Deck 6: Closing Entries and the Postclosing Trial Balance

Question 1

Data for the closing entries is taken from the ____________________ section of the worksheet.

Answer 1

Income Statement

Question 2

The owner's capital account is closed at the end of each accounting period.

Answer 2

False

Question 3

Withdrawals by the owner for personal use do not affect net income or net loss of the business.

Answer 3

True

Question 4

A compound entry in the general journal is made to close expense accounts.

Question 5

"After-closing trial balance" is another name for the postclosing trial balance.

Question 6

The entry to transfer net income to the owner's capital account would include a debit to the owner's capital account.

Question 7

One of the purposes of closing entries is to transfer net income or net loss for the period to the owner's capital account.

Question 8

The postclosing trial balance contains balance sheet accounts only.

Question 9

If the Income Summary account has a debit balance before it is closed, the firm experienced a net ____________________ from operations.

Question 10

The ____________________ entries transfer the results of operations to owner's equity.

Question 11

The balance of the Income Summary account is transferred to the ____________________ account.

Question 12

The entry to close an expense account requires a credit to the Income Summary account.

Question 13

"Closing" is written in the Description column of the individual revenue and expense accounts in the general ledger.

Question 14

At the end of the accounting period, the balances of the revenue and expense accounts are transferred to the ____________________ account.

Question 15

"Income and Expense Summary" is another name for the Income Summary account.

Question 16

The temporary owner's equity accounts are closed because they apply to only one accounting period.

Question 17

The heading "Closing Entries" is usually written in the Description column of the general journal above the first closing entry.

Question 18

Interpreting the financial statements is the last step in the accounting cycle.

Question 19

The entry to close the revenue account Fees Income requires a debit to that account.

Question 20

After the closing entries are posted, the balance of the owner's capital account agrees with the amount of owner's equity shown on the balance sheet for the period.

Question 21

The postclosing trial balance lists only the asset, ____________________, and owner's capital accounts.

Question 22

Which of the following accounts is not closed?

A) Cash
B) Fees Income
C) Rent Expense
D) Joan Wilson, Drawing

Question 23

After the closing entries are posted to the ledger, each expense account will have

A) a debit balance.
B) a credit balance.
C) either a debit or a credit balance.
D) a zero balance.

Question 24

One purpose of closing entries is to give zero balances to

A) asset and liability accounts.
B) liability and capital accounts.
C) revenue and expense accounts.
D) expense and capital accounts.

Question 25

After all the closing entries are posted to the ledger, the Income Summary account will have a ____________________ balance.

Question 26

The owner's drawing account is closed by debiting

A) the owner's drawing account and crediting the owner's capital account.
B) the owner's capital account and crediting the owner's drawing account.
C) Income Summary and crediting the owner's drawing account.
D) the owner's drawing account and crediting Income Summary.

Question 27

One purpose of closing entries is to

A) transfer the results of operations to owner's equity.
B) reduce the owner's capital account balance to zero so that the account is ready for the next period.
C) adjust the ledger account balances to provide complete and accurate figures for use on financial statements.
D) close all accounts so that the ledger is ready for the next accounting period.

Question 28

The ____________________ entries reduce the balances of the revenue, expense, and drawing accounts to zero so that they are ready to receive data for the next period.

Question 29

The entry to close the Income Summary account may include

A) a debit to Income Summary and a credit to the owner's capital account.
B) a debit to Income Summary and a credit to Cash.
C) a debit to Cash and a credit to Income Summary.
D) a debit to Income Summary and a credit to the owner's drawing account.

Question 30

The ____________________ trial balance is prepared to make sure that the general ledger is in balance after adjusting and closing entries have been recorded and posted.

Question 31

The revenue account Fees Income is closed by debiting

A) Cash and crediting Fees Income.
B) Fees Income and crediting Income Summary.
C) the owner's capital account and crediting Fees Income.
D) Income Summary and crediting Fees Income.

Question 32

After all the closing entries are posted, the ____________________ account reflects the results of operations for the period.

Question 33

The final closing entry transfers the balance of the ____________________ account to the owner's capital account.

Question 34

Which of the following accounts will not normally have a zero balance after the closing entries have been posted?

A) Income Summary
B) Fees Income
C) The owner's capital account
D) Rent Expense

Question 35

The firm had net income if the entry to close the Income Summary account is recorded as a ____________________ to the owner's capital account.

Question 36

The entry to transfer a net loss to the owner's capital account would include a debit to

A) the owner's capital account and a credit to Cash.
B) the owner's drawing account and a credit to the owner's capital account.
C) Income Summary and a credit to the owner's capital account.
D) the owner's capital account and a credit to Income Summary.

Question 37

Which of the following statements is not correct?

A) Before the Income Summary account is closed, its balance represents the net income or net loss for the accounting period.
B) The Income Summary account is a temporary owner's equity account.
C) The Income Summary account is used only at the end of an accounting period to help with the closing procedure.
D) The owner's drawing account is closed to the Income Summary Statement.

Question 38

In the closing procedure, the ____________________ account balances are transferred to the debit side of the Income Summary account.

Question 39

The ____________________ is a series of steps performed during each fiscal period to classify and record transactions and summarize financial data for a business.

Question 40

The Income Summary account is classified as a(n) ____________________ owner's equity account.

Question 41

Which of the following accounts has a normal debit balance?

A) Accounts Receivable
B) Accounts Payable
C) Fees Income
D) T. Stark, Capital

Question 42

The entry to close the Depreciation Expense account would include a debit to

A) the Income Summary account and a credit to the Depreciation Expense account.
B) the Income Summary and a credit to Cash.
C) Cash and a credit to the Income Summary account.
D) the Depreciation Expense account and a credit to the Income Summary account.

Question 43

Which of the following has a normal credit balance?

A) Accounts Receivable
B) Accounts Payable
C) Supplies Expense
D) T. Stark, Drawing

Question 44

If a business has a net loss for a fiscal period, the journal entry to close the Income Summary account is

A) a debit to Income Summary and a credit to Fees Income.
B) a debit to Income Summary and a credit to Capital.
C) a debit to Capital and a credit to Income Summary.
D) a debit to Capital and a credit to Drawing.

Question 45

The entry to close the owner's drawing account would include a debit to the

A) Income Summary account and a credit to the owner's drawing account.
B) owner's drawing account and a credit to Cash.
C) owner's capital account and a credit to the owner's drawing account.
D) owner's drawing account and a credit to the Income Summary account.

Question 46

After the closing entries are posted to the ledger, each revenue account will have

A) a zero balance.
B) a debit balance.
C) a credit balance.
D) either a debit or a credit balance.

Question 47

The entry to close the Accumulated Depreciation account may include a debit to

A) the Income Summary account and a credit to the Accumulated Depreciation account.
B) the Depreciation Expense account and a credit to the Accumulated Depreciation account.
C) the Accumulated Depreciation account and a credit to the Income Summary account.
D) none of the above.

Question 48

The first step in the closing process is to close

A) the drawing account
B) the capital account
C) the revenue accounts
D) the expense accounts

Question 49

The first two closing entries to the Income Summary account indicate a debit of $53,000 and a credit of $64,000. The third closing entry would be

A) debit Capital $11,000; credit Income Summary $11,000
B) debit Income Summary $11,000; credit Capital $11,000
C) debit Revenue $64,000; credit Expenses $53,000
D) debit Income Summary $11,000; credit Drawing $11,000

Question 50

Which of the following statements is not correct?

A) If the postclosing trial balance does not balance, there are errors in the accounting records.
B) The audit trial should be used to trace data through the accounting records to find and correct errors.
C) The balance of the owner's capital account, as reflected on the postclosing trial balance, will match the amount reported on the income statement.
D) The balance of the owner's capital account on the adjusted trial balance will usually be different than that reported on the postclosing trial balance.

Question 51

A postclosing trial balance could include all of the following except the

A) owner's capital account.
B) Cash account.
C) Fees Income account.
D) Accounts Receivable account.

Question 52

All of the following accounts will appear on the postclosing trial balance except

A) Equipment.
B) Accumulated Depreciation--Equipment.
C) Depreciation Expense--Equipment.
D) Accounts Payable.

Question 53

Entries required to zero the balances of the temporary accounts at the end of the year are called

A) posting entries.
B) adjusting entries.
C) closing entries.
D) correcting entries.

Question 54

When done properly, how many journal entries are involved in the closing process?

A) 2
B) 3
C) 4
D) 5

Question 55

Which of the following entries records the closing of Penny Pincher, Drawing at the end of the accounting period?

A) Debit Penny Pincer, Drawing; credit Penny Pincher, Capital
B) Debit Penny Pincher, Capital; credit Income Summary
C) Debit Income Summary; credit Penny Pincher, Drawing
D) Debit Penny Pincher, Capital; credit Penny Pincher, Drawing

Question 56

Which of the following accounts would be closed?

A) Accounts Receivable
B) Accumulated Depreciation
C) Supplies Expense
D) Joan Wilson, Capital

Question 57

Which of the following accounts is a permanent account?

A) Supplies
B) Supplies Expense
C) Owner's drawing
D) Fees Income

Question 58

Which of the following statements is not correct?

A) After closing entries are posted, the revenue, expense, and drawing accounts will have zero balances.
B) At the end of each accounting period, asset and liability account balances are reduced to zero.
C) A postclosing trial balance will not contain revenue and expense account balances.
D) Adjusting entries must be journalized and posted before the closing entries are journalized and posted.

Question 59

During the closing process, Accumulated Depreciation--Equipment will

A) be closed to the income summary account
B) be closed to the capital account
C) be closed to the drawing account
D) not be used

Question 60

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

A) Accounts Payable
B) Fred Sanford, Drawing
C) Income from Services
D) Advertising Expense

Question 61

From the following list identify the accounts that will appear on the postclosing trial balance by placing an X before those accounts.
___
A. Cash
___
B. Accounts Receivable
___
C. Supplies
___
D. Equipment
___
E. Accumulated Depreciation
___
___ F. Accounts Payable
___ G. Jane Nelson, Capital
___ H. Jane Nelson, Drawing
___ I. Fees Income
___ J. Depreciation Expense
___ K. Salaries Expense
___ L. Supplies Expense
___ M. Utilities Expense

Question 62

After the worksheet has been completed, the next step in the accounting cycle is to

A) journalize and post the closing entries.
B) journalize and post the adjusting entries.
C) prepare the postclosing trial balance.
D) prepare the financial statements.

Question 63

The adjusted ledger accounts of Miraldi Landscaping Design on December 31, 2013, appear as follows. All accounts have normal balances and adjusting entries have been made. Extend the balances to the Balance Sheet and Income Statement columns of the worksheet. Then, journalize the closing entries on page 12 of a general journal.

Question 64

The partial worksheet for the Roberts Company showed the following data on October 31, 2013. Record the closing entries on page 9 of a general journal.

Question 65

Information in the financial statements provides answers to many questions, including:

A) How much do customers owe the business?
B) What are the business' current and long term plans for expansion?
C) Has the business achieved its net income goal for the year?
D) All of the above.

Question 66

On December 31, the ledger of Hartley Engineering Company contained the following account balances: All the accounts have normal balances. Journalize the closing entries. Use 6 as the general journal page number.

Question 67

After the transactions have been posted, the next step in the accounting cycle is to

A) prepare the financial statements.
B) prepare the postclosing trial balance.
C) prepare the worksheet.
D) journalize and post the adjusting entries.

Question 68

Managers often consult financial statements for specific types of information. Indicate whether each of the following items would appear on the income statement, statement of owner's equity, or the balance sheet. Note that an item may appear on more than one statement. The first item is completed as an example.

Question 69

On December 31 the Income Summary account of Cook Company has a debit balance of $18,000 after revenue of $49,000 and expenses of $67,000 were closed to the account. Maria Cook, Drawing has a debit balance of $23,000 and Maria Cook, Capital has a credit balance of $84,000. Record the journal entries necessary to complete closing the accounts. Use 22 as the general journal page number. Then, post the closing entries to the Maria Cook, Capital account.

Question 70

On December 31, the Income Summary account of Coulter Company has a credit balance of $20,000 after revenue of $89,000 and expenses of $69,000 were closed to the account. Joseph Coulter, Drawing has a debit balance of $3,000 and Joseph Coulter, Capital has a credit balance of $45,000. Record the journal entries necessary to complete closing the accounts. Use 14 as the general journal page number. Then, post the closing entries to the Joseph Coulter, Capital account.

Question 71

Danos Company's partial worksheet for the month ended December 31, 2013, is shown below. Open the owner's capital account (account number 301) in the general ledger and record the December 1, 2013, balance of $64,000 shown on the worksheet. Journalize the closing entries on page 8 of a general journal. Post the closing entries to the owner's capital account. Prepare a postclosing trial balance.

Question 72

Which of the following statements is correct?

A) The Balance Sheet section of the worksheet contains the data that is used to make closing entries.
B) The balance of the owner's drawing account will appear on the postclosing trial balance.
C) Closing entries are entered directly on the worksheet.
D) Preparation of the postclosing trial balance is the last step in the end-of-period routine.

Question 73

The Income Summary and Karen Randall, Capital accounts for Randall Printing Company at the end of its accounting period follow. Complete the following statements.
A. Total revenue for the period is ____________________.
B. Total expenses for the period are ____________________.
C. Net income (loss) for the period is ____________________.
D. Owner's withdrawals for the period are ____________________.

Question 74

On December 31, the ledger of Davis Company contained the following account balances: All the accounts have normal balances. Journalize the closing entries. Use 11 as the general journal page number.

Question 75

The adjusted ledger accounts of RD Consulting on December 31, 2013, appear as follows. All accounts have normal balances and adjusting entries have been made. Extend the balances to the Balance Sheet and Income Statement columns of the worksheet. Then, journalize the closing entries on page 4 of a general journal.

Question 76

The Income Summary and Meryl Sussman, Capital accounts for Sussman Interior Design Services at the end of its accounting period follow. Complete the following statements.
A. Total revenue for the period is ____________________.
B. Total expenses for the period are ____________________.
C. Net income (loss) for the period is ____________________.
D. Owner's withdrawals for the period are ____________________.

Question 77

The partial worksheet for the Jamison Company showed the following data on October 31, 2013. Record the closing entries on page 6 of a general journal.

Question 78

The asset, liability, and owner's capital accounts appear on all of the following except the

A) income statement.
B) balance sheet.
C) postclosing trial balance.
D) worksheet.

Question 79

From the following list identify the accounts that will appear on the postclosing trial balance by placing an X before those accounts.
___
A. Accounts Payable
___
B. Accounts Receivable
___
C. Accumulated Depreciation
___
D. Cash
___
E. Depreciation Expense
___
___ F. Equipment
___ G. Fees Income
___ H. Allie Lee, Capital
___ I. Allie Lee, Drawing
___ J. Salaries Expense
___ K. Supplies
___ L. Supplies Expense
___ M. Utilities Expense

Question 80

Dorsey Company's partial worksheet for the month ended March 31, 2013, is shown below. Open the owner's capital account (account number 301) in the general ledger and record the March 1, 2013, balance of $32,000 shown on the worksheet. Journalize the closing entries on page 3 of a general journal. Post the closing entries to the owner's capital account. Prepare a postclosing trial balance.