Question 1

Which of the following sequences of documents or records describes the proper sequence in the accounting cycle?

Accepted Answer

A)  Source documents, journal, ledger, work sheet, financial statements
B)  Source documents, work sheet, journal, ledger, financial statements
C)  Source documents, ledger, journal, work sheet, financial statements
D)  Work sheet, source documents, financial statements, ledger, journal
E)  Financial statements, journal, ledger, source documents, work sheet A

Question 2

The owner's Capital account will always have a zero balance after the closing entries are posted.

Accepted Answer

A) True 
 B)False

Question 3

Net income for a company is $35,000 for the current year. The owner withdrew $3,500 per month for personal expenses. The owner's Capital account will show a net

Accepted Answer

A)  decrease of $7,000.
B)  increase of $7,000.
C)  decrease of $42,000.
D)  increase of $42,000.
E)  increase of $77,000.

Question 4

Explain the differences between cash and accrual accounting methods.

Accepted Answer

The cash basis of accounting records revenue when cash is received and expenses when cash is paid. Under the accrual method, revenues are recorded when earned, and expenses are recorded when incurred. This method is more complicated and time consuming than the cash method.

Question 5

If a liability was extended into the Income Statement Credit column on the work sheet, net income would be understated.

Accepted Answer

A) True 
 B)False

Question 6

The post-closing trial balance will include

Accepted Answer

A)  Accumulated Depreciation.
B)  Depreciation Expense.
C)  Drawing.
D)  Rent Expense.
E)  Income from Services. A

Question 7

The Income Summary account balance should always increase after the closing entries are posted at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following accounts will have a remaining balance after the closing process is completed?

Accepted Answer

A)  Income from Services
B)  Rent Expense
C)  Owner's Drawing
D)  Owner's Capital
E)  Depreciation Expense

Question 9

The first step in the accounting cycle is to

Accepted Answer

A)  analyze source documents and record business transactions in a journal.
B)  prepare a post-closing trial balance.
C)  complete the work sheet.
D)  journalize and post the adjusting entries.

Question 10

The Income Summary account has a debit balance of $10,000 prior to closing. The owner's Drawing account has a balance of $7,000 before closing. The owner's Capital account will

Accepted Answer

A)  decrease $10,000.
B)  increase $17,000.
C)  increase $10,000.
D)  decrease $17,000.
E)  increase $7,000.

Question 11

The second step in the closing process is to close the _____________ account(s)  into the ___________ account(s) .

Accepted Answer

A)  expense, income summary
B)  income summary, expense
C)  expense, net income
D)  revenue, income summary

Question 12

Both income statement and balance sheet accounts are closed at the end of a fiscal period.

Accepted Answer

A) True 
 B)False

Question 13

The entry to close revenue would involve a

Accepted Answer

A)  debit to capital.
B)  credit to Income Summary.
C)  debit to net income.
D)  credit to revenue.

Question 14

The _______________ requires that revenue is recorded when earned and expenses are recorded when incurred.

Accepted Answer

A)  accrual basis of accounting
B)  cash basis of accounting
C)  hybrid basis of accounting
D)  GAAP basis of accounting

Question 15

If expenses are greater than revenue, the Income Summary account will be closed by a debit to

Accepted Answer

A)  Cash and a credit to Income Summary.
B)  Income Summary and a credit to Cash.
C)  Capital and a credit to Income Summary.
D)  Income Summary and a credit to Capital.
E)  Income Summary and a credit to Drawing.

Question 16

When using the work sheet to prepare closing entries, which of the following statement is correct?

Accepted Answer

A)  You should use all balances listed in the balance sheet columns.
B)  You should use all balances listed in the balance sheet columns and the income statement columns.
C)  You should use all balances listed in the income statement columns.
D)  None of the answers listed

Question 17

Closing entries are prepared to close the

Accepted Answer

A)  temporary accounts.
B)  accumulated depreciation accounts.
C)  owner's Capital account.
D)  Wages Payable account.
E)  payables and receivables.

Question 18

Which of the following statements is true concerning the steps in the accounting cycle?

Accepted Answer

A)  Preparing a trial balance should be completed before recording business transactions into a journal.
B)  Journalizing and posting the closing entries should be completed after preparing financial statements.
C)  Completing the work sheet should be completed after preparing the financial statements.
D)  Preparing a post-closing trial balance should be completed before completing the work sheet.

Question 19

Match the terms that follow with the correct definitions.
 
-The ability to transfer financial reports from on program to another.

Accepted Answer

The answer of Match the terms that follow with the...

Question 20

The post-closing trial balance is best prepared from the

Accepted Answer

A)  general ledger.
B)  general journal and the general ledger.
C)  general ledger and the financial statements.
D)  financial statements.
E)  income statement.

Exam 5: Closing Entries and the Post-Closing Trial Balance Including Appendix

Which of the following sequences of documents or records describes the proper sequence in the accounting cycle?

Correct AnswerverifiedA

The owner's Capital account will always have a zero balance after the closing entries are posted.

Correct AnswerverifiedShow Answer

Net income for a company is $35,000 for the current year. The owner withdrew $3,500 per month for personal expenses. The owner's Capital account will show a net

Correct AnswerverifiedShow Answer

Explain the differences between cash and accrual accounting methods.

Correct AnswerverifiedThe cash basis of accounting records revenue when cash is received and expenses when cash is paid. Under the accrual method, revenues are recorded when earned, and expenses are recorded when incurred. This method is more complicated and time consuming than the cash method.

If a liability was extended into the Income Statement Credit column on the work sheet, net income would be understated.

Correct AnswerverifiedShow Answer

The post-closing trial balance will include

Correct AnswerverifiedA

The Income Summary account balance should always increase after the closing entries are posted at the end of the accounting period.

Correct AnswerverifiedShow Answer

Which of the following accounts will have a remaining balance after the closing process is completed?

Correct AnswerverifiedShow Answer

The first step in the accounting cycle is to

Correct AnswerverifiedShow Answer

The Income Summary account has a debit balance of $10,000 prior to closing. The owner's Drawing account has a balance of $7,000 before closing. The owner's Capital account will

Correct AnswerverifiedShow Answer

The second step in the closing process is to close the _____________ account(s) into the ___________ account(s) .

Correct AnswerverifiedShow Answer

Both income statement and balance sheet accounts are closed at the end of a fiscal period.

Correct AnswerverifiedShow Answer

The entry to close revenue would involve a

Correct AnswerverifiedShow Answer

The _______________ requires that revenue is recorded when earned and expenses are recorded when incurred.

Correct AnswerverifiedShow Answer

If expenses are greater than revenue, the Income Summary account will be closed by a debit to

Correct AnswerverifiedShow Answer

When using the work sheet to prepare closing entries, which of the following statement is correct?

Correct AnswerverifiedShow Answer

Closing entries are prepared to close the

Correct AnswerverifiedShow Answer

Which of the following statements is true concerning the steps in the accounting cycle?

Correct AnswerverifiedShow Answer

Match the terms that follow with the correct definitions. -The ability to transfer financial reports from on program to another.

Correct AnswerverifiedShow Answer

The post-closing trial balance is best prepared from the

Correct AnswerverifiedShow Answer

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The cash basis of accounting records revenue when cash is received and expenses when cash is paid. Under the accrual method, revenues are recorded when earned, and expenses are recorded when incurred. This method is more complicated and time consuming than the cash method.

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The second step in the closing process is to close the ___ account(s) into the _ account(s) .

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