Question 1

The Income Summary account is used to

Accepted Answer

A)   close the revenue accounts only.
B)   close the revenue accounts and expense accounts only.
C)   close the drawing account.
D)   close revenue accounts and expense accounts and update the owner's capital account.E) A) and B)
F) B) and C)

Question 2

When recording closing entries in the general journal, which of the following is written in the Description column?

Accepted Answer

A)   "closing entries"
B)   a description of the transaction
C)   nothing
D)   "zero out accounts"E) None of the above
F) B) and C)

Question 3

From the partial work sheet, prepare an income statement, a statement of owner's equity, and a classified balance sheet. The owner made no additional investments in the business during the month.

Accepted Answer

The answer of From the partial work sheet, prepare an...

Question 4

What is the purpose of the post-closing trial balance?

Accepted Answer

A)   to prove no errors were made while recording entries in the journal
B)   to prove the equality of the debit and credit balances in the general ledger accounts
C)   to prove the closing entries were recorded correctly in the journal
D)   to prove the balances in the general ledger accounts are correctE) C) and D)
F) None of the above

Question 5

Match the terms with the definitions.
-The process of giving zero balances to the temporary accounts so that they can accumulate information for the next accounting period.

Accepted Answer

A)  account form of balance sheet
B)  accounting cycle
C)  classified balance sheet
D)  closing process
E)  current assetsF) current liabilitiesG) Income SummaryH) long-term liabilitiesI) operating cycleJ) permanent accountsK) post-closing trial balanceL) property, plant, and equipmentM) report form of balance sheetN) temporary accountsO) F) and K)
P) A) and B)

Question 6

Current assets include cash and other assets that will be converted into cash or consumed within one year or the normal operating cycle of the business, whichever is longer.

Accepted Answer

A) True 
 B)False

Question 7

Match the terms with the definitions.
-A balance sheet in which the assets are on the left and the liabilities and the owner's equity sections are on the right.

Accepted Answer

A)  account form of balance sheet
B)  accounting cycle
C)  classified balance sheet
D)  closing process
E)  current assetsF) current liabilitiesG) Income SummaryH) long-term liabilitiesI) operating cycleJ) permanent accountsK) post-closing trial balanceL) property, plant, and equipmentM) report form of balance sheetN) temporary accountsO) B) and C)
P) F) and M)

Question 8

The balance in an expense account is closed to a(n)

Accepted Answer

A)   capital account.
B)   revenue account.
C)   drawing account.
D)   income summary account.E) None of the above
F) A) and D)

Question 9

Match the terms with the definitions.
-Obligations that are not expected to be paid within a year and do not require the use of current assets.

Accepted Answer

A)  account form of balance sheet
B)  accounting cycle
C)  classified balance sheet
D)  closing process
E)  current assetsF) current liabilitiesG) Income SummaryH) long-term liabilitiesI) operating cycleJ) permanent accountsK) post-closing trial balanceL) property, plant, and equipmentM) report form of balance sheetN) temporary accountsO) A) and N)
P) G) and N)

Question 10

The account to which revenue and expenses are closed is called

Accepted Answer

A)   Cash.
B)   Drawing.
C)   Income Summary.
D)   Net Income.E) None of the above
F) All of the above

Question 11

The journal entry to close expense accounts includes

Accepted Answer

A)   debiting the expense accounts and crediting Income Summary.
B)   debiting Income Summary and crediting the expense accounts.
C)   debiting the expense accounts and crediting the owner's capital account.
D)   debiting the expense accounts and crediting the drawing account.E) All of the above
F) None of the above

Question 12

Match the terms with the definitions.
-Assets that are expected to serve the business for many years.

Accepted Answer

A)  account form of balance sheet
B)  accounting cycle
C)  classified balance sheet
D)  closing process
E)  current assetsF) current liabilitiesG) Income SummaryH) long-term liabilitiesI) operating cycleJ) permanent accountsK) post-closing trial balanceL) property, plant, and equipmentM) report form of balance sheetN) temporary accountsO) E) and L)
P) C) and E)

Question 13

The total revenue of the month of June amounted to $7,500; total expenses amounted to $3,500; and withdrawals amounted to $600. The net income for the month amounted to

Accepted Answer

A)   $7,500.
B)   $3,400.
C)   $4,000.
D)   $3,500.E) B) and D)
F) All of the above

Question 14

A form of balance sheet that lists the assets at the left and the liabilities and owner's equity at the right is called a report form of balance sheet.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following steps of the accounting cycle are in the correct order?

Accepted Answer

A)   prepare a trial balance, post to general ledger accounts, journalize adjusting and closing entries
B)   make adjustments, complete a work sheet, post to general ledger accounts
C)   prepare financial statements, make adjustments, prepare a trial balance
D)   prepare a trial balance, make adjustments, prepare financial statementsE) None of the above
F) A) and B)

Question 16

To close the drawing account with a debit balance, credit the account for its balance and debit the owner's capital account.

Accepted Answer

A) True 
 B)False

Question 17

Expenses on the income statement could be listed in the same order as they appear in the chart of accounts.

Accepted Answer

A) True 
 B)False

Question 18

To close an expense account with a debit balance, debit the account for its balance and credit the income summary account.

Accepted Answer

A) True 
 B)False

Question 19

A form of balance sheet that lists the liabilities and the owner's equity sections below the assets section is called the

Accepted Answer

A)   account form.
B)   journal form.
C)   report form.
D)   current form.E) None of the above
F) A) and B)

Question 20

A post-closing trial balance is used to prove the equality of debit and credit balances in the general ledger accounts after the closing entries have been posted.

Accepted Answer

A) True 
 B)False

Exam 6: Financial Statements and the Closing Process

A form of balance sheet that lists the liabilities and the owner's equity sections below the assets section is called the

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Match the terms with the definitions. -A balance sheet in which the assets are on the left and the liabilities and the owner's equity sections are on the right.

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A form of balance sheet that lists the assets at the left and the liabilities and owner's equity at the right is called a report form of balance sheet.

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From the partial work sheet, prepare an income statement, a statement of owner's equity, and a classified balance sheet. The owner made no additional investments in the business during the month.

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Expenses on the income statement could be listed in the same order as they appear in the chart of accounts.

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Match the terms with the definitions. -Assets that are expected to serve the business for many years.

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A post-closing trial balance is used to prove the equality of debit and credit balances in the general ledger accounts after the closing entries have been posted.

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What is the purpose of the post-closing trial balance?

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When recording closing entries in the general journal, which of the following is written in the Description column?

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Match the terms with the definitions. -Obligations that are not expected to be paid within a year and do not require the use of current assets.

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The balance in an expense account is closed to a(n)

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The total revenue of the month of June amounted to $7,500; total expenses amounted to $3,500; and withdrawals amounted to $600. The net income for the month amounted to

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Current assets include cash and other assets that will be converted into cash or consumed within one year or the normal operating cycle of the business, whichever is longer.

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The Income Summary account is used to

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Which of the following steps of the accounting cycle are in the correct order?

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To close the drawing account with a debit balance, credit the account for its balance and debit the owner's capital account.

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To close an expense account with a debit balance, debit the account for its balance and credit the income summary account.

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Match the terms with the definitions. -The process of giving zero balances to the temporary accounts so that they can accumulate information for the next accounting period.

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The journal entry to close expense accounts includes

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The account to which revenue and expenses are closed is called

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