Deck 4: Completing the Accounting Cycle

Question 1

Cash is a nominal account.

Answer 1

False

Question 2

The only accounts that are closed are income statement accounts.

Answer 2

False

Question 3

An expense account is closed with a credit to the expense account and a debit to Income Summary.

Answer 3

True

Question 4

An adjusted trial balance provides all the data needed to record the closing entries.

Question 5

In the accounting cycle,closing entries are prepared before adjusting entries.

Question 6

Accounts Receivable is closed to Income Summary as part of the closing process.

Question 7

During the closing process,expenses are transferred to the debit side of the Income Summary account.

Question 8

Permanent accounts are also known as nominal accounts.

Question 9

The Withdrawals account bypasses the Income Summary account when it is being closed.

Question 10

Closing entries result in the transfer of net income or net loss into the owner's Capital account.

Question 11

A revenue account is closed with a debit to the revenue account and a credit to Income Summary.

Question 12

During the closing process,revenues are transferred to the debit side of the Income Summary account.

Question 13

Income Summary is closed with a debit to Income Summary and a credit to the Withdrawals account.

Question 14

The Income Summary account appears in the income statement.

Question 15

Nominal account balances are reduced to zero by closing entries.

Question 16

A temporary account is also known as a nominal account.

Question 17

After all closing entries have been entered and posted,the balance of the Income Summary account will be zero.

Question 18

Supplies Expense is a temporary account.

Question 19

Closing entries deal primarily with the balances of real accounts.

Question 20

Depreciation Expense-Buildings is a nominal account.

Question 21

The adjusting entries involving Depreciation Expense-Buildings and Supplies Expense could be reversed.

Question 22

There is sufficient information on a post-closing trial balance to prepare a balance sheet.

Question 23

The post-closing trial balance will contain only nominal accounts.

Question 24

The work sheet is published in the annual report along with the financial statements.

Question 25

The purpose of reversing entries is to simplify the bookkeeping process.

Question 26

Reversing entries are made to correct errors in the accounts.

Question 27

The work sheet is a type of accountant's working paper.

Question 28

Reversing entries are never required.

Question 29

The adjusting entries involving Rent Receivable and Salaries Payable could be reversed.

Question 30

When a company has net income,the Income Summary account appears as a credit on the post-closing trial balance.

Question 31

There is sufficient information on a post-closing trial balance to prepare an income statement.

Question 32

Working papers provide a written record of the work performed by the accountant or auditor.

Question 33

The amount for the Withdrawals account will appear in the Income Statement columns of a work sheet.

Question 34

The post-closing trial balance will typically have more accounts than the adjusted trial balance.

Question 35

Despite the many uses of laptop computers,they cannot be used to prepare work sheets.

Question 36

Owner's Capital is closed by transferring the balance to Income Summary.

Question 37

The balances of all the real (permanent)accounts are the same on the adjusted trial balance as they are on a post-closing trial balance.

Question 38

Reversing entries can be made for accruals,but not for deferrals.

Question 39

The Adjusted Trial Balance columns of the work sheet are prepared by combining the Trial Balance and Adjustments columns of the work sheet.

Question 40

A reversing entry will include either a debit to a revenue account or a credit to an expense account.

Question 41

The Income Statement columns of the work sheet show all the accounts that need to be closed,except for the Withdrawals account.

Question 42

The Income Statement columns of the work sheet show all the accounts that need to be closed.

Question 43

When the Income Statement columns of the work sheet are initially footed,they should be in balance.

Question 44

The work sheet is prepared after the formal adjusting and closing entries.

Question 45

Preparing the work sheet and recording closing entries are important steps that save money and prevent mistakes.

Question 46

Reversing entries,like any other entries,are posted to the ledger.

Question 47

The information needed to record the adjusting entries can be copied from the work sheet.

Question 48

On a work sheet,the balance of the owner's Capital account is its ending amount for the period.

Question 49

Closing entries can be prepared by referring solely to the Income Statement columns of the work sheet.

Question 50

Since the balance of the Accumulated Depreciation account will appear on the asset side of the balance sheet,it is placed on the debit side of the work sheet's Balance Sheet columns.

Question 51

Reversing entries are all dated as of the first day of the new accounting period.

Question 52

Preparing the worksheet and closing entries provide a mechanism for applying the concept of periodicity.

Question 53

The amount placed opposite the Land account in the Balance Sheet columns of the work sheet is the amount to be reflected for Land on the balance sheet.

Question 54

The heading of a work sheet might contain the line "As of February 28,20x5."

Question 55

An important use of the work sheet is as a replacement for the annual financial statements.

Question 56

The adjusting entries entered onto a work sheet must still be recorded in the general journal.

Question 57

The work sheet should be prepared after the formal financial statements have been prepared.

Question 58

The amount placed opposite the owner's Capital account in the Balance Sheet columns of the work sheet is the amount to be reflected for owner's Capital on the balance sheet.

Question 59

When the Balance Sheet columns of the work sheet are initially footed,they should be in balance.

Question 60

The amount of the Withdrawals account can be found on the work sheet.

Question 61

Preparation of closing entries

A)is an optional step in the accounting cycle.
B)is the first step after posting to the general ledger.
C)assist in achieving periodicity and accrual accounting.
D)All of these choices.

Question 62

Closing entries are made

A)to clear revenue and expense accounts of their balances.
B)to clear withdrawals of its balance.
C)to summarize a period's revenues and expenses.
D)All of these choices.

Question 63

An important purpose of closing entries is to

A)help achieve the goals of the matching principle.
B)set permanent account balances to zero to begin the next period.
C)update the nominal accounts at year end.
D)transfer net income or net loss to the owner's Capital account.

Question 64

An important purpose of closing entries is to

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

Question 65

Under which circumstance would one less closing entry than usual be made?

A)When a net loss has been suffered
B)When withdrawals by the owner are equal to net income for the period
C)When net income is zero
D)When the owner's Capital account is zero prior to posting of closing entries

Question 66

Failure to prepare closing entries will produce a misstated

A)total liabilities figure on the balance sheet.
B)total assets figure on the balance sheet.
C)owner's Capital account balance.
D)Income Summary account balance.

Question 67

Which of the following is not a temporary account?

A)Depreciation Expense-Vehicles
B)Service Revenue
C)Unearned Revenue
D)Interest Income

Question 68

The Income Summary account is credited in the entry that closes

A)the Withdrawals account.
B)expense accounts.
C)net income.
D)revenue accounts.

Question 69

The owner's Capital,Withdrawals,and Income Summary accounts for Harmon Repair Company for the accounting period are presented below in T account form after the recording and posting of closing entries: The amount of net income (or net loss)for the period is

A)$300 net income.
B)$900 net income.
C)$600 net income.
D)$300 net loss.

Question 70

Closing entries ultimately will affect

A)total liabilities.
B)the Cash account.
C)the owner's Capital account.
D)total assets.

Question 71

Which of the following accounts is not found in closing entries?

A)Accumulated Depreciation-Equipment
B)Owner's Capital
C)Income Summary
D)Withdrawals

Question 72

Which of the following could not possibly be a closing entry?

A)Debit Income Summary and credit owner's Capital
B)Debit Income Summary and credit Withdrawals
C)Debit owner's Capital and credit Withdrawals
D)Debit owner's Capital and credit Income Summary

Question 73

The Income Summary account

A)appears on the balance sheet.
B)appears on the income statement.
C)is closed to the cash account to properly state cash at the end of the period.
D)does not appear in the financial statements.

Question 74

The Balance Sheet columns of the work sheet show one account that needs to be closed.

Question 75

The owner's Capital,Withdrawals,and Income Summary accounts for Harmon Repair Company for the accounting period are presented below in T account form after the recording and posting of closing entries: The total amount of revenue earned for the period is

A)$300.
B)$600.
C)$700.
D)$900.

Question 76

Which of the following accounts is a real account?

A)Building
B)Depreciation Expense-Buildings
C)Interest Expense
D)Service Revenue

Question 77

Which of the following accounts is not closed during the closing process?

A)Owner's Capital
B)Commissions Earned
C)Income Summary.
D)Withdrawals

Question 78

Which of the following is not a permanent account?

A)Supplies
B)Accounts Receivable
C)Withdrawals
D)Unearned Revenue

Question 79

After all closing entries have been posted,which of the following accounts is most likely to have a nonzero balance?

A)Interest Expense
B)Unearned Revenue
C)Service Revenue
D)Income Summary

Question 80

Which of the following is a nominal account?

A)Interest Payable
B)Property Taxes Expense
C)Owner's Capital
D)Cash