows debits of $17,000 and credits of $12,000. This results in a

A) net income of $29,000.
B) net loss of $29,000.
C) net income of $5,000.
D) net loss of $5,000.

Question 31

How do you close the expense accounts?

A) Debit Capital; credit the expense accounts
B) Credit Capital; debit the expense accounts
C) Credit Income Summary; debit the expense accounts
D) Debit Income Summary; credit the expense accounts

Question 32

The entry to close the expense account(s) was entered in reverse-Income Summary was credited and the expense account(s) was/were debited. The result of this error is that

A) before closing it, Income Summary will have a credit balance.
B) before closing it, Income Summary will have a debit balance.
C) the assets will be overstated.
D) the liabilities will be overstated.

Question 33

Closing entries will

A) increase the Owner's Capital.
B) decrease the Owner's Capital balance.
C) either increase or decrease Owner's Capital.
D) not affect the Owner's Capital balance.

Question 34

The entry to close the revenue account(s) was entered in reverse-Income Summary was debited and the revenue account(s) was/were credited. The result of this error is that

A) before closing it, Income Summary will have a credit balance.
B) before closing it, Income Summary will have a debit balance.
C) the assets will be overstated.
D) the liabilities will be overstated.

Question 35

The income statement credit column of the worksheet showed the following revenues: Maintenance Fees $800
Professional Fees 700
The journal entry to close the revenue accounts is

A) $$\begin{array}{l}\text { Income Summary } \quad 1,500\\\begin{array} { l l } \text { Maintenance Fees } & 800 \\\text { Professional Fees } & 700\end{array}\end{array}$$
B) Maintenance Fees $\quad 800$
Professional Fees $\quad 700$
Income Summary $\quad 1,500$
C) Capital $\quad 1,500$
income summary $\quad 1,500$
D) $$\begin{array} { l l l } \text { Maintenance Fees } & 800 & \\\text { Professional Fees } & 700 & \\\quad \text { Capital } & & 1,500\end{array}$$

Question 36

The following normal account balances were found on the general ledger before closing entries were prepared: $$\begin{array} { l r l r } \text { Revenue } & \$ 700 & \text { Cash } & \$ 500 \\\text { Expenses } & \$ 400 & \text { Accounts Receivable } & \$ 350 \\\text { Capital } & \$ 7,500 & \text { Withdrawals } & \$ 1,000\end{array}$$
After closing entries are posted, what is the balance in the Cash account?

A) $800
B) $0
C) $300
D) Closing entries do not affect the Cash account.

Question 37

M. Smuts showed a net income of $5,250. The entry to close the Income Summary account would include a

A) debit to M. Smuts Capital, $5,250.
B) credit to M. Smuts Capital, $5,250.
C) debit to Income Summary, $5,250.
D) Both B and C are correct.

Question 38

The Income Summary account shows debits of $18,500 and credits of $11,275. This results in a

A) net income of $29,775.
B) net loss of $29,775.
C) net income of $7,225.
D) net loss of $7,225.

Question 39

J. Oros showed a net loss of $3,250. The entry to close the Income Summary account would include a

A) debit to Oros, Capital, $3,250.
B) debit to Income Summary, $3,250.
C) credit to Oros, Capital, $3,250.
D) credit to Cash, $3,250.

Question 40

All permanent accounts can be found

A) on the Income Statement.
B) on the Statement of Owner's Equity.
C) on the Balance Sheet.
D) Permanent accounts do not appear on the financial statements.

Question 41

The entry to close Income Summary (net loss) to Capital was omitted. This error will cause

A) the ending capital to be overstated.
B) the ending capital to be understated.
C) no error in the ending capital balance.
D) None of these are correct.

Question 42

The entry to close the Withdrawal account was entered in reverse-the Withdrawal account was debited and Capital credited. The result of this error is that

A) before closing it, Income Summary will have a credit balance.
B) before closing it, Income Summary will have a debit balance.
C) the end of period capital will be understated.
D) the end of period capital will be overstated.

Question 43

When closing the Income Summary account when there is a net income

A) Capital would increase.
B) Capital would decrease.
C) Capital would remain the same.
D) None of these are correct.

Question 44

When revenue is closed,

A) Owner's Capital will be debited.
B) Income Summary will be debited.
C) Income Summary will be credited.
D) None of these are correct.

Question 45

The entry to close the Depreciation Expense account would cause

A) the Capital account balance to increase.
B) the Capital account balance to decrease.
C) the Depreciation Expense account balance to decrease.
D) None of these are correct.

Question 46

The beginning capital balance is $4,350, there are no additional investments but the owner did withdraw $500 during the accounting period. The period's revenue is $5,000 and expenses total $6,500. What is the ending capital balance (after closing entries)?

A) $5,350
B) $2,850
C) $5,850
D) $2,350

Question 47

The entry to close Income Summary (net loss) was entered in reverse-Income Summary was debited and Capital was credited. This error will cause

A) Income Summary to have a credit balance.
B) Income Summary to have a debit balance.
C) the assets to be overstated.
D) the liabilities to be overstated.

Question 48

The beginning capital balance is $1,000; there are no additional investments or withdrawals by the owner during the accounting period. The period's revenue is $500 and expenses total $450. What is the ending capital balance (after closing entries)?

A) $1,050
B) $1,500
C) $1,450
D) $50

Question 49

When Income Summary has a credit balance and the account is closed,

A) Capital is decreased.
B) Capital is increased.
C) Withdrawals is increased.
D) None of these are correct.

Question 50

When the Withdrawals account is closed,

A) Owner's Capital will be debited.
B) Income Summary will be debited.
C) Income Summary will be credited.
D) None of these are correct.

Question 51

Which of the following is NOT a temporary account?

A) Wages Expense.
B) Service Fees.
C) Rent Expense.
D) Capital.

Question 52

The Capital account debited and the withdrawals credited would be the result of

A) closing the Income Summary account-there is a net income.
B) closing the withdrawal account.
C) closing the Income Summary account-there is a net loss.
D) closing the expense accounts.

Question 53

The entry to close the Fees Earned account would cause

A) the Capital account balance to increase.
B) the Capital account balance to decrease.
C) the Fees Earned account to decrease.
D) None of these are correct.

Question 54

The Income Summary account debited and the expense accounts credited would be the result of

A) closing the Income Summary account-there is a net income.
B) closing the revenue accounts.
C) closing the Income Summary accounts-there is a net loss.
D) closing the expense accounts.

Question 55

When closing the Income Summary account when there is a net loss,

A) Capital would increase.
B) Capital would decrease.
C) Capital would remain the same.
D) None of these are correct.

Question 56

The revenue accounts debited and the Income Summary account credited would be the result of

A) closing the Income Summary account-there is a net income.
B) closing the Income Summary account-there is a net loss.
C) closing the revenue accounts.
D) closing the expense accounts.

Question 57

Which of the following is a real account?

A) Cash
B) Fees Earned
C) Utilities Expense
D) Income Summary

Question 58

When closing the Withdrawal account,

A) Capital would increase.
B) Capital would decrease.
C) Capital would remain the same.
D) None of these are correct.

Question 59

When the expenses are closed,

A) Owner's Capital will be debited.
B) Income Summary will be debited.
C) Income Summary will be credited.
D) None of these are correct.

Question 60

After closing the revenue and expense accounts, Income Summary showed a debit balance of $2,500. Which of the following statements is TRUE?

A) The company had a net loss of $2,500.
B) The company had a net income of $2,500.
C) The company's cash increased $2,500.
D) None of these answers are correct.

Question 61

The Income Summary account shows debits of $20,000 and credits of $22,000. This is a result of

A) net income of $2,000.
B) net loss of $2,000.
C) net income of $38,000.
D) net loss of $38,000.

Question 62

The income statement and balance sheet sections of the worksheet provide the information needed to prepare the closing entries.

Question 63

Nominal accounts are called temporary accounts because their balances are not carried forward to the next accounting period.

Question 64

Depreciation Expense is closed to Income Summary, but Accumulated Depreciation is not closed.

Question 65

There are 4 closing entries.

Question 66

The Withdrawals account is closed to Income Summary.

Question 67

Temporary accounts are those accounts with balances that are brought forward to the next accounting period.

Question 68

Real accounts are those accounts with balances that are brought forward to the next accounting period.

Question 69

Closing entries are found in the adjustment columns of the worksheet.

Question 70

A temporary account in the ledger used for closing revenues and expenses is

A) capital.
B) withdrawals.
C) income summary.
D) net income.

Question 71

Information for closing entries comes from

A) the worksheet.
B) the trial balance.
C) the post-closing trial balance.
D) the source documents.

Question 72

A nominal account is the same as

A) a real account.
B) a temporary account.
C) an unusual account.
D) a permanent account.

Question 73

Income Summary is a temporary account located in the chart of accounts under

A) Assets.
B) Liabilities.
C) Owner's Equity.
D) Revenue.

Question 74

The Withdrawals account is closed to the Owner's Capital account.

Question 75

The income statement debit column of the worksheet showed the following expenses: Supplies Expense $250
Depreciation Expense 175
Salaries Expense 800
The journal entry to close the expense accounts is

A)Income Summary $\quad 1,225$
Supplies Expense $\quad 250$
Depreciation Expense $\quad 175$
Salaries Expense $\quad 800$
B)Income Summary $\quad 1,225$
Capital $\quad 1,225$
C) Supplies Expense $\quad 250$
Depreciation Expense $\quad 175$
Salaries Expense $\quad 800$
Income Summary $\quad 1,225$
D) Capital $\quad 1,225$
Income Summary $\quad 1,225$

Question 76

Revenues and expenses are closed to the Income Summary account.

Question 77

The purpose of closing entries is to

A) adjust the accounts in the ledger.
B) set nominal account balances to zero to begin the next period.
C) set real account balances to zero to begin the next period.
D) help in preparing financial statements.

Question 78

After all the closing entries have been posted the Income Summary account balance will

A) have a zero balance.
B) have a balance the same as the capital account.
C) have a balance the same as the cash account.
D) vary from company to company.

Question 79

The Depreciation Expense account is closed to the Owner's Capital account.

Question 80

Which of the following accounting cycle steps comes after the others?

A) Preparing the financial statements
B) Journalizing and posting closing entries
C) Preparing the worksheet
D) Journalizing and posting adjusting entries