Deck 5: The Accounting Cycle Completed

Question 1

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) Balance Sheet entries.
D) adjusting Cash.

Answer 1

B

Question 2

Eav's Event Planning bought a computer on January 1st worth $5,000 with an expected life of 4 years and a residual value of $1,500. What is the adjusting journal entry for December 31 at the end of the first year?

Answer 2

C

Question 3

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.

Answer 3

A

Question 4

Question 5

Question 6

Question 7

Sandra's Design Studio showed office supplies account showed a balance of $1,000. A count of the supplies left on hand as of June 30 was $700. The adjusting journal entry is:

Question 8

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 9

Question 10

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

Question 11

Question 12

The income statement debit column of the worksheet showed the following expenses: The journal entry to close the expense accounts is:

Question 13

Each adjusting entry affects:

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

Question 14

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

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

Question 15

Tom's Electrical Service purchased tools for $6,000. They have an expected life of 30 months and no residual value. The adjusting journal entry for the month is:

Question 16

Question 17

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.

Question 18

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 19

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 20

Question 21

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 22

Which of the following accounts is a temporary account?

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

Question 23

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 24

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 25

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

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

Question 26

How do you close a revenue account?

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

Question 27

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 28

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 29

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

Question 30

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 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 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 33

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

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

Question 34

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. Taylor, Withdrawals
D) Medical Fees Earned

Question 35

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 36

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

A) Accounts Receivable
B) Depreciation Expense
C) Accounts Payable
D) Prepaid Rent Expense

Question 37

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

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

Question 38

To close the Fees Earned account:

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

Question 39

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 40

Closing entries will affect:

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

Question 41

B. Jensen's worksheet showed the revenue account, Rental Fees, $1,800. The journal entry to close the account is:

Question 42

The following normal account balances were found on the general ledger before closing entries were prepared: After closing entries are posted, what is the balance in the Revenue account?

A) $910
B) $0
C) $360
D) Closing entries do not affect Revenue.

Question 43

J. Oakely showed a net loss of $5,500. The entry to close the Income Summary account would include a:

A) debit to Oakely, Capital, $5,500.
B) debit to Income Summary, $5,500.
C) credit to Oakely, Capital, $5,500.
D) credit to Cash, $5,500.

Question 44

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 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

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 47

The following normal account balances were found on the general ledger before closing entries were prepared: After closing entries are posted, what is the balance in the Capital account?

A) $7,560
B) $7,000
C) $6,560
D) Closing entries do not affect the Capital account.

Question 48

The income statement credit column of the worksheet showed the following revenues:
The journal entry to close the revenue accounts is:

Question 49

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 50

The balance in the J. Higgins, Withdrawals account was $3,200. The entry to close the account would include a:

A) debit to Income Summary, $3,200.
B) credit to Income Summary, $3,200.
C) debit to J. Higgins, Capital, $3,200.
D) debit to J. Higgins, Withdrawals, $3,200.

Question 51

M. Sims showed a net income of $8,000. The entry to close the Income Summary account would include a:

A) debit to M. Sims Capital, $8,000.
B) credit to M. Sims Capital, $8,000.
C) debit to Income Summary, $8,000.
D) Both B and C are correct.

Question 52

Closing entries will:

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

Question 53

The following normal account balances were found on the general ledger before closing entries were prepared: After closing entries are posted, what is the balance in the Cash account?

A) $800
B) $0
C) $200
D) $600

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

On Petro 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 56

The Income Summary account shows debits of $35,824 and credits of $25,977. This results in:

A) Withdrawals of $61,801.
B) a net loss of $61,801.
C) a net income of $9,847.
D) a net loss of $9,847.

Question 57

The balance in the Rent Expense account on the worksheet was $220. The journal entry to close the Rent Expense account is:

Question 58

After closing the revenue, expense, and withdrawal accounts, the capital increased by $2,500. Which of the following situations could have occurred?

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

Question 59

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 60

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 61

The beginning capital balance is $6,200, there are no additional investments, but the owner did withdraw $500 during the accounting period. The period's revenue is $4,300 and expenses total $6,100. What is the ending capital balance (after closing entries)?

A) $6,200
B) $6,700
C) $4,400
D) $3,900

Question 62

Which of the following is a temporary account?

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

Question 63

When revenue is closed:

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

Question 64

The Withdrawals account is closed to the Revenue account.

Question 65

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) the Income Summary account balance not to be affected.

Question 66

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

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

Question 67

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 decreased.

Question 68

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 69

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 70

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 71

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 Accumulated Depreciation account balance to increase.
D) None of the above answers are correct.

Question 72

The Withdrawals account is closed to Income Summary.

Question 73

The beginning capital balance is $1,600; there are no additional investments or withdrawals by the owner during the accounting period. The period's revenue is $630 and expenses total $600. What is the ending capital balance (after closing entries)?

A) $1,630
B) $2,200
C) $2,230
D) $30

Question 74

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 capital accounts.

Question 75

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 the above answers are correct.

Question 76

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 77

There are 7 closing entries.

Question 78

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 79

Which of the following is a real account?

A) Cash
B) Accounts Payable
C) Utilities Expense
D) A and B are correct

Question 80

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.