Deck 4: Completing the Accounting Cycle

Question 1

Nominal account balances are reduced to zero by closing entries.

Answer 1

True

Question 2

Accounts Receivable is closed to Income Summary as part of the closing process.

Answer 2

False

Question 3

An expense account is closed with a credit to the expense account and a debit to Income Summary.

Answer 3

True

Question 4

Depreciation Expense-Buildings is a nominal account.

Question 5

During the closing process,expenses are transferred to the debit side of the Income Summary account.

Question 6

The only accounts that are closed are income statement accounts.

Question 7

An adjusted trial balance provides all the data needed to record the closing entries.

Question 8

In the accounting cycle,closing entries are prepared before adjusting entries.

Question 9

Permanent accounts are also known as nominal accounts.

Question 10

Closing entries deal primarily with the balances of real accounts.

Question 11

The Income Summary account appears in the income statement.

Question 12

A revenue account is closed with a debit to the revenue account and a credit to Income Summary.

Question 13

Closing entries result in the transfer of net income or net loss into the owner's Capital account.

Question 14

Cash is a nominal account.

Question 15

Supplies Expense is a temporary account.

Question 16

The Withdrawals account bypasses the Income Summary account when it is being closed.

Question 17

During the closing process,revenues are transferred to the debit side of the Income Summary account.

Question 18

Income Summary is closed with a debit to Income Summary and a credit to the Withdrawals account.

Question 19

After all closing entries have been entered and posted,the balance of the Income Summary account will be zero.

Question 20

A temporary account is also known as a nominal account.

Question 21

Despite the many uses of laptop computers,they cannot be used to prepare work sheets.

Question 22

Reversing entries are made to correct errors in the accounts.

Question 23

The Adjusted Trial Balance columns of the work sheet are prepared by combining the Trial Balance and Adjustments columns of the work sheet.

Question 24

Working papers provide a written record of the work performed by the accountant or auditor.

Question 25

There is sufficient information on a post-closing trial balance to prepare an income statement.

Question 26

The adjusting entries involving Rent Receivable and Salaries Payable could be reversed.

Question 27

Owner's Capital is closed by transferring the balance to Income Summary.

Question 28

The adjusting entries involving Depreciation Expense-Buildings and Supplies Expense could be reversed.

Question 29

Reversing entries can be made for accruals,but not for deferrals.

Question 30

The amount for the Withdrawals account will appear in the Income Statement columns of a work sheet.

Question 31

Reversing entries are never required.

Question 32

When a company has net income,the Income Summary account appears as a credit on the post-closing trial balance.

Question 33

The post-closing trial balance will contain only nominal accounts.

Question 34

A reversing entry will include either a debit to a revenue account or a credit to an expense account.

Question 35

The work sheet is a type of accountant's working paper.

Question 36

The post-closing trial balance will typically have more accounts than the adjusted trial balance.

Question 37

The work sheet is published in the annual report along with the financial statements.

Question 38

There is sufficient information on a post-closing trial balance to prepare a balance sheet.

Question 39

The balances of all the real (permanent)accounts are the same on the adjusted trial balance as they are on a post-closing trial balance.

Question 40

The purpose of reversing entries is to simplify the bookkeeping process.

Question 41

An important use of the work sheet is as a replacement for the annual financial statements.

Question 42

The Income Statement columns of the work sheet show all the accounts that need to be closed.

Question 43

The amount of the Withdrawals account can be found on the work sheet.

Question 44

Preparing the worksheet and closing entries provide a mechanism for applying the concept of periodicity.

Question 45

The adjusting entries entered onto a work sheet must still be recorded in the general journal.

Question 46

The amount placed opposite the owner's Capital account in the Balance Sheet columns of the work sheet is the amount to be reflected for owner's Capital on the balance sheet.

Question 47

When the Balance Sheet columns of the work sheet are initially footed,they should be in balance.

Question 48

The Income Statement columns of the work sheet show all the accounts that need to be closed,except for the Withdrawals account.

Question 49

The information needed to record the adjusting entries can be copied from the work sheet.

Question 50

Reversing entries are all dated as of the first day of the new accounting period.

Question 51

Preparing the work sheet and recording closing entries are important steps that save money and prevent mistakes.

Question 52

Reversing entries,like any other entries,are posted to the ledger.

Question 53

The work sheet should be prepared after the formal financial statements have been prepared.

Question 54

Since the balance of the Accumulated Depreciation account will appear on the asset side of the balance sheet,it is placed on the debit side of the work sheet's Balance Sheet columns.

Question 55

The heading of a work sheet might contain the line "As of February 28,20x5."

Question 56

Closing entries can be prepared by referring solely to the Income Statement columns of the work sheet.

Question 57

When the Income Statement columns of the work sheet are initially footed,they should be in balance.

Question 58

The work sheet is prepared after the formal adjusting and closing entries.

Question 59

The amount placed opposite the Land account in the Balance Sheet columns of the work sheet is the amount to be reflected for Land on the balance sheet.

Question 60

On a work sheet,the balance of the owner's Capital account is its ending amount for the period.

Question 61

Which of the following accounts is not closed during the closing process?

A)Owner's Capital
B)Commissions Earned
C)Income Summary.
D)Withdrawals

Question 62

The owner's Capital,Withdrawals,and Income Summary accounts for Harmon Repair Company for the accounting period are presented below in T account form after the recording and posting of closing entries: The total amount of revenue earned for the period is

A)$300.
B)$600.
C)$700.
D)$900.

Question 63

Which of the following is a nominal account?

A)Interest Payable
B)Property Taxes Expense
C)Owner's Capital
D)Cash

Question 64

Failure to prepare closing entries will produce a misstated

A)total liabilities figure on the balance sheet.
B)total assets figure on the balance sheet.
C)owner's Capital account balance.
D)Income Summary account balance.

Question 65

Preparation of closing entries

A)is an optional step in the accounting cycle.
B)is the first step after posting to the general ledger.
C)assist in achieving periodicity and accrual accounting.
D)All of these choices.

Question 66

Closing entries are made

A)to clear revenue and expense accounts of their balances.
B)to clear withdrawals of its balance.
C)to summarize a period's revenues and expenses.
D)All of these choices.

Question 67

The Income Summary account

A)appears on the balance sheet.
B)appears on the income statement.
C)is closed to the cash account to properly state cash at the end of the period.
D)does not appear in the financial statements.

Question 68

After all closing entries have been posted,which of the following accounts is most likely to have a nonzero balance?

A)Interest Expense
B)Unearned Revenue
C)Service Revenue
D)Income Summary

Question 69

Under which circumstance would one less closing entry than usual be made?

A)When a net loss has been suffered
B)When withdrawals by the owner are equal to net income for the period
C)When net income is zero
D)When the owner's Capital account is zero prior to posting of closing entries

Question 70

Which of the following accounts is not found in closing entries?

A)Accumulated Depreciation-Equipment
B)Owner's Capital
C)Income Summary
D)Withdrawals

Question 71

The Income Summary account is credited in the entry that closes

A)the Withdrawals account.
B)expense accounts.
C)net income.
D)revenue accounts.

Question 72

Closing entries ultimately will affect

A)total liabilities.
B)the Cash account.
C)the owner's Capital account.
D)total assets.

Question 73

Which of the following is not a permanent account?

A)Supplies
B)Accounts Receivable
C)Withdrawals
D)Unearned Revenue

Question 74

The owner's Capital,Withdrawals,and Income Summary accounts for Harmon Repair Company for the accounting period are presented below in T account form after the recording and posting of closing entries: The amount of net income (or net loss)for the period is

A)$300 net income.
B)$900 net income.
C)$600 net income.
D)$300 net loss.

Question 75

Which of the following accounts is a real account?

A)Building
B)Depreciation Expense-Buildings
C)Interest Expense
D)Service Revenue

Question 76

The Balance Sheet columns of the work sheet show one account that needs to be closed.

Question 77

Which of the following could not possibly be a closing entry?

A)Debit Income Summary and credit owner's Capital
B)Debit Income Summary and credit Withdrawals
C)Debit owner's Capital and credit Withdrawals
D)Debit owner's Capital and credit Income Summary

Question 78

An important purpose of closing entries is to

A)set nominal account balances to zero to begin the next period.
B)adjust the accounts in the ledger.
C)help in preparing financial statements.
D)set real account balances to zero to begin the next period.

Question 79

Which of the following is not a temporary account?

A)Depreciation Expense-Vehicles
B)Service Revenue
C)Unearned Revenue
D)Interest Income

Question 80

An important purpose of closing entries is to

A)help achieve the goals of the matching principle.
B)set permanent account balances to zero to begin the next period.
C)update the nominal accounts at year end.
D)transfer net income or net loss to the owner's Capital account.