Question 1

Emilia Feridy, the proprietor of EF Services, withdrew a total of $50 for to pay for her daughter's swimming lessons. What is the entry needed to record this transaction?

Accepted Answer

The transaction involves the proprietor of the business withdrawing cash for personal use. Therefore, the entry should be a debit to the account for withdrawals (an equity account) and a credit to the cash account. Option A is incorrect as it debits the capital account, which is not affected by this transaction. Option C is incorrect as it credits the capital account, which is not accurate. Option D is incorrect as it debits the capital account, which is not affected by this transaction. Option E is incorrect as it debits the cash account, which is not affected by this transaction.

Question 2

The Income Summary account is a(n)

Accepted Answer

The Income Summary account is a temporary account used to summarize the revenue and expenses for the period before transferring the net income or loss to the Retained Earnings account. It is closed at the end of the accounting period and its balance is transferred to the Retained Earnings account, which is a permanent account.

Question 3

The Income Summary account is used

Accepted Answer

The Income Summary account is used to close the revenue and expense accounts at the end of an accounting period by transferring their balances to the Income Summary account. This account is then used to determine the net income or loss for the period, which is ultimately transferred to the Retained Earnings account.

Question 4

Which of the following statements is true?

Accepted Answer

Preparing a post-closing trial balance is a necessary step in the accounting cycle to ensure the accuracy of the adjusting and closing procedures. Journalizing involves recording transactions in the journal, not in T-accounts. The information on the work sheet is used to prepare financial statements, but it does not replace preparing the actual statements. Adjusting entries on the work sheet still need to be posted to the ledger accounts. Therefore, statement B is the only true statement.

Question 5

A classified balance sheet

Accepted Answer

A classified balance sheet organizes assets and liabilities into important subgroups, such as current assets and long-term assets, and current liabilities and long-term liabilities. This allows for better analysis of a company's financial position and ability to meet its obligations in the short-term and long-term. The other options listed refer to different financial statements or activities that may be included in a company's overall financial reporting, but are not specifically related to a classified balance sheet.

Question 6

After all closing entries are made and posted, the balance in the owners' capital account in the ledger will be equal to

Accepted Answer

After all closing entries are made, the balance in the owners' capital account in the ledger will be equal to the balance of owners' capital on the post-closing trial balance. This is because the purpose of closing entries is to transfer the net income or loss to the owners' capital account, which is then reflected on the post-closing trial balance. Therefore, the balance in the owners' capital account is not zero, nor is it equal to the beginning balance or the pre-closing trial balance.

Question 7

An error is indicated if the following account has a balance appearing on the post-closing trial balance

Accepted Answer

Depreciation expense, Office Equipment, should not appear on the post-closing trial balance because it is a temporary account that should have been closed to the income summary account at the end of the accounting period.

Question 8

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account is the

Accepted Answer

The Income Summary account is a temporary account used only in the closing process to hold the amounts of revenues and expenses before they are transferred to the owner's capital account. It is used to determine the net income or loss for the period and to close out temporary revenue and expense accounts.

Question 9

When closing the Withdrawals account

Accepted Answer

The answer of When closing the Withdrawals account
...

Question 10

The eight recurring steps performed each accounting period, starting with recording transactions in the journal and continuing through the post-closing trial balance, is called the

Accepted Answer

The eight recurring steps performed each accounting period, starting with recording transactions in the journal and continuing through the post-closing trial balance, is called the accounting cycle. The other options (A, B, D, and E) do not accurately describe the specific steps involved in the accounting process.

Question 11

A post-closing trial balance shows

Accepted Answer

A post-closing trial balance includes all ledger accounts that have a balance after closing entries are made. Temporary accounts (revenues, expenses, dividends) are closed to Retained Earnings, so they have a zero balance and are not included. Only permanent accounts (assets, liabilities, equity) appear on a post-closing trial balance.

Question 12

A company had revenues of $75,000, withdrawals of $10,000 and expenses of $62,000 during an accounting period. Which of the following entries should not be journalized in the closing process?

Accepted Answer

The answer of A company had revenues of $75,000, withdrawals...

Question 13

The Income Summary account is

Accepted Answer

All of the options listed describe the Income Summary account. It is a temporary account used in the closing process to summarize revenues and expenses, and is not a permanent account. It is used in partnerships to transfer the amount of profit or loss to the owners' capital accounts.

Question 14

The J. Dawson, Capital account has a credit balance of $1,200 before closing entries are made. If total revenues for the year are $65,200, total expenses $49,800, and withdrawals are $2,400, what is the ending balance in the J. Dawson, Capital account after all closing entries have been made?

Accepted Answer

The answer of The J. Dawson, Capital account has a...

Question 15

Which statement is incorrect?

Accepted Answer

Withdrawals are closed directly to the Capital account, not through the Income Summary account.

Question 16

Which of the following is the final step in the accounting cycle?

Accepted Answer

The final step in the accounting cycle is preparing a post-closing trial balance, which is done after all the closing entries have been made. This trial balance includes only permanent accounts and helps ensure that the accounting records are balanced and accurate before the start of the next accounting period.```

Question 17

The asset section of a classified balance sheet includes

Accepted Answer

The asset section of a classified balance sheet includes current assets, long-term investments, property, plant and equipment, and intangible assets. These categories help to organize and provide information about a company's resources and investments.

Question 18

After all appropriate closing entries to the following accounts have been made, what will be the balance in the Jeff Corvette, Capital account? $$\begin{array} { | l | r | } 
\hline \text { Service fees revenue } & \$ 140,000 \
\hline \text { Various experses } & 60,000 \
\hline \text { Jeff Corvette, capital } & 80,000 \
\hline \text { Jeff Corvette, withdrawals } & 15,000 \
\hline
\end{array}$$

Accepted Answer

Without the details of the accounts given, it is impossible to determine the exact balance in the Jeff Corvette, Capital account. However, closing entries are made to transfer net income or net loss to the owner's capital account. Therefore, the correct answer would be the sum of all revenues and gains minus the sum of all expenses and losses, which would result in the net income. This net income would then be added to the beginning balance of the Jeff Corvette, Capital account. The only answer choice that could be reasonably close to the correct answer based on this logic would be D, $145,000.

Question 19

Given the following accounts and their adjusted balances before closing entries are posted, what amount will be posted to Bessie Cool, Capital in the process of closing the Income Summary account? Assume all accounts have normal balances. $$\begin{array} { | l | r | } 
\hline \text { Bessie Cool, capital } & \$ 7,000 \
\hline \text { Bessie Cool, withdrawals } & 9,600 \
\hline \text { Service Revenue } & 35,500 \
\hline \text { Rent expense } & 3,600 \
\hline \text { Salaries expense } & 7,200 \
\hline \text { Insurarace expense } & 920 \
\hline \text { Depreciation experse, equip. } & 500 \
\hline \text { Accumulated depreciation, equipment. } & 1,500 \
\hline
\end{array}$$

Accepted Answer

The answer of Given the following accounts and their adjusted...

Question 20

A trial balance prepared after the adjusting and closing entries have been posted, and which is the final step in the accounting cycle, is a(n)

Accepted Answer

The post-closing trial balance is prepared after the adjusting and closing entries have been posted, and it is the final step in the accounting cycle. It includes all accounts and their balances, including the permanent accounts, which have been updated to reflect only the balance of the account at the end of the period.

Quiz 4: Completing the Accounting Cycle and Classifying Accounts