True/False
Indicate whether the sentence or statement is true
or false.
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1.
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General ledger account balances are changed only by posting journal
entries.
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2.
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Information needed for journalizing adjusting entries is taken from Income Statement
and Balance Sheet columns of a work sheet.
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3.
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Information needed for journalizing closing entries is taken from the Adjustment
columns of a work sheet.
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4.
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Indicating a source document is not necessary when journalizing adjusting
entries.
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5.
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At
the end of a fiscal period, the temporary accounts are closed to prepare the general ledger for the
next fiscal period.
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6.
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Income Summary is a temporary account and is used only at the beginning of a fiscal
period.
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7.
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Income Summary has a debit balance.
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8.
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Amounts needed for the closing entries are obtained from the Trial Balance columns of
a work sheet.
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9.
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The
income summary account is a temporary account and must begin each fiscal period with a zero
balance.
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10.
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Adjusting entries bring subsidiary ledger accounts up to date.
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11.
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Adjusting entries recorded in a work sheet are journalized in a general
journal.
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12.
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Adjusting entries are recorded on the next line following the last daily
transaction.
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13.
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Closing temporary accounts at the end of a fiscal period is an application of the
Matching Expenses with Revenue accounting concept.
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14.
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To
close a temporary account, an amount equal to its balance is recorded on the side opposite the
balance.
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15.
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Permanent accounts are sometimes referred to as nominal accounts.
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16.
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The
ending account balances of permanent accounts for one fiscal period are the beginning account
balances for the next fiscal period.
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17.
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Contra accounts with credit balances are closed by crediting the accounts and debiting
Income Summary.
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18.
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Expense accounts are closed by crediting the expense accounts and debiting Income
Summary for the total amount.
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19.
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The
income summary account is closed into the retained earnings account.
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20.
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Dividends increase the earnings retained by a corporation.
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21.
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After
the closing entry for the dividends account is posted, Dividends has a zero balance.
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22.
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After
all closing entries are posted, the income statement accounts are the only general ledger accounts
that have balances.
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23.
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Income statement accounts with zero balances to begin the new fiscal year is an
application of the Business Entity accounting concept.
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24.
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The
purpose of the post-closing trial balance is to prove the general ledger equality of debits and
credits.
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25.
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The
first steps in the accounting cycle for a merchandising business are to check source documents for
accuracy and analyze transactions into debit and credit parts.
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26.
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The
final step in the accounting cycle for a merchandising business is to prepare financial statements
from the work sheet.
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27.
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Permanent accounts include the asset and liability accounts as well as the owners'
capital accounts.
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28.
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The
income summary account is unique because it does not have a normal balance side.
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29.
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Service and merchandising businesses use totally different accounting
cycles.
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30.
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Income Summary is used only at the end of the fiscal period to help prepare other
accounts for a new fiscal period.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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31.
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The
two types of journal entries needed to change general ledger account balances at the end of the
fiscal period are ____. a. | adjusting and correcting
entries | c. | adjusting and
closing entries | b. | closing and correcting entries | d. | none of the above | | | | |
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32.
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Information needed for journalizing adjusting entries is taken from the
____. a. | Trial Balance
columns of a work sheet | b. | Adjustments columns of a work sheet | c. | Income Statement
columns of a work sheet | d. | Balance Sheet columns of a work sheet | | |
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33.
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Recording closing entries to prepare temporary accounts for the next fiscal period is
an application of the accounting concept ____. a. | Matching Expenses with Revenue | c. | Accounting Period Cycle | b. | Adequate
Disclosure | d. | Consistent
Reporting | | | | |
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34.
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The
store supplies inventory adjustment includes a debit to Supplies Expense--Store and a credit to
____. a. | Income
Summary | c. | Purchases | b. | Merchandise Inventory | d. | Supplies--Store | | | | |
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35.
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The
amounts needed for closing entries are obtained from the work sheet's ____. a. | Trial Balance
and Balance Sheet columns | b. | Adjustments and Balance Sheet columns | c. | Income Statement
and Balance Sheet columns | d. | Balance Sheet columns | | |
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36.
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Each
revenue account must begin each fiscal period with a ____. a. | debit
balance | b. | credit balance | c. | zero
balance | d. | balance reflecting net income from the previous
period | | |
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37.
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To
close the revenue account, the revenue account balance for the fiscal period is transferred into
____. a. | the income
summary account | c. | the cash
account | b. | the capital accounts | d. | none of the above | | | | |
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38.
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Having each cost and expense account begin a new fiscal period with a zero balance is
an application of the accounting concept ____. a. | Accounting Period Cycle | c. | Matching Expenses with Revenue | b. | Adequate
Disclosure | d. | Consistent
Reporting | | | | |
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39.
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To
close the sales account, ____. a. | debit Sales; credit Cash | c. | debit Income Summary; credit Sales | b. | debit Sales;
credit Income Summary | d. | debit Cash;
credit Sales | | | | |
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40.
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To
close the expense and cost accounts, ____. a. | debit the expense and cost accounts; credit Income
Summary | b. | debit the expense accounts; credit the capital
accounts | c. | debit Income Summary; credit the expense and cost
accounts | d. | debit Income Summary; credit the capital
accounts | | |
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41.
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To
close the income summary account when there is net income, ____. a. | debit Cash;
credit Income Summary | b. | debit the capital accounts; credit Income
Summary | c. | debit Income Summary; credit Retained
Earnings | d. | debit Retained Earnings; credit Income
Summary | | |
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42.
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To
close the dividends account, ____. a. | debit Retained Earnings and credit
Dividends | b. | debit Dividends and credit Retained
Earnings | c. | debit Income Summary and credit
Dividends | d. | debit Dividends and credit Income
Summary | | |
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43.
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Which
journal entries change general ledger account balances at the end of a fiscal
period? a. | Adjusting
entries | c. | Both A and
B | b. | Closing
entries | d. | Neither A nor
B | | | | |
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44.
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Temporary accounts include ____. a. | revenue accounts | c. | expense accounts | b. | cost
accounts | d. | all of the
above | | | | |
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45.
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Which
income statement accounts have zero balances to begin a new fiscal period? a. | Revenue
accounts | c. | Expense
accounts | b. | Cost accounts | d. | All of the above | | | | |
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46.
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Which
balance sheet accounts have up-to-date balances to begin a new fiscal period? a. | Asset
accounts | c. | Capital
accounts | b. | Liability accounts | d. | All of the above | | | | |
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47.
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Merchandising businesses use an accounting cycle similar to the accounting cycle of
____. a. | Service
businesses | c. | Proprietorships | b. | Corporations | d. | All of the above | | | | |
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48.
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To
reduce the debit balances of income statement accounts to zero, ____. a. | debit the income
statement accounts and credit Income Summary | b. | debit Income
Summary and credit the income statement accounts | c. | debit the income
statement accounts and credit Retained Earnings | d. | debit Retained
Earnings and credit the income statement accounts | | |
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49.
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Which
of the following is not a closing entry for a corporation? a. | Closing entry
for adjustments | b. | Closing entry for income statement
accounts | c. | Closing entry for the dividends
account | d. | Closing entry to record net income or net loss in the retained
earnings account | | |
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50.
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After
adjusting and closing entries have been posted to the general ledger, a ____. a. | balance sheet is
prepared | b. | trial balance is prepared | c. | post-closing
balance sheet is prepared | d. | post-closing trial balance is
prepared | | |
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