Deck 5: Closing Entries and the Post-Closing Trial Balance Including Appendix

Question 1

Which of the following accounts should be closed to J. Bean, Capital, in the fourth closing entry?

A)Professional Fees
B)J.Bean, Drawing
C)Wages Expense
D)Income Summary
E)Accumulated Depreciation

Answer 1

B

Question 2

The owner's Drawing account for the current period is closed to the

A)Cash account.
B)Income Summary account.
C)Income from Services account.
D)Wages Expense account.
E)owner's Capital account

Answer 2

E

Question 3

The post-closing trial balance is best prepared from the

A)general ledger.
B)general journal and the general ledger.
C)general ledger and the financial statements.
D)financial statements.
E)income statement.

Answer 3

A

Question 4

Net income for a company is $35,000 for the current year. The owner withdrew $3,500 per month for personal expenses. The owner's Capital account will show a net

A)decrease of $7,000.
B)increase of $7,000.
C)decrease of $42,000.
D)increase of $42,000.
E)increase of $77,000.

Question 5

If expenses are greater than revenue, the Income Summary account will be closed by a debit to

A)Cash and a credit to Income Summary.
B)Income Summary and a credit to Cash.
C)Capital and a credit to Income Summary.
D)Income Summary and a credit to Capital.
E)Income Summary and a credit to Drawing.

Question 6

Which of the following accounts would not be involved in closing entries?

A)Advertising Expense
B)J.Ryan, Drawing
C)Salaries Payable
D)Income from Services
E)Rent Expense

Question 7

Which of the following sequences of documents or records describes the proper sequence in the accounting cycle?

A)Source documents, journal, ledger, work sheet, financial statements
B)Source documents, work sheet, journal, ledger, financial statements
C)Source documents, ledger, journal, work sheet, financial statements
D)Work sheet, source documents, financial statements, ledger, journal
E)Financial statements, journal, ledger, source documents, work sheet

Question 8

The Cash account is

A)closed to the owner's Capital account.
B)closed to the owner's Drawing account.
C)shown on the balance sheet as a liability.
D)shown on the income statement.
E)not closed.

Question 9

In preparing the first two closing entries, to which of the following columns of the work sheet does one refer?

A)Balance Sheet columns
B)Adjusted Trial Balance columns
C)Income Statement columns
D)Trial Balance columns
E)Adjustments columns

Question 10

The Income Summary account has an $8,000 credit balance prior to being closed to the owner's Capital account. The owner's Capital account had a $32,000 beginning balance and a $36,500 ending balance. Determine the amount of the owner's drawing during the current period.

A)$8,500
B)$3,500
C)$2,500
D)$4,500
E)$8,000

Question 11

The Income Summary account has a debit balance of $10,000 prior to closing. The owner's Drawing account has a balance of $7,000 before closing. The owner's Capital account will

A)decrease $10,000.
B)increase $17,000.
C)increase $10,000.
D)decrease $17,000.
E)increase $7,000.

Question 12

The last step in the closing procedure closes

A)the Income Summary account.
B)the Capital account.
C)the Drawing account.
D)the expense accounts.
E)all liability accounts.

Question 13

Which of the following can be prepared by taking the account balances from the general ledger after closing?

A)Income statement
B)Post-closing trial balance
C)Balance sheet
D)Statement of owner's equity
E)Adjusted trial balance

Question 14

The post-closing trial balance will include

A)Accumulated Depreciation.
B)Depreciation Expense.
C)Drawing.
D)Rent Expense.
E)Income from Services.

Question 15

Closing entries are prepared to close the

A)temporary accounts.
B)accumulated depreciation accounts.
C)owner's Capital account.
D)Wages Payable account.
E)payables and receivables.

Question 16

Closing entries are prepared

A)before adjusting entries.
B)during the month.
C)on the first day of the new accounting period.
D)after adjusting entries.
E)at the option of the company's accounting department.

Question 17

The most efficient sources for closing entry information are the

A)general ledger and general journal.
B)general journal and work sheet.
C)general ledger and work sheet.
D)work sheet and financial statements.
E)balance sheet and income statement.

Question 18

Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

A)Rent Expense
B)Equipment
C)Wages Payable
D)Accumulated Depreciation
E)The owner's Drawing account

Question 19

If L. Green's total revenue for the year was $38,000 and total expenses were $30,000, the third closing entry would be

A)debit Income Summary; credit L.Green, Capital.
B)debit L.Green, Capital; credit Income Summary.
C)debit Income Summary; credit Income from Services.
D)debit Income from Services; credit Income Summary.
E)debit L.Green, Capital; credit L.Green, Drawing.

Question 20

Which of the following are all temporary accounts?

A)Liabilities, revenue, and expenses
B)Revenue, liabilities, and the owner's Drawing
C)Assets, liabilities, and owner's Drawing
D)Revenue, expenses, and the Owner's Drawing
E)Liabilities and assets

Question 21

The adjusted balances for Tomas Co. are listed below. Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J) Tomas, Capital, $30,000
J) Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
The entry to close the drawing account would involve a

A)credit to J.Tomas, Drawing, $10,000.
B)debit to Income Summary, $10,000.
C)credit to J.Tomas, Capital, $10,000.
D)debit to Income from Services, $10,000.

Question 22

The entry to close revenue would involve a

A)debit to capital.
B)credit to Income Summary.
C)debit to net income.
D)credit to revenue.

Question 23

The adjusted balances for Tomas Co. are listed below. Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J) Tomas, Capital, $30,000
J) Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
After recording the closing entries, what would be the balance of the capital account?

A)$30,000
B)$45,000
C)$35,000
D)$5,000

Question 24

Which of the following account(s) would be involved in closing entries?

A)Salaries Payable
B)Cash
C)Rent Expense
D)All of the answers listed

Question 25

The last step in the accounting cycle is to

A)prepare a trial balance.
B)prepare a post-closing trial balance.
C)complete the work sheet.
D)journalize and post the adjusting entries.

Question 26

Which of the following accounts in the ledger will ordinarily appear in the post-closing trial balance?

A)Drawing
B)Accounts Receivable
C)Income from Services
D)Supplies Expense
E)Wages Expense

Question 27

Financial statements prepared during the fiscal year for periods of less than twelve months are called

A)temporary statements.
B)internal statements.
C)interim statements.
D)nominal statements.
E)external statements.

Question 28

The first step in the accounting cycle is to

A)analyze source documents and record business transactions in a journal.
B)prepare a post-closing trial balance.
C)complete the work sheet.
D)journalize and post the adjusting entries.

Question 29

Which of the following statements is true concerning the steps in the accounting cycle?

A)Preparing a trial balance should be completed before recording business transactions into a journal.
B)Journalizing and posting the closing entries should be completed after preparing financial statements.
C)Completing the work sheet should be completed after preparing the financial statements.
D)Preparing a post-closing trial balance should be completed before completing the work sheet.

Question 30

Which of the following account(s) would remain open after closing entries?

A)Accounts Payable
B)Equipment
C)Owner's capital
D)All of the answers listed

Question 31

The entry to close the drawing account would involve a

A)debit to capital.
B)credit to cash.
C)debit to Income Summary.
D)credit to net income.

Question 32

Revenue and expenses would not appear on a(n)

A)unadjusted trial balance.
B)adjusted trial balance.
C)income statement.
D)work sheet.
E)post-closing trial balance.

Question 33

The adjusted balances for Tomas Co. are listed below. Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J) Tomas, Capital, $30,000
J) Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
The entry to close Income Summary would involve a

A)credit to Net Income, $15,000.
B)debit to Income Summary, $15,000.
C)debit to Net Income, $15,000.
D)debit to J.Tomas, Capital, $15,000

Question 34

The adjusted balances for Tomas Co. are listed below. Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J) Tomas, Capital, $30,000
J) Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
The entry to close revenue would involve a

A)debit to Income Summary, $35,000.
B)credit to Income from Services, $35,000
C)debit to Income from Services, $35,000.
D)None of the answers listed

Question 35

The adjusted balances for Tomas Co. are listed below. Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J) Tomas, Capital, $30,000
J) Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
The entry to close expenses would involve a

A)debit to Income Summary, $20,000
B)credit to Income Summary, $20,000
C)debit to Income Summary, $12,000.
D)debit to Wages Expense, $12,000, and Rent Expense, $8,000.

Question 36

The Income Summary account would be reported on which financial statement?

A)Income Statement
B)Balance Sheet
C)Statement of Owner's Equity
D)None.The Income Summary account is not reported on a financial statement.

Question 37

Which of the following accounts will have a remaining balance after the closing process is completed?

A)Income from Services
B)Rent Expense
C)Owner's Drawing
D)Owner's Capital
E)Depreciation Expense

Question 38

Entries required to clear or zero the balances of temporary accounts at the end of the year are called ____________ entries.

A)adjusting
B)journal
C)closing
D)clearing

Question 39

A net loss

A)decreases the Cash account.
B)increases the owner's Capital account.
C)decreases the owner's Capital account.
D)decreases the owner's Drawing account.
E)increases the owner's Drawing account.

Question 40

Assume a company has a net income that exceeds the owner's drawing for the current year. The owner's Capital account

A)will have a zero balance after the closing entries are completed.
B)will increase.
C)will decrease.
D)will remain the same as the beginning balance.
E)It is impossible to tell with the information provided.

Question 41

Munoz Co. prepays cash in October for insurance that covers only the month of November. Munoz Co. records the expense in October. Which method of accounting is Munoz Co. using?

A)accrual basis of accounting
B)cash basis of accounting
C)hybrid basis of accounting
D)consolidated basis of accounting

Question 42

The entry to close Income Summary, assuming a net loss, would involve a

A)credit to cash.
B)debit to net income.
C)credit to Income Summary.
D)credit to capital.

Question 43

Yellow Co. makes a sale to a customer in January but does not receive payment until March. Yellow Co. records the sale in January. Which method of accounting is Yellow Co. using?

A)accrual basis of accounting
B)cash basis of accounting
C)hybrid basis of accounting
D)consolidated basis of accounting

Question 44

The _______________ requires that revenue is recorded when it is received in cash and expenses are recorded when they are paid in cash.

A)accrual basis of accounting
B)cash basis of accounting
C)hybrid basis of accounting
D)GAAP basis of accounting

Question 45

Which of the following account(s) are real accounts?

A)Cash
B)Accumulated Depreciation
C)Notes Payable
D)Capital
E)All of the accounts listed are real.

Question 46

The Drawing account should be closed into the __________ account.

A)Income Summary
B)Net Income
C)Expense
D)Capital

Question 47

What is the first step in the closing process?

A)Close the expense accounts to income summary.
B)Close the Drawing account into the Capital account.
C)Close the revenue account(s) into Income Summary.
D)Close the Income Summary account into the Capital account.

Question 48

The closing process causes the account balance of which account to be zeroed out?

A)Cash
B)Account Payable
C)Accumulated Depreciation
D)R.Carson, Drawing

Question 49

Collins Co. uses the cash basis of accounting. Collins Co. prepays cash in April for insurance that covers only the month of May. Which of the following is true?

A)Collins Co.should record the Insurance Expense in April.
B)Collins Co.should record the Insurance Expense in May.
C)Collins Co.should record the payment of cash in May.
D)None of the answers listed.

Question 50

The second step in the closing process is to close the _____________ account(s) into the ___________ account(s).

A)expense, income summary
B)income summary, expense
C)expense, net income
D)revenue, income summary

Question 51

___________ are prepared during the fiscal year and cover a period of time less than twelve months.

A)Fiscal statements
B)Annual statements
C)Interim statements
D)Closing statements

Question 52

The entry to close expenses would involve (a)

A)debit to Income Summary
B)debit to drawing.
C)credit to net income.
D)debits to expense accounts.

Question 53

When using the work sheet to prepare closing entries, which of the following statement is correct?

A)You should use all balances listed in the balance sheet columns.
B)You should use all balances listed in the balance sheet columns and the income statement columns.
C)You should use all balances listed in the income statement columns.
D)None of the answers listed

Question 54

The first step in the closing process is to close the _____________ account(s) into the ___________ account(s).

A)revenue, net income
B)income summary, revenue
C)expense, net income
D)revenue, income summary

Question 55

Which of the following are all permanent accounts?

A)Cash, Rent Expense, owner's drawing
B)Accumulated Depreciation, Notes Payable, owner's drawing
C)Cash, Prepaid Insurance, Notes Payable
D)Owner's capital, owner's drawing, Rent Expense

Question 56

Boulder Co. uses the accrual basis of accounting. Boulder Co. receives cash from customers in October for services to be performed in December. Which of the following is true?

A)Boulder Co.should record revenue in October.
B)Boulder Co.should record revenue in December.
C)Boulder Co.should record the receipt of cash in December.
D)None of the answers listed.

Question 57

Which of the following accounts would not be shown on the post-closing trial balance?

A)owner's drawing
B)Notes Payable
C)Accumulated Depreciation
D)owner's capital

Question 58

The _______________ requires that revenue is recorded when earned and expenses are recorded when incurred.

A)accrual basis of accounting
B)cash basis of accounting
C)hybrid basis of accounting
D)GAAP basis of accounting

Question 59

Which of the following accounts would be shown on the post-closing trial balance?

A)owner's drawing
B)Rent Expense
C)Accumulated Depreciation
D)All of the accounts listed would be shown.

Question 60

The fourth step in the closing process is to close the _____________ account(s) into the ___________ account(s).

A)Income Summary, Capital
B)Capital, Drawing
C)Drawing, Capital
D)Drawing, Income Summary

Question 61

Entries required to clear or zero the balances of the temporary accounts at the end of the year are called adjusting entries.

Question 62

The Income Summary account balance should always increase after the closing entries are posted at the end of the accounting period.

Question 63

The purpose of the post-closing trial balance is to make sure the debit balances equal the credit balances before the closing process.

Question 64

The post-closing trial balance contains only asset, liability, and revenue accounts.

Question 65

After closing the expense accounts, the total of the expense accounts will appear on the debit side of the Income Summary account.

Question 66

The first step in the closing entries is to close the revenue account(s) into the Income Summary account.

Question 67

The fourth step in the closing procedure is to close the Income Summary account into the Capital account.

Question 68

The owner's Capital account will always have a zero balance after the closing entries are posted.

Question 69

If the totals of the post-closing trial balance are not equal, the first step in tracking down the error is to verify postings to the ledger.

Question 70

Information for the closing entries is normally obtained from the Adjusted Trial Balance columns of a work sheet.

Question 71

Closing entries are posted to the work sheet, but not to the general ledger.

Question 72

Closing entries may be prepared from the ledger or the work sheet.

Question 73

The balance in the owner's Capital account is closed to the owner's Drawing account.

Question 74

If a business has a net loss for a fiscal period, the journal entry to close the Income Summary account is a debit to Income Summary and a credit to Capital.

Question 75

Both income statement and balance sheet accounts are closed at the end of a fiscal period.

Question 76

The debit to Income Summary in the second closing entry represents the total expenses.

Question 77

If Income Summary has a credit balance after closing revenue and expense accounts, this indicates a net loss.

Question 78

After the temporary accounts are closed, only the real accounts have balances.

Question 79

The balance of the Drawing account is closed to the Capital account.

Question 80

A post-closing trial balance will include only permanent accounts.