Deck 5: The Accounting Cycle Completed

Question 1

Each adjustment affects:

A)the income statement.
B)the balance sheet.
C)the cash account.
D)Both A and B are correct.

Answer 1

D

Question 2

For each of the following,identify in Column 1 the category to which the account belongs,in Column 2 the normal balance for the account,in Column 3 the financial statement on which the account balance is reported,and in Column 4 the nature of the account (permanent/temporary).
Example:

Answer 2

Question 3

The ending balances in the ledger after posting the adjusting entries,will be the same amounts that are found on the worksheet in the adjusted trial balance column.

Answer 3

True

Question 4

Mark's Tree Service depreciation for the month is $500.The adjusting journal entry is:

A)
$\begin{array}{|l|l|}\hline\text { Equipment } & 500 \\\hline \text { Accumulated Depreciation } &500\\\hline\end{array}$
B)

C)

D)

Question 5

The income statement debit column of the worksheet showed the following expenses:
$\begin{array}{|l|r|}\hline\text { Supplies Expense } & \$ 600 \\\hline \text { Depreciation Expense } & 400 \\\hline \text { Salaries Expense } & 300 \\\hline\end{array}$
The journal entry to close the expense accounts is:

A)
$\begin{array}{|l|l|}\hline \text { Income Summary } & 1,300 \\\hline \text { Supplies Expense } & 600 \\\hline \text { Depreciation Expense } & 400 \\\hline \text { Salaries Expense } &300\\\hline\end{array}$
B)

C)

D)
$\begin{array}{|l|l|}\hline\text { Capital } & 1,200 \\\hline \text { Income Summary } & 1,200\\\hline\end{array}$

Question 6

For each of the following,identify in Column 1 the category to which the account belongs,in Column 2 the normal balance for the account,in Column 3 the financial statement on which the account balance is reported,and in Column 4 the nature of the account (permanent/temporary).
Example:

Question 7

Journal entries that are needed in order to update account balances for internal business transactions (such as supplies and prepaid rent)at the end of the period are:

A)closing entries.
B)adjusting entries.
C)sales entries.
D)adjusting Cash.

Question 8

The adjusting entry for accrued salaries is to:

A)debit Salaries Expense;credit Salaries Payable.
B)debit Salaries Expense;credit Cash.
C)debit Salaries Payable;credit Salaries Expense.
D)debit Cash;credit Salaries Payable.

Question 9

The adjusting entry to record the expired rent would be to:

A)debit Prepaid Rent;credit Rent Expense.
B)debit Cash;credit Prepaid Rent.
C)debit Prepaid Rent;credit Cash.
D)debit Rent Expense;credit Prepaid Rent.

Question 10

For each of the following,identify in Column 1 the category to which the account belongs,in Column 2 the normal balance for the account,in Column 3 the financial statement on which the account balance is reported,and in Column 4 the nature of the account (permanent/temporary).
Example:

Question 11

Samantha's Design Studio showed office supplies available of $1,000.A count of the supplies left on hand as of June 30 was $500.The adjusting journal entry is:

A)
$\begin{array}{l|l}\text { Office Supplies } & 1,000 \\\hline \text { Office Supplies Expense } && 1,000\end{array}$
B)
$$\begin{array} { |c | l l| } \hline \text { Office Supplies Expense } & 1,000 & \\\hline \text { Office Supplies } & & 1,000 \\\hline\end{array}$$
C)
$\begin{array}{l|}\text { Office Supplies } &500\\\hline \text { Office Supplies Expense }&&500\end{array}$
D)
$$\begin{array} { | c | l | } \hline \text { Office Supplies Expense } & 500 \\\hline \text { Office Supplies } & 500\\\hline\end{array}$$

Question 12

For each of the following,identify in Column 1 the category to which the account belongs,in Column 2 the normal balance for the account,in Column 3 the financial statement on which the account balance is reported,and in Column 4 the nature of the account (permanent/temporary).
Example:

Question 13

Tim's Electrical Service purchased tools for $6,000.They have an expected life of 20 months and no residual value.The adjusting journal entry for the month is:

A)
$\begin{array}{l|l}\text { Depreciation Expense } & 300 \\\hline \text { Tools } && 300\end{array}$
B)
$\begin{array}{l|l}\text { Depreciation Expense } & 300 \\\hline \text { Accumulated Depreciation } && 300\end{array}$
C)
$$\begin{array} { | c | l | } \hline \text { Accumulated Depreciation } & 300 \\\hline \text { Depreciation Expense } &300\\\hline\end{array}$$
D)
$\begin{array}{l|l}\text { Accumulated Depreciation } & 300 \\\hline \text { Equipment } && 300\end{array}$

Question 14

For each of the following,identify in Column 1 the category to which the account belongs,in Column 2 the normal balance for the account,in Column 3 the financial statement on which the account balance is reported,and in Column 4 the nature of the account (permanent/temporary).
Example:

Question 15

Adjusting journal 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 closing entries are prepared.
D)must be journalized and posted.

Question 16

For each of the following,identify in Column 1 the category to which the account belongs,in Column 2 the normal balance for the account,in Column 3 the financial statement on which the account balance is reported,and in Column 4 the nature of the account (permanent/temporary).
Example:

Question 17

The adjusting entry to record depreciation for the company automobile would be:

A)debit Cash;credit Accumulated Depreciation,Automobile.
B)debit Accumulated Depreciation,Automobile;credit Automobile.
C)debit Depreciation Expense,Automobile;credit Accumulated Depreciation,Automobile.
D)debit Depreciation Expense,Automobile;credit Automobile.

Question 18

Tina's Event Planning bought a computer worth $4,000 with an expected life of 4 years and a residual value of $800.What is the adjusting journal entry after the first year?

A)
$\begin{array}{|l|l|}\hline\text { Computer } & 800 \\\hline \text { Depreciation Expense } & 800\\\hline\end{array}$
B)
$$\begin{array} { | c | c | } \hline \text { Computer } & 800 \\\hline \text { Accumulated Depreciation, Computer } & 800 \\\hline\end{array}$$
C)
$$\begin{array} { | c | c | } \hline \text { Depreciation Expense } & 800 \\\hline \text { Accumulated Depreciation, Computer } & 800 \\\hline\end{array}$$
D)
$\begin{array}{|l|l|}\hline\text { Depreciation Expense } & 800 \\\hline \text { Computer } & 800\\\hline\end{array}$

Question 19

For each of the following,identify in Column 1 the category to which the account belongs,in Column 2 the normal balance for the account,in Column 3 the financial statement on which the account balance is reported,and in Column 4 the nature of the account (permanent/temporary).
Example:

Question 20

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 21

Income Summary:

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

Question 22

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 23

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 24

To close the Withdrawals account:

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

Question 25

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 26

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 27

An account in which the balance is carried over from one accounting period to the next is called a:

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

Question 28

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

A)Salaries Expense
B)Fees Earned
C)Utilities Expense
D)All of the above are correct

Question 29

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

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

Question 30

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 31

Closing entries:

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

Question 32

Which of the following accounts is a temporary account?

A)Withdrawals
B)Accounts Receivable
C)Cash
D)Accounts Payable

Question 33

Closing entries will affect:

A)total assets.
B)Cash.
C)Owner's Capital.
D)total liabilities.

Question 34

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 35

To close the Fees Earned account:

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

Question 36

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

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

Question 37

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

Question 38

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

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

Question 39

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 40

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)no owner withdrawals during the period.

Question 41

The following normal account balances were found on the general ledger before closing entries were prepared:
$$\begin{array} { | l | l | } \hline \text { Revenue } \$ 1,100 & \text { Cash } \$ 600 \\\hline \text { Expenses } \$ 600 & \text { Accounts Receivable } \$ 400 \\\hline \text { Capital } \$ 7,500 & \text { Withdrawals } \$ 1,000 \\\hline\end{array}$$
After closing entries are posted,what is the balance in the Capital account?

A)$8,000
B)$7,500
C)$7,000
D)Closing entries do not affect the Capital account.

Question 42

On Flex Company's worksheet,the revenue account had a normal balance of $3,200.The entry to close the account would include a:

A)debit to Cash for $3,200.
B)credit to Income Summary for $3,200.
C)debit to Capital for $3,200.
D)credit to Revenue for $3,200.

Question 43

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 44

The following normal account balances were found on the general ledger before closing entries were prepared:
$$\begin{array} { | l | l | } \hline \text { Revenue } \$ 800 & \text { Cash } \$ 500 \\\hline \text { Expenses } \$ 400 & \text { Accounts Receivable } \$ 350 \\\hline \text { Capital } \$ 7,500 & \text { Withdrawals } \$ 1,000 \\\hline\end{array}$$
After closing entries are posted,what is the balance in the Cash account?

A)$800
B)$0
C)$300
D)$500.

Question 45

The Rent Expense account had a normal balance of $1,100.The entry to close the account would include a:

A)debit to Rent Expense,$1,100.
B)debit to Income Summary,$1,100.
C)debit to Capital,$1,100.
D)credit to Income Summary,$1,100.

Question 46

Closing entries will:

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

Question 47

The income statement credit column of the worksheet showed the following revenues:
$$\begin{array} { | r | r |} \hline \text { Catering Fees Earned } & \$ 600 \\\hline \text { Cleaning Fees Earned } & 800 \\\hline\end{array}$$
The journal entry to close the revenue accounts is:

A)
$$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Income Summary }& 1,400 \\\hline \text { Catering Fees Earned } & 600 \\\hline \text { Cleaning Fees Earned } & 800 \\\hline\end{array}\end{array}$$
B)
$\begin{array}{|l|l|}\hline \text { Catering Fees Earned } & 600 \\\hline \text { Cleaning Fees Earned } &800 \\\hline \text { Income Summary } & 1,400 \\\hline\end{array}$
C)
$\begin{array}{|l|l|}\hline \text { Capital } & 1,400 \\\hline \text { Income Summary }& 1,400 \\\hline \end{array}$
D)
$\begin{array}{|l|l|}\hline\text { Catering Fees Earned } & 600 \\\hline \text { Cleaning Fees Earned } & 300 \\\hline \text { Capital } &1,400 \\\hline\end{array}$

Question 48

M.Smuts showed a net income of $5,000.The entry to close the Income Summary account would include a:

A)debit to M.Smuts Capital,$5,000.
B)credit to M.Smuts Capital,$5,000.
C)debit to Income Summary,$5,000.
D)Both B and C are correct.

Question 49

After closing the revenue,expense,and withdrawal accounts,the capital increased by $2,000.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 50

The following normal account balances were found on the general ledger before closing entries were prepared:
$$\begin{array} { | l | l | } \hline \text { Revenue } \$ 900 & \text { Cash } \$ 500 \\\hline \text { Expenses } \$ 500 & \text { Accounts Receivable } \$ 350 \\\hline \text { Capital } \$ 7,500 & \text { Withdrawals } \$ 1,000 \\\hline\end{array}$$
After closing entries are posted,what is the balance in the Revenue account?

A)$800
B)$0
C)$400
D)Closing entries do not affect Revenue.

Question 51

The balance in the Rent Expense account on the worksheet was $150.The journal entry to close the Rent Expense account is:

A)
$\begin{array}{|l|l|l|}\hline\text { Rent Expense } & & 150 \\\hline \text { Prepaid Rent Expense } & 150\\\hline\end{array}$
B)
$\begin{array}{|l|l|}\hline\text { Rent Expense } & 150 \\\hline \text { Income Summary } & 150\\\hline\end{array}$
C)
$$\begin{array} {| r | r | } \hline\text { Rent Expense } & 150 \\\hline \text { Capital } & 150 \\\hline\end{array}$$
D)
$$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Income Summary }& 150 \\\hline \text { Rent Expense } & 150 \\\hline\end{array}\end{array}$$

Question 52

The balance in the J.Higgins,Withdrawals account was $3,000.The entry to close the account would include a:

A)debit to Income Summary,$3,000.
B)credit to Income Summary,$3,000.
C)debit to J.Higgins,Capital,$3,000.
D)debit to J.Higgins,Withdrawals,$3,000.

Question 53

The Income Summary account shows debits of $29,000 and credits of $20,000.This results in a:

A)net income of $49,000.
B)net loss of $49,000.
C)net income of $9,000.
D)net loss of $9,000.

Question 54

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 55

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 understated.

Question 56

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 understated.
D)the liabilities will be understated.

Question 57

B.Benson's worksheet showed the revenue account,Rental Fees,$1,300.The journal entry to close the account is:

A)
$\begin{array}{ll}\text { Rental Fees } & 1,300 \\\text { Income Summary }& 1,300\end{array}$
B)
$\begin{array}{|l|l|}\hline\text { Benson, Capital } & 1,300 \\\hline \text { Rental Fees } & 1,300\\\hline\end{array}$
C)
$\begin{array}{|l|l|}\hline\text { Rental Fees } & 1,300 \\\hline \text { Benson, Capital } & 1,300\\\hline\end{array}$
D)
$\begin{array}{|l|l|}\hline\text { Income Summary }&1,300 \\\hline \text { Rental Fees }&1,300\\\hline\end{array}$

Question 58

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 59

J.Oros showed a net loss of $3,500.The entry to close the Income Summary account would include a:

A)debit to Oros,Capital,$3,500.
B)debit to Income Summary ,$3,500.
C)credit to Oros,Capital,$3,500.
D)credit to Cash,$3,500.

Question 60

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 61

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 is correct.

Question 62

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 $600 and expenses total $550.What is the ending capital balance (after closing entries)?

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

Question 63

Which of the following is a temporary account?

A)Wages Expense
B)Service Fees Earned
C)Rent Expense
D)All of the above are temporary accounts

Question 64

Which of the following is a real account?

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

Question 65

There are 7 closing entries.

Question 66

The Withdrawals account is closed to Income Summary.

Question 67

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 68

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 is correct.

Question 69

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 is correct.

Question 70

The Withdrawals account is closed to the Revenue account.

Question 71

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)Revenue will be debited.

Question 72

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)Revenue is increased.

Question 73

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 74

When closing the Withdrawal account:

A)Capital would increase.
B)Capital would decrease.
C)Income Summary will be debited.
D)None of these is correct.

Question 75

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 is correct.

Question 76

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

A)$5,500
B)$6,000
C)$3,500
D)$3,000

Question 77

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 78

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)Revenue would decrease.

Question 79

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 is correct.

Question 80

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 is correct.